In addition to a wide-ranging slate of state and county offices and issues, voters in Buena Vista will be asked to make a decision on whether the town should institute an occupational tax on lodging that would fund capital improvements.
Ballot issue 2A, if approved, would create a tax of $3 per room per night on hotels and $5 per room per night on vacation rentals 30 days or less.
Specifically, the lower rate applies to lodging businesses that pay commercial property taxes, which are much higher than the residential property taxes paid by lodgers renting out homes on a short-term basis.
The tax is projected to generate $211,097.75 for the town in its first year, which would go to a dedicated fund for capital investments, a category that includes, according to the ballot language, “public safety equipment and facilities, open space and recreational areas and facilities, signage and wayfinding and town beatification.”
The language also allows the board of trustees to vote to raise either rate to $6.
The tax would be collected by the town. Town administrator Phillip Puckett said the town had no plans to increase personnel to collect the tax, that it would be self-reported and that issues of delinquency could be resolved by town hall’s existing code enforcement resources.
If approved by voters on Nov. 6, the next step for the board of trustees would be to pass an ordinance laying out the details of how the tax is collected, when it’s due, as well as the exact definitions of terms in the ballot language, Puckett said.
Among those definitions would be the meaning of the word room. In the case of conventional commercial hotels, the definition is self-evident, but in the case of the residential properties rented as VRBO’s, the board intends to define the term more flexibly.
If a renter is offering an entire home under one booking, they would be charged one daily fee. If the renter rented several rooms in the same home under different bookings, they would be charged $5 per night for each room.
If approved, the tax would take effect January 1, 2019.
According to town revenue and expenditure data going back to 2013, capital expenditures have consistently been the second-largest budget item after personnel costs. Twenty-seven percent of total expenses went to capital improvements in 2017.
Opponents of the measure say that the ballot issue was rushed through without opportunity for public comment and that tax would raise the amount paid by hotels per room – a combination of sales taxes to the municipality, county and state and lodging taxes from both the town and the county’s lodging district – to some of the highest rates in the state.
Public discussion on the ballot language first opened during the trustees Aug. 28 meeting, when they approved the ballot language. Trustee Mark Jenkins voted against approving the ballot language, saying that more public input should be sought.
Jed Selby, the owner of the Surf Hotel in South Main and one of the measure’s most outspoken critics, has previously accused Buena Vista’s government of acting hastily and eschewing public participation in its handling of the “land swap” deal with Urban, Inc. to develop an affordable housing complex.
Selby, who said he estimates he could lose $200,000 during his first year in the thin-margin hotel business, said that the same revenue could be generated by a 0.1 percent increase in sales tax.
“Higher tax rate than Vail and Aspen? No thank you!” reads an anti-2A sign seen around town.
State sales tax is 2.9 percent. Chaffee county sales tax is 2.5 percent, as is Buena Vista’s. Chaffee County’s Lodging District collects a tax to fund tourism at 1.9 percent, placing the current total rate at 9.8 percent.
On the Chaffee County ballot is a measure to raise the county sales tax to 2.75 percent, with the additional quarter percent earmarked for environmental concerns, as is a statewide measure, Proposition 110, to raise the state sales tax by 0.62 percent to fund Colorado Department of Transportation projects.
Buena Vista trustees approved a resolution at their last meeting giving support for that proposition, which would dedicate 40 percent of revenue raised from the increase to rural road projects.
The website for the city of Aspen lists its tax on lodging at 11.3 percent, broken town to a 2.4 percent city sales tax, the 2.9 percent state sales tax, Pitkin County’s 3.6 percent rate (the ninth-highest county sales tax rate in the state), a 0.4 percent tax for the Roaring Fork Transit Authority and a 2 percent lodging tax, 75 percent of whose revenues go to promote Aspen tourism and 25 percent of which fund local transit services.
Vailgov.org lists its tax on lodging at 9.8 percent, composed of the state sales tax, Eagle County’s 1 percent sales tax, a 0.5 percent tax for Eagle transportation, the town of Vail’s 4 percent sales tax and Vail’s 1.4 percent lodging tax, which “organization, management, promotion, and marketing of public events, for business recruitment and for tourism promotion.”
Aspen’s sales tax revenue report from July 2018 says the town collected $407,908 that month from the 2 percent lodging tax and $2,184,031 from all local sales taxes.
In 2013, Vail brought in $2,622853 to its Local Marketing District through it’s 1.4 percent tax.
Neither Pitkin nor Eagle counties have countywide lodging tax districts.
A survey of other popular tourist destinations in the high country found Telluride reporting a 12.65 percent rate on lodging, Crested Butte with a 13.4 percent rate, Steamboat Springs with a 9.4 percent rate and Breckenridge with an 11.55 percent rate.
As a statutory town, BV does not have the authority to levy a percentage tax on lodging, as home-rule communities like Aspen and Vail do.
This means that, for Buena Vista, the tax would be proportionally higher on rooms offered at a lower price.
At $150 per night, the average figure offered to trustees as they determined where to set the ballot question’s price points during their Aug. 28 meeting, $3 per room per night would be 2 percent of the room rate. On a $200 room, the rate would amount to 1.5 percent of the total.
At the maximum tax rate of $6 per room per night, the tax would be 4 percent of $150.
Buena Vista’s rate would be less compared to nearby statutory towns with flat-rate lodging occupational taxes, like Salida or Vail’s neighboring community of Eagle.
Salida’s rate is 10.8 percent plus $3.66 per room per night, or 2.44 percent on a $150 room. Eagle’s rate is 8.9 percent plus $4 per room per night, or 2.6 percent on $150.
Silverton hotels pay a lodging tax of 12.4 percent plus $2 per room per night.
This year, the Salida City Council voted that it would raise the tax rate on a schedule to reach a $4.82 rate by 2020, an amount approved by voters in 2008.
Buena Vista’s lodging tax would be unique among the communities listed here in that the revenue from its tax would not go back to the area’s tourism or recreation industries.