Eagle County first to try to use new state law to ask voters for lodging tax to fund housing, child care

Until this year, Colorado counties with voter-approved lodging taxes could only use the proceeds for advertising and marketing of local tourism.

But state lawmakers passed a bipartisan bill, House Bill 22-1117, that expands the allowed uses of county lodging taxes — paid as a percentage tacked on to the nightly rate at hotels, motels, guesthouses and short-term rentals. Gov. Jared Polis, a Democrat, signed HB-1117 into law March 31. It takes effect Aug. 10.

With voter approval, counties and local marketing districts will soon be able to spend lodging tax revenue on housing and child care for the tourism workforce, or on “enhancing the visitor experience,” which might include improving outdoor recreation facilities. Voter approval is required due to provisions in Colorado’s Taxpayer’s Bill of Rights. At least 10% of the tax revenue must be spent on advertising and marketing for the tourism industry.

“This is one of the most consequential pieces of legislation for affordable workforce housing in the mountains in a very long time,” state Rep. Dylan Roberts, one of the bill’s sponsors, said in a written statement upon the bill’s signing. “Mountain communities have long asked for this tool — the ability to use the revenue brought in by tourists to support the workers and communities that serve those tourists — but have been prevented from doing so by state law.”

Some elected officials in Colorado counties that depend heavily on tourism hope the new law will help them address the affordable housing crisis, worker shortages and an influx of new visitors to outdoor spaces. They plan to ask voters this fall to use revenue from existing lodging taxes in new ways, or to approve entirely new lodging taxes.

When the COVID-19 pandemic hit, rural and resort communities had a “tremendous allure” for city dwellers who wanted to get away, said Gini Pingenot, director of external affairs for Colorado Counties Inc., which advocates for county interests. “With that came pressures on services that local communities just weren’t equipped for or ready for. So that lived experience, I believe, really helped people recognize that we needed a mechanism to have visitors contribute to the services they were using.”

On June 21, the Eagle County Board of County Commissioners became the first to approve a resolution that would, if passed by voters in November, raise a 2% tax on short-term lodging and use 90% of the proceeds on affordable housing and child care for the local workforce. The remaining 10% would be used for marketing to attract tourists. The new tax would only apply to areas of the county that do not already have a lodging tax — namely, unincorporated Eagle County and the town of Gypsum — as Colorado law prevents county and city lodging taxes from being “layered” on top of one another.

Commissioners from Summit and Clear Creek counties are among those who’ve also expressed interest in bringing their own lodging tax measures to voters. Those counties’ resolutions have not yet been finalized and voted on by county commissioners, which would need to happen before they got on the November ballot.

Summit County Commissioner Elisabeth Lawrence would like to see a new county lodging tax on the local ballot this fall. Such a tax would cover the unincorporated areas of the county, exempting the towns of Silverthorne, Breckenridge, Dillon and Frisco, which already have their own lodging taxes.

The lack of affordable housing and child care in Summit County has exacerbated a worker shortage for one of the state’s hottest real estate markets, home to four ski resorts. A 2020 needs assessment identified a shortage of 730 for-sale and rental units in Summit County that could grow to approximately 2,000 units by 2023.

For tourism industry workers who can manage to find a place to live, there’s the challenge of finding someone to care for their children during the work day. Nearly 700 children are on a wait list for child care in Summit County, Lawrence said.

“At the end of the day, it’s really supporting those working families in our community,” Lawrence said of a potential lodging tax. “This is also an economic driver. If our parents can’t go to work because they don’t have child care, our businesses suffer. We have a very low unemployment rate and a large, large number of openings here of available jobs (such) that we really can’t fully serve our tourism community.”

A 2% lodging tax in Summit County would raise an estimated $2 million a year, Lawrence said, since the ski resorts Keystone and Copper Mountain, along with thousands of short-term vacation rentals, are located in the unincorporated areas of the county that would be taxed. Along with housing and child care, Lawrence would like to see the revenue help pay for public infrastructure needs that have grown since the COVID-19 pandemic began.

“In many areas of the unincorporated parts of the counties, we might not plow seven days a week, because that wasn’t really necessary,” Lawrence said. “Now, we might have visitors in those areas seven days a week, so that certainly changes our day-to-day operations.”

Clear Creek County leaders are considering their own ballot measure to help address high visitor traffic, Commissioner Randy Wheelock told Newsline. “(Tourism) has both positive and negative impacts both to our community and to our environment, and so some of those impacts require management,” Wheelock said.

The county includes popular tourist attractions such as the Indian Hot Springs, whitewater rafting and zipline tours. Clear Creek is among the 29 Colorado counties that already have a 2% lodging tax, so a ballot measure would simply ask voters to use the tax revenue for more than just marketing to tourists. Possibilities might include investing in housing or child care, managing parks and trails, or educating tourists on how to be good stewards of the outdoors.

Before finalizing the text of the ballot measure, Wheelock said Clear Creek County plans to survey voters on how they would like to see the tax revenue spent.

“We want our decision to put something on the ballot to be informed at least in part by the answers we get from that survey,” he said.

HB-1117 — the law making these ballot measures possible — was sponsored by Roberts, an Avon Democrat, and Rep. Marc Catlin, a Montrose Republican, along with Sens. Don Coram, another Republican from Montrose, and Kerry Donovan, a Vail Democrat. Colorado Coalition for the Homeless; the Colorado Association of Realtors; Healthier Colorado, a public health and climate advocacy organization; and Counties and Commissioners Acting Together, a group of county governments and local elected officials, were among the bill’s supporters. The Tourism Industry Association of Colorado opposed the policy.

HB-1117 passed the Senate on a vote of 23-10, with two lawmakers, Coram and Democratic Sen. Brittany Pettersen of Lakewood, excused. In the House, the vote was 46-18, with Rep. Mike Lynch, a Wellington Republican, excused. All of the “no” votes on HB-1117 belonged to Republicans, though several GOP lawmakers voted in support.

Editor’s note: This story first appeared on Colorado Newsline, which is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Colorado Newsline maintains editorial independence. Contact Editor Quentin Young for questions: info@coloradonewsline.com. Follow Colorado Newsline on Facebook and Twitter.