The six Town Council members had lots of options to discuss on Tuesday, August 3, for dealing with vacation rentals. (One Council member, Mat deGraaf, was absent.) For one thing, they had four recommendations handed to them by Town Planning Commission, related to Pagosa’s housing crisis, and in particular, related to STRs. (Short-Term Rentals; but I prefer the label “vacation rentals” because that’s their primary use.)
Three weeks earlier, the Planning Commission had received a briefing by Planning Director James Dickhoff, which clarified that vacation rentals are a “use by right” in the Town’s commercial-zoned districts, but require a “conditional use permit” in residential areas. Mr. Dickhoff also noted that the complaints from the community, about vacation rentals, generally emanate from residential-zoned areas.
Downtown resident Chrissy Karas offered testimony at that meeting, according to the Planning Commission minutes. She “stated the area has always been quiet and safe. She explained that she had a drone aimed into her home windows, and that the home on one side has been converted to a vacation rental and it’s not kept well, trash accumulates, yard isn’t being cared for.”
Further on in the approved minutes, Planning Commissioner Chris Pitcher “addressed commission, first stating that the vacation rental industry is another function that allows us to serve the tourism sector that created Pagosa, but the impacts are really impacting workforce housing. Would support the method of taxing them as commercial. If the owner wants to live in it, or rent to someone long-term, it could be residential again. He also added he’d like lodgers’ tax redirected to solving this problem. He feels owner-occupied units should be allowed. Asked if short-term rentals in mixed-use districts are taxed as commercial or residential. Legal counsel clarified that there is a difference between a tax and a fee, and a tax has to be voted on and does not go into the municipal fund as earmarked money for “housing”. Advised to be careful not to call it a tax, as a fee disguised as a tax can be challenged.”
Some of us may question Commissioner Pitcher’s quoted claim that “the tourism sector created Pagosa.” According to the only analysis of taxation I’ve come across (done by the Daily Post) tourism has historically contributed less than 20% of the sales taxes collected in Archuleta County, and little of the property tax revenue. Tourists do contribute a large portion of the Lodgers Tax revenue, but all of that money currently gets wasted on promoting more tourism. (Not everyone considers it to be wasted, of course.)
I did not attend the July 13 Planning Commission meeting, so I am quoting from their approved minutes without any ability to vouch for their accuracy. But I have certainly heard claims very similar to the ones attributed to Commission Pitcher at previous Planning Commission meetings.
I’ve also written at some length, here in the Daily Post, about the difference between a “tax” and a “fee” — a difference often misunderstood (or ignored) by our local and state decision-making bodies.
Legally, the term “tax” refers to money extracted from a taxpayer without any promise that the tax will ‘directly’ benefit said taxpayer. The money extracted typically gets applied to general public uses — roads, schools, police, parks, health care, poverty, land use planning, transportation, and so on. There’s no guarantee that the taxes I pay to the School District, for example, will benefit me directly. Same with law enforcement, and hospitals, and child protection services.
The Colorado Constitution specifies that state and local governments must obtain voter approval before creating a new tax, or increasing the amount of an existing tax.
“Fees” are a different animal. Or rather, they should be a different animal. But often, they are not.
According to the legal definition, a “fee” is money extracted from a customer, to reimburse the government for the cost of providing a particular service not provided to the general public. When I approach my local building department, for example, for the approval of a new commercial or residential building project, I will pay a “permit fee” that supposedly covers the cost of reviewing and approving my building plans, doing building inspections, and various other services. Ideally, a fee would precisely cover the government’s time and expenses for providing the requested service. In fact, the amount of a government “fee” sometimes has little relationship to the cost of the service provided.
When the “fee” is far higher than the actual cost of service, it becomes a “tax”. (In my humble opinion.)
To repeat the quote, above, from the Planning Commission minutes: “Legal counsel clarified that there is a difference between a tax and a fee, and a tax has to be voted on and does not go into the municipal fund as earmarked money for ‘housing’. Advised to be careful not to call it a tax, as a fee disguised as a tax can be challenged…”
Money extracted from my pocket — or anyone’s pocket — by my government, to subsidize workforce housing for a completely different set of people, is obviously not a ‘fee’. It’s a tax.
The Lodgers Tax is, by definition and by name, a tax.
The people paying the Lodgers Tax are visitors to Pagosa Springs, who are enjoying the community that we — the full-time residents — maintain with our sales taxes, property taxes, blood, sweat, and tears. In my opinion, a Lodgers Tax can ethically be used for general community purposes, the same way sales taxes and property taxes are used for general community purposes. Via the Lodgers Tax, the tourist visitors could then be helping to ensure a healthy overall Pagosa Springs economy, the same way the rest of us do.
Legally, a Lodgers Tax can be used any way the Town voters believe it should be used. (In my humble opinion.) And this is one of the four recommendations the Planning Commission tried to hand off to the Town Council: to use the Lodgers Tax differently, to help address the housing crisis.
On August 3, the Town Council considered, in a somewhat confused fashion, the idea of reallocating the Lodgers Tax, but couldn’t quite agree on how to grab the baton.
There was plenty of back and forth discussion, representing various points of view. But no definite decision was made… in much the same way that no significant housing decisions have been made for at least the past eight years.
While the crisis has grown worse… and worse…