After a lengthy discussion during their Tuesday, Aug. 28, meeting, Buena Vista trustees voted to approve placing a lodging occupation tax as a special election item during the November election. The decision was made in two roll-call votes: the first whether to take the question to the voters, passed 4-2, with Trustees Mark Jenkins and Lawanna Best voting “no.” The second vote, establishing a maximum tax and initial rates, was 5-1, with Trustee Mark Jenkins voting against the resolution.
The resolution shapes the ballot initiative as a maximum $6 tax, broken out as two separate tax rates between commercial lodging (hotels and motels) and non-commercial (vacation and short-term rentals). As trustees reminded themselves throughout the discussion, if the ballot initiative passes, it is not a tax on the hotel, it is a tax on the user of the unit – the people renting the units pay the tax.
Trustees debated whether to charge a flat rate across both categories, and whether to charge short-term rentals at all. In the end, they decided that the ballot language would state that hotels and motels would pay a $3 tax per unit, while short-term rentals will pay a $5 tax per unit.
Town Administrator Phillip Puckett said that based on those rates and occupancy projections, the town would likely collect more than $211,000 to be used for capital improvement needs not funded by current revenue. Those needs range from replacement of fire trucks to infrastructure, housing, emergency services, recreation, way-finding and beautification.
“Most things we consider critical we have dedicated funding sources for – water, airport, street fund, stormwater fund, energy charging vehicles – we cover those,” said Mayor Duff Lacy. “But with our capital fund needs, right now we’re taking it out of the general fund after allocating for the operating fund, or we go for matching grants. This is important enough to set a revenue stream for capital improvements.”
While members of the public and trustees brought up other ways to raise revenue, including a general sales tax, they quickly returned to the lodging occupation tax model. Most said they were leery of a general sales tax, especially since the state and county are also considering new taxes. Most felt that a general sales tax might be too burdensome on local residents, especially low-income residents.
“What we’re after is something that is going to provide consistent revenue to cover the capital improvements we need,” said Lacy. “And when you look at the numbers, the hotels and motels are going to have consistent, higher occupancy rates. Short-term rentals, you get the high summer months, but then you might get nothing in winter months. We list safety, health welfare first in our vision statement … we need a revenue stream to do things like replace a fire truck for instance – a fire truck can cost $170,000.”
The decision to propose different rates for commercial and non-commercial lodging was also debated. Several trustees pointed out that short-term rentals pay only property tax, not commercial taxes that hotels and motels pay. That fact held weight, especially when two short-term rental owners spoke during public comment saying they would be willing to contribute more.
“For me, it comes down to we had two owners of short-term rentals here tonight who said they would be willing to pay a higher tax (than commercial properties),” said Trustee Cindie Swisher. “It seems to me if they are willing to pay more, we should hear them.”
Ballot language must be finalized with the County Clerk and Recorder’s office by Sept. 7 to be included on the general election ballot.