The summer of 2021…
Pagosa Springs was enjoying — or not enjoying, as the case may be — a record number of tourist visits, with visitors splashing in the hot springs, hiking in the forest, eating in the COVID-delimited restaurants.
The local real estate market was hot to the point of ‘overheated’, largely as a result of out-of-town investors buying up residential homes and converting them into vacation rentals. STRs. Short-Term Rentals.
The budget of the Pagosa Springs Area Tourism Board — the joint Town/County committee tasked with encouraging the tourist economy — appeared headed for another record year of Lodgers Tax revenue. Twice the revenue amount collected in 2015… Three times the amount of revenue collected in 2010…
But Pagosa Springs was not enjoying its ongoing housing crisis. Working families and individuals with rented accommodations were being evicted, as their homes were purchased by STR investors, with little chance of finding a rental they could afford.
Businesses were cutting back on hours of service, due to lack of employees.
Although the shocking growth of Lodgers Tax indicated that certain segments of the economy were thriving… including out-of-town STR investors… local working families increasingly found themselves struggling to make ends meet.
The curve of skyrocketing home prices in Archuleta County has been disturbingly similar to the curve of increased tourism taxes.
The data for the above graph came from CREN (Colorado Real Estate Network), courtesy one of our local realtors.
These disturbing curves were not expressly mentioned in two recent editorials published in the weekly Pagosa Springs SUN, written by that paper’s editor, Terri Lynn Oldham House, although Ms. House did, in fact, refer to the housing crisis in both op-eds. For example:
Solving the issue of the lack of housing that our workforce can afford is a complex issue and one that will require a larger community effort than placing fees on STRs located in town.
In mentioning “fees placed on STRs located in town”, Ms. House was here referring to Ballot Question A, which appears on the mail ballots for the Town of Pagosa Springs’ April 5 election. That ballot measure, if approved by municipal voters, will require a fee on Short-Term Rentals of at least $150 per month per licensed bedroom. I fully agree with Ms. House, that a long-term solution will require a larger community effort, especially out in the unincorporated county where perhaps 80% of the STRs are operating. A ‘Yes’ vote on Ballot Question A is merely one part of the solution.
In her two editorials, however, Ms. House urged the readers of her two SUN editorials to vote “No.”
Ms. House had shared some incorrect information in her March 17 editorial, implying that certain STRs within the town would be ‘double-taxed’ by the proposed fee, because those particular STRs were paying the commercial property tax rate — 29% — instead of the residential rate — 7.15% — and thus, were not benefiting from the Colorado tax loophole available to STRs in Colorado.
Ms. House had heard this incorrect information from local business owner Jason Cox, the owner of a downtown STR. She repeated his misinformation in her March 17 editorial… but corrected the mistaken information in her March 24 editorial:
On Monday, we looked into the tax records for a couple of downtown STRs located in commercial buildings and discovered they were actually assessed at the lower rate of 7.15% for the portion of the building used as an STR, and not the 29% that the business owner had stated in a public meeting.
In fact, all of the STRs located within the town limits benefit from the same tax loophole that assesses STRs at the lower ‘residential rate’. This loophole is one of the main justifications for the “$150 per bedroom” fee proposed by Ballot Question A — a fee that will allow STR owners to contribute to solving the housing crisis they helped create.
The Pagosa Springs Town Council officially adopted a 54-page plan — the “Roadmap to Affordable Housing — in 2019, which recommended the development of permanent community funding sources for addressing the workforce housing issue… which was already a serious crisis. But three years later, the Town Council had still not been able to agree on how to create that permanent funding stream. So a group of local citizens stepped up to propose just such a funding stream, as one part of the “larger effort” that Ms. House recommends.
During the summer of 2021, the Pagosa Springs Planning Commission was carrying on an intense discussion about STRs, and on July 13, the Commission recommended that the Town’s annual fee charged to STRs within the town limits be significantly increased — from $200 per year to $6,000 per year.
This Planning Commission recommendation was forwarded to the Town Council, and was championed over the next few months by a volunteer community group, Pagosa Housing Partners. (Disclosure: I serve on the board of PHP.) Unfortunately, the Council could not agree on the best formula for increasing the STR fees… so Pagosa Housing Partners and another citizen group, Pagosa Neighbors, spearheaded a citizens initiative to be placed in front of the town voters on April 5.
Colorado continues to classify STRs as ‘residential homes’… even though many of them are, in fact, entirely commercial operations. This means that a $500,000 house used as an STR pays one-quarter the property tax paid by a $500,000 motel building on the same street. Additionally, the STR removes a residential home from the housing market, and worsens the community’s already serious housing crisis.
Presumably, the new fee will ultimately be paid by the tourists who book these vacation rentals… perhaps without even noticing any difference? A survey of communities that have placed similar fees on STRs gives little indication that such fees reduce the number of STRs, or the number of STR bookings.
Ballot Question A has its critics, although the majority of them appear to be STR owners… most of whom are not town voters, nor are they even residents of Archuleta County…
Bill Hudson began sharing his opinions in the Pagosa Daily Post in 2004 and can’t seem to break the habit. He claims that, in Pagosa Springs, opinions are like pickup trucks: everybody has one.