Tuesday, August 17, 2021
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Avon sidelines use tax in favor of short-term rental tax for housing fund

Avon is contemplating asking residents to vote on a short-term rental tax in November.Every day File Photograph The city of…

By Staff , in Vacation Rentals , at August 17, 2021

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Avon is contemplating asking residents to vote on a short-term rental tax in November.
Every day File Photograph

The city of Avon has been evaluating a number of choices to create a devoted income stream for group housing, as the necessity for housing continues to develop.

“I feel everyone seems to be conscious that that’s in all probability essentially the most urgent challenge in Eagle County and the city of Avon proper now, so long as mud flows aren’t flowing into peoples’ properties,” mentioned Eric Heil, Avon’s city supervisor, on the Aug. 10 City Council assembly. “Clearly, the housing has gotten to some extent the place it’s past difficult, it’s effecting our native financial system.”

With urgency, the City Council is contemplating placing a tax query on the upcoming November poll that might assist generate funds for this.

“I feel with the depth of the group housing challenge, this is a chance for the group in the event that they wish to approve a funding supply that might actually take us from not having a housing program to having the funding to do some sort of housing program,” Heil mentioned.

Final month, the City Council thought of implementing a building materials use tax that might go towards a group housing fund.

This tax could be collected on the time a constructing allow was issued by the city and use a predetermined formulation to calculate the development worth and subsequently the tax. Generally, building use taxes calculate a use tax based mostly off of fifty% of the development worth. As soon as the use tax was collected, a construct could be exempt from paying additional gross sales taxes on supplies associated to the allow. Avon is the one jurisdiction in Eagle County with no building use tax.

Nevertheless, on the Aug. 10 City Council assembly, council sidelined the use tax, citing steerage from the city’s finance committee in addition to contemplating the probability of its success. As a substitute, the council is contemplating putting a short-term rental tax on the poll.

“Proper now, I see the use tax happening in flames if we go for that. I additionally assume if we ask for each, then we see each go down. I feel the timing is correct for simply the short-term use tax,” mentioned Council member Scott Prince. “Housing is a matter, little doubt about it. Everyone seems to be being impacted and we have now to do one thing. And I don’t assume ready one other yr is suitable proper now and I feel simply going after that short-term rental and gauging voter urge for food is suitable right now.”

Brief-term rental tax

The short-term rental tax could be utilized to any rental property that’s not assessed as a industrial property and that’s rented for lower than 30 days.

In accordance with Heil, Avon is in a novel scenario to revenue off of a short-term rental tax as a result of most of its properties aren’t thought of industrial properties.

“Avon is a little bit little bit of an anomaly in that Consolation Inn is the one property that’s a industrial property resort. All the pieces else is both a time share, which is assessed as residential or condominiums,” he mentioned, itemizing The Westin, The Seasons at Avon, The Lodge at Avon Heart, Beaver Creek West and extra as examples of condominium tasks which are assessed as residential and never industrial.

This differs from the city’s present 4% lodging tax, which applies to all timeshares, motels and trip leases. Brief-term leases account for about two-thirds of those who apply below the lodging tax.

Heil estimated that, based mostly on the 2019 Lodging Tax revenues, {that a} 1% short-term rental tax would generate roughly $227,500, a 2% tax would generate $455,000 and 4% tax would generate $910,000.

Making it on the poll

In favoring this short-term rental tax over the development use tax, the reasoning is that the use tax would usher in much less income and be tougher to cross. Different arguments included that the short-term rental tax has larger potential to supply a extra secure and long-term income supply, it makes a transparent reference to housing, and it’s largely a tax on visitors fairly than residents.

Nevertheless, this doesn’t imply the use tax is nixed for good. Council directed the city workers to proceed researching the tax for consideration on future ballots. This consists of attainable schooling, outreach and polling providers on the use tax.

Nonetheless, with the poll deadlines quickly approaching, some council members expressed trepidation concerning the quick timeframe left to develop a poll query for November. With a purpose to make it on the Nov. 2 county poll, the city must submit the poll query by Sept. 3.

“If we put two un-ripe tax questions on our poll that we haven’t polled on, haven’t centered grouped on, haven’t ready advertising supplies, we don’t even have poll language of what TABOR makes us ask; we’re simply asking for the voters to say hell no,” mentioned Council member Tamra Underwood. “Let’s speak about it and do a classy course of as an alternative of simply winging it and throwing it on a poll and getting denied.”

Others expressed curiosity in figuring out examples to make use of within the poll query of what the group housing funds would go towards. Mayor Sarah Smith Hymes famous that drawing from historical past, a poll query has a better probability of success with voters if it identifies an express use for the cash.

Nevertheless, Heil expressed that it is a troublesome ask.

“I may help be very clear to the place we’re. If we had funding that might allow us to proceed to help Mi Casa Avon as a devoted funding supply,” he mentioned. “It could put us able to associate with the county and the city of Vail and match grant funds and obtainable funds from the state and federal authorities however with out proudly owning land I can’t level to that undertaking A, B, C goes to interrupt floor subsequent Spring.”

In the end, council raised quite a lot of questions concerning the short-term rental tax — together with whether or not the tax would discourage guests and de-incentivize future developments in addition to what the suitable proportion of tax could be — to be answered by the following council assembly, which is scheduled for Aug. 24. At the moment, city workers will current a proposal on the potential short-term rental tax, together with the poll language.

Smith Hymes famous that going ahead, for her, would require reaching a virtually unanimous resolution amongst all council members.

“I feel it’s essential that each one of us, if we determine to go to a tax, that all of us agree it’s an necessary factor to do,” she mentioned. “If it’s not just about near unanimous, then I’m unsure that’s a good suggestion. I don’t assume it bodes effectively for its final success.”

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