Seldom in recent memory has a local ballot question elicited such an intense response. Such is the case with the Salida Ballot Question 300; which, if passed, would undo ballot questions 2A and 2B, passed only one year prior. That approval placed a city-area lodging tax on properties being used as short-term rentals (STRs) with the simple goal of funding momentum to add more workforce (affordable) housing within the city of Salida.
But one year in, as is often the case, naysayers are pointing out unintended consequences. They say that making Chaffee County-based property owners doing short-term rentals pay the same high fees that non-local property owners who buy short-term rental properties as investment income is unfair. The impact of these fees, they say, is a matter of economics; not just impacting their STR business, but their ability to remain living in Salida or the county, and the economy as a whole.
Many local resident STR owners say that they are trying to make ends meet — and might even qualify for the same low-income housing opportunities the city is trying to fund.
The proposed tax reductions for local short-term rental owners would differentiate tax rates for local property owners in residential zones who rent for fewer nights, than those non-residents running their properties as STR businesses. This is NOT a new tax: it seeks to repeal, replace, and lower the existing tax.
Ballot Question 300 is worded as follows:
“Commencing on January 1, 2024, shall the city of Salida’s taxes be increased by an estimated $297,000 annually (first full fiscal year increase) and by whatever additional amounts are raised annually thereafter through the adoption of an annual license fee of $540 to be paid by non-Chaffee county residents, who own short term rental properties in the city and by setting the occupational lodging tax for all short term rental properties in the city and by setting the occupational lodging tax for all short-term rental license holders to $5.00 per occupied bedroom, per night, in a short term rental, with the proceeds of such tax, together with investment earnings thereon, to be used to promote affordable housing in the city.”
Those Against Proposition 300 Say Legal Challenges Can’t Be Won
Those urging voters to vote “No” on Question 300 point out that voters just approved the STR rates in last year’s public election. They point out that because Salida is a statutory city, approval of a two-tier STR tax rate favoring resident owners is unconstitutional and is very likely to result in lawsuits against the city. This will cost the city expensive legal fees to fight for a decision that the city may be likely to lose.
The resulting limbo could stall the city’s efforts to create a fund to subsidize low-income housing within the city limits. It would most certainly lead to a reduction of the city’s Affordable Housing Fund; effectively diminishing it by approximately 64 percent. This action would reverse the allocation previously approved by voters just last year.
Another critical point; the taxes that were authorized by voters in the previous year are already earmarked to support critical affordable housing initiatives, including projects such as the 1st and D Apartments and the South Ark Neighborhood. These projects are essential components that will increase the city’s workforce housing stock. To qualify for low-income housing grants, local matches are required.
Also among projects of great need within the county and the City of Salida is the “Places to Age” conceptual initiative; which will also require local matching funding to move forward. Aging in place housing would not just allow seniors to transition from home ownership to senior living, it will support the transition of existing housing stock to a younger generation.
Without maintaining 2A and 2B, say those against 300, the city of Salida will not have enough local matching funds with which to qualify for low-income housing grants.
Those For Ballot Question 300
Those who urge voters to vote “yes” on Question 300 say that the City of Salida currently imposes the highest STR taxes in the State of Colorado. This example is provided on the ballot: “A three-bedroom house renting for $200/night can be charged up to $80 in taxes/night. As a result, many tourists are choosing alternative destinations, refusing to pay such high taxes. This, in turn, has caused a significant decline in income for STR owners.”
The proposed changes in Ballot Question 300 would reduce taxes making them less regressive for local owners in residential areas who can only rent for fewer nights and pay more in taxes. (There is no limit on the number of rental nights for STRS in the commercial areas).
They counter the city’s Constitutional argument by saying that when the city decided to block any further non-resident STR owners in residential areas past a certain number, the city was already setting a differentiation precedent.
While those against Ballot Question 300 say the city has no comprehensive plan for the use of the STR taxes they collect, this is not true. The city has clearly identified the taxes collected as intended for the city’s Affordable Housing fund; to prime the pump to apply for low-income housing grants.
Those against the ballot question claim that the resulting decrease in visitors is negatively impacting the local Salida economy because tourists are choosing other lodging, but do not specify where they are staying. They add that it’s unfair to balance the entire funding of workforce housing on the backs of one industry category.
Editor’s Note: Ark Valley Voice writes pro-con articles on every ballot question each election season. Doing so does not constitute an opinion either way by this news organization; it simply presents the arguments on both sides of the ballot issue.