As was mentioned yesterday in Part Three, the non-profit organization Pagosa Housing Partners (PHP) is proposing to petition a new tax proposal onto the Town’s April 5, 2022 election ballot. The new tax — an excise tax — would be collected on the operation of Short-Term Rentals.
STRs. Vacation rentals
STRs currently pay sales tax… and lodgers tax…
… and this would be an additional tax, to help fund ‘workforce housing’ efforts, based on the unpleasant fact that the STR industry converts existing residential homes into commercial mini-motels… in a community that has been challenged a workforce housing shortage for at least two decades.
Although… it might be a fee, instead of a tax…
The PHP board will be voting on that question tomorrow, at their November 24 meeting.
Fee, or tax?
If the petition asks the voters to approve a tax, it will likely be in the 10% range. This is higher than the STR excise tax collected in some Colorado communities, but also lower than the 15% tax approved by voters in Ouray, Colorado earlier this month.
If the petition asks the voters to approve a fee, it will likely be about $150 per licensed bedroom, per month.
Either way, the petition will target STRs located within the town limits. As a Home Rule municipality, the Town of Pagosa Springs is legally required to allow its citizens to petition measures onto the ballot, at a regular or special election.
About 150 of the community’s current STRs are located within the town limits. An excise tax, or an excise fee, could generate about $600,000 per year to support new workforce housing, renovation of existing workforce housing, property purchases for workforce housing, and infrastructure improvements to facilitate workforce housing.
The vast majority of homes that have been converted into commercial mini-motels, however, are located in the unincorporated county. How many might that be? We don’t really know. About 500 STRs are licensed by Archuleta County, but websites like AirDNA suggest that perhaps twice that many are operating in our community.
The Archuleta Board of County Commissioners historically have not allowed citizens to petition initiatives onto the County’s election ballots.
Last Thursday, we heard a vigorous discussion by the Pagosa Springs Town Council on the topic of funding for workforce housing efforts, and it appears likely that the Council will be reallocating half of the Town’s 4.9% Lodgers Tax for housing next year.
The Council also had proposed ‘excise tax on STRs’ ordinance before them for consideration, but weren’t able to reach an agreement to place it onto the April ballot.
But what, exactly, is ‘workforce housing’? Why is PHP specifying “workforce housing aimed at households earning no more than 100% of Area Median Income”…?
When federal and state housing agencies estimate the average (median) price of housing in Archuleta County, they include various types of households in their calculations. Employees. Retirees. Business owners. From those community-wide income estimates, the Colorado Housing and Finance Authority defines the fair rent (or the average rent) for a one-bedroom apartment or house at $1,378 per month.
A two-bedroom at $1,655. And a three bedroom at $1,911. If you can even find a rental in Pagosa Springs.
Some people working for the Town government can afford these kinds of rents. Some people working for the County government can afford these rents. Some people working in the construction industry may be able to afford these rents.
People working in Pagosa’s retail industry, or hospitality industries — that is, a huge slice of our local workers — cannot afford “average rents”. Nor can they afford average home mortgages, when a median-priced home costs $400,000.
If we want Archuleta County to remain even marginally viable as a place to live and work, we have a monumental task ahead of us. The Root Policy Research report, published last August, estimated the Archuleta County housing shortage at 800 units of workforce housing.
Some of our local leaders talk about “missing middle” housing, and have implemented policies that use tax revenues to subsidize families making up to 150% Area Median Income (AMI). Unfortunately, such policies are providing taxpayer subsidies to families earning 50% more than the average taxpayer.
That’s just crazy. (Like, something the federal government would do.)
The PHP Housing Survey conducted in July 2021 found that all — all — of the families ‘extremely burdened” by housing costs — that is, paying more than 50% of their household income for housing — are earning less than 80% AMI.
These are the folks suffering most in our community… struggling to afford food, healthcare, childcare, insurance, and other necessities. These are the folks earning less than the average weekly wage in Pagosa: $821. Which comes to about $42,700 per year, if you work 52 weeks with no time off.
Half of our workers earn less than $42,700, according to the US Bureau of Labor Statistics. Many make much, much less.
In such a situation, I personally want to see us direct our policies and funding at folks earning less than the average local wage — and not use the taxes paid by those same struggling families to subsidize housing for people who have more than the average income. That’s why the proposed PHP petitions specifically call for workforce housing projects aimed at households earning less than 100% AMI.
Will the Town voters step up to help solve our crisis? I believe they will.
I believe the Archuleta County voters would do the same, if only the Board of County Commissioners would give them the chance.