In Colorado, Glenwood Springs one of many towns looking to fund affordable housing through taxation
Glenwood Springs Post Independent
Now that the Glenwood Springs City Council has approved adding the 2.5% lodging tax to the November ballot, voters will decide whether to approve it or not. If passed, it will be added to other taxes that lodgers already pay when visiting Glenwood Springs.
With two lodging taxes of 2.5%, a state tax of 2.9%, both a transportation tax and county tax of 1% and the city tax of 3.7%, it starts to add up to double digits. Currently, lodgers in Glenwood Springs pay 11.1%; if the new lodging tax passes on the ballot, then it will be 13.6%.
As Glenwood Springs considers the new tax, many other towns in Colorado are adding additional lodging and sales tax to accommodate workforce housing. Summit County Commissioner Elisabeth Lawrence recently pushed to make it so counties can now charge higher county lodging taxes, bringing the Summit County lodging tax from 2% to 6%.
Lawrence explained that Summit County is unique with a lot of unaffiliated land being used for short-term rentals, but that land is not being taxed for tourism like the affiliated parts of the county.
“What happened in San Miguel County, which is Telluride, is really fascinating,” she said. “Their voters rescinded a lodging tax, took it back, because it was for marketing and advertising, and they said, ‘We no longer want to spend our money on that.’ So, their voters took it back.”
In April, Frisco voters overwhelmingly passed a short-term rental tax that will not apply to hotels.
“We saw the same thing in the town of Silverthorne,” she said. “They added a new lodging tax, not just for (short-term rentals) but any kind of lodging, and their voters passed it overwhelmingly, and they’re putting it into their general fund. Now, we have the town of Dillon that is going to their voters in November, and they are asking for two different types of lodging taxes.”
Frisco pays 8.375% in sales tax, and a lodging tax for tourism at 2.35%. Frisco just added a 5% excise tax for short-term rentals this summer to help fund affordable housing. Altogether, Frisco lodgers in short-term rentals pay 15.725% in taxes. Hotels do not collect the 5% excise tax.
The town of Frisco estimates they will receive $1.2 million to $1.5 million to put toward their workforce housing.
“Obviously, $1.2 and $1.5 million is not going to build a lot of stuff,” said Don Reimer, Frisco’s community development director. “What it does do is it helps support our other funds, and we use that to leverage and finance projects. Right now, the town of Frisco has a couple of different projects on the books that we’re working on.”
Partnerships are one of the best ways to make that money go further, he said.
“We know we can’t do it alone,” he said. “So, in this particular case, we’re partnering with (Colorado Department of Transportation). They’ve indicated that they’ve got some really severe staffing challenges because of the lack of housing, and, certainly, we can sympathize with that as well.”
Summit County also charges an overall county sales tax of .725% that funds workforce housing throughout the county.
Summit County, which includes Silverthorne, Dillon, Breckenridge and Frisco, makes up the Summit Combined Housing Authority that collects the .725% sales tax that funds housing programs, said Jason Dietz, housing director of Summit County Government.
Much like Glenwood Springs, Frisco is geographically boxed in with sparse room for growth or outward development.
“We’re surrounded by the National Forest on three sides and Dillon reservoir on the fourth,” Reimer said. “So, there’s nowhere to go. There’s very, very little undeveloped land in Frisco. Most of what we’re seeing is redevelopment of existing properties.”
He said that Frisco will purchase a parcel that seems viable for workforce housing and will keep it in reserve for a future housing-development program.
Another option that Frisco uses is working with private developers.
“This costs zero dollars from the town; a private developer can get additional market-rate units if they also construct a couple of deed-restricted units in our project,” Riemer said. “So, through that program, there’s been about 30 units that have been created over the past 10 years or so.”
In southwest Colorado, the city of Durango has a 5.25% lodging tax that was increased in 2021, but the majority of that tax is spent on tourism, and none of it is spent on workforce housing. With an 8.4% sales tax, Durango’s lodgers pay 13.65% in taxes.
Durango is funding their workforce housing with some use of the city’s $4.7 million from the American Rescue Plan Act and funds from the in-lieu fund that has about $1.1 million.
Most towns and cities throughout the state have added have added some form of a lodging tax, ranging from 4% to 10% — with Denver’s lodging tax as high as 10.75% and Aurora’ s at 8%.
Not every town is adding a lodging tax, excise tax or accommodations tax specifically for their workforce or affordable housing; but, almost every city and town that receives any tourism in the state of Colorado is looking for a way to create a fund to accommodate their local, workforce-housing needs.
“Working with folks across the state and trying to understand, ‘What do you want to use (a lodging tax) for?’ What always rose to the top in every community was housing,” Lawrence said.