Council interested in raising lodging tax
April 5, 2014
Members of the Aspen City Council want to explore options for generating revenue that potentially could fund a grant program for Aspen's smaller lodge owners.
As the city continued discussions on its lodge-incentive program at a work session on Tuesday, Community Development Director Chris Bendon said that the writing of the program has focused mainly on development opportunity, while ignoring the importance of lodge updates. To remain viable, he said lodges need improvements every five to 10 years, including new light fixtures, new paint, new furniture and new flat-screen televisions.
"Many of the smaller lodge operators have said, 'We know what we need to do. We just don't have the money to do it,'" he said.
He pointed out that Basalt is considering revenue-generating measures for a new hotel to be built at Willits — through either a 2 percent lodging tax that voters will decide on during November elections or $500,000 from the town's general fund.
Aspen currently has a 2 percent lodging tax that is levied on guests who stay in town; 1.5 percent of the proceeds goes toward marketing, and 0.5 percent goes toward transit.
Council members did not offer exact ideas for additional revenue sources, but Bendon said that it would need to be attached to the lodging tax in some form. He said the next step is to see what the tolerance is in the marketplace for additional fees on lodging stays.
"Is there room there without harming our attractiveness as a resort," Bendon said. "We could set a fee that is intolerable to our guests, they don't come here, and it has a negative effect. So I think there's some conversation there."
Mayor Steve Skadron told Bendon, "Generally, we'd like to hear more."
Bendon said the city would be entering a new arena if it were to establish a grant program for lodges. As a hypothetical example, Bendon said a hotel operator might apply for a $100,000 grant for interior renovations. He added that some people are "repelled" by the idea because it sounds like a hand-out from the government.
"It kind of strikes some people the wrong way, but it's an area that we continue to think maybe we need to explore," he said.
City Manager Steve Barwick said it wouldn't be a one-way relationship. The city could consider attaching deed-restrictions to each grant. He added that such a program might help small lodges compete with the "sometimes overwhelming competition" from free-market residential.
One of the major components of the lodge-incentive program is the consideration for fee reductions and waivers for lodge development. City planners are expected to gauge the budgetary impact of reducing development fees by 25 percent, 50 percent and 75 percent in certain circumstances. With some level of fee reduction likely, Bendon said it will be useful to consider additional revenue generation.
Councilman Dwayne Romero said he's looking forward to hearing feedback from hotel managers, the Aspen Chamber Association and the Aspen Lodging Association.
As a general comment to end the discussion, Skadron said he would like to see the lodge-incentive program steer lodge operators away from becoming "real estate developers." He said Aspen needs to get away from the reliance on free-market components for hotel-development projects.
"I want to get away from the idea that covering the expense is going to be done immediately, within two years," he said. "The expectation should be that the business operation pays for the investment over time."