At their Thursday, November 18 regular meeting, the Pagosa Springs Town Council considered Ordinance 964, which would have placed a ballot measure before the voters at the April 5, 2022 Town election. (That election will also be a chance to elect a mayor and three Council members.)
From Ordinance 964, which Council had requested staff to bring to them, two weeks ago:
An Ordinance of the Town of Pagosa Springs submitting to the registered electors voting in the municipal election, to be held April 5, 2022, a ballot issue modifying the existing requirement that a majority (51%) of the Town Lodgers Tax be directed only for external marketing and allowing such funding to be redirected for workforce housing and town infrastructure, and contingent upon elector approval, amending the Pagosa Springs Municipal Code to provide for the same.
The Ordinance produced considerable debate at the meeting — in part, because there was no obvious reason to place this question in front of the voters in the first place.
The “existing requirement” that a majority of the Town’s Lodgers Tax be directed only to “external marketing” had never been established by the voters. It had been established in 2015 by Town Council Ordinance 826 — without any voter participation — and the limitation could therefore be “dis-established” by a simple vote of the seven Council members.
Apparently, no one on the Town Staff or on the Town Council remembered that, when the Town’s 4.9% Lodgers Tax was finally approved by the voters in 2006, the original plans for using the new revenues were based around the creation of tourist-friendly events to attract people to Pagosa — not around external marketing. ‘External marketing’ didn’t become a dominant part of the spending pattern until later on.
As these facts became more clear during the Thursday Council meeting (thanks, in part, to some input from audience members) the result was a decision by the Council to reject Ordinance 964, and direct staff to create two rather different ordinances, to be presented at next month’s Council meeting. The new ordinances, as specified by Council member Shari Pierce’s motion, would contain these elements:
“I would direct staff to bring forward for our consideration, two new ordinances.
“The first, removing the 51% ‘external marketing’ limit.
“And the second, dedicating 50% of the Town’s income from the [Lodgers Tax] towards workforce housing; infrastructure related to workforce housing; and wastewater infrastructure related to workforce housing.”
Council member Mat deGraaf offered a second to the motion, which then passed unanimously.
A rather sudden change of direction, and a pleasant surprise for some of us in the audience.
The next agenda item was Ordinance 965, which the Council had likewise requested two weeks ago.
An Ordinance of the Town of Pagosa Springs submitting to the registered electors voting in the municipal election, to be held April 5, 2022, a ballot issue concerning the imposition of an Excise Tax on short term rentals, to fund workforce housing, and contingent upon elector approval, amending the Pagosa Springs Municipal Code to provide for the same.
The actual text of the ordinance included a couple of blank spaces… one for the percentage rate for the excise tax on Short-Term Rentals (STRs)… and one for the maximum amount that the tax could generate, as required by the Colorado Constitution, in ballot measures.
The Colorado Constitution also requires voter approval for new taxes, and for tax increases. The Colorado Constitution does not, however, require voter approval for the creation of ‘fees’ — which are different from ‘taxes’ (at least nominally.)
This particular STR excise tax, or excise fee, had been recommended back in July by the Town Planning Commission, and has since been promoted (ad nauseam?) by the non-profit housing organization Pagosa Housing Partners… (of which I am a volunteer board member.)
But on Thursday evening, it seems the Council had spent most of its creative juices debating Ordinance 964 — the Lodgers Tax reallocation — and when faced with the various options suggested by Ordinance 965… options such as establishing a fee instead of a tax; setting the tax or fee based on nightly stays or based on an annual ‘per bedroom’ fee… and a lack of clarity how much would be generated by the various options… the Council ended up throwing in the towel, and voting simply to reject Ordinance 965…
… without giving the staff any further direction.
As a result of this failure to take definite steps to create an STR tax or fee, it might be left up to the Town citizens to petition a similar measure onto the April 2022 ballot — if anything is going to happen in that regard.
Fortunately for those who feel the STR industry is negatively impacting our community without contributing its fair share of taxes, Pagosa Housing Partners (PHP) has been developing a petition that would establish an annual Workforce Housing Fee… if approved by the Town voters. The draft language for the petition reads:
“The Town of Pagosa Springs shall collect an annual Workforce Housing Fee from Short-Term Rentals (STRs) located within town limits, amounting to at least $1,900 per permitted bedroom, except no fee shall be due when the STR owner(s) live full-time on the STR property. All Workforce Housing Fees shall be dedicated to the creation and sustainability of workforce housing, aimed at households earning no more than 100% of Area Median Income. The fees shall be due annually on each June 1st following approval of this charter amendment by Town electors.”
The “$1,900 per bedroom” amount was calculated by comparing how much a traditional motel or bed-and-breakfast contributes to our community in property taxes — paid at the 29% commercial property tax rate — compared to how little STRs contribute to the community in property taxes, paid at the 7.15% “residential” property tax rate.
Because the Workforce Housing Fee can be paid once a year, the Town would not need to spend the rest of the year trying to collect a tax or fee.
Daily Post readers might wonder why the proposed ballot language mentions “100% of Area Median Income”.
Readers might also wonder why this new fee will apply only to STRs within the town limits. What about the county STRs?
I will be happy to explain.