Open Doors workforce housing rental RVs now on site at Salida RV Resort Park. Part of the solution to address the county’s workforce housing crisis. Bill Almquist photo
In an apparent, rather stunning, reversal of their previously-indicated opinion on the matter of the Short-Term Rental (STR) room tax rate, the Salida City Council (SCC) voted at their regular meeting on February 6 to reject Ordinance 2024-03. It would have amended the municipal code to lower the voter-approved taxation rate of $15 per room per night to $10 per room per night, after a public hearing that included a passionate call to heed the voters’ decision from Mayor Pro-Tem Justin Critelli.
City Administrator Christy Doon opened the public hearing by stating that there had been two city elections where the question of the STR fees and taxes had been put before Salida voters and both times voters have indicated they approved the $15 per room, per night rate.
The first, in 2022, established the license fee and room rate, with the revenues going towards the city’s affordable housing fund. The second one, in November, 2023, was the result of a citizen ballot initiative known as Ballot Question 300 . It would have lowered those license fees for certain owners and lowered the room tax rate from $15 per night to $5 per night. This ballot initiative was defeated.
Doon said that city staff had been asked to prepare the ordinance, apparently in response to complaints from STR owners that they were being charged too much and it was affecting their business. “Staff has identified affordable housing projects that the affordable housing fund would go towards,” she added. To date there had been over $800,000 collected in the fund as of the end of fiscal year 2023.
In a previous meeting, Doon had raised the point that reducing the room tax would result in a loss of about $174,000 in revenue for the affordable housing fund.
Historic F and First Streets in downtown Salida. Courtesy Photo
There was a brief period of SCC questions before public comment. “Just to be sure, we can’t go back up to $15 without a vote, right?” asked Council member Dominique Naccarato. “Right,” answered Finance Director Aimee Tihonovich.
“Why did we pick $15 as the fee?” asked member Suzanne Fontana. “It’s not a fee,” Tihonovich replied. “It’s a tax, because it’s been voted on.”
“We started out with [the idea of] an annual [STR license] fee being $5,000,” said member Alisa Pappenfort: “That was to create equity with hotels and motels, which have to pay commercial tax rates. And because people didn’t want STRs in their neighborhood, and because STRs were leading to the commodification of homes. So, originally, the plan was to have the fee be $5,000 and the room tax be $10 per night – we changed that to a $1,000 annual fee and $15 room tax.”
“I am very concerned about your impending decision,” said Eileen Rogers during public comment. “I don’t see anything that says the Council actually has the power to change the room tax and overturn the will of the voters.
“I know that when property owners began to rent out their properties as STRs that a lot of local rentals were now out of reach for the local workforce. My understanding is that a lot of STRs are owned by out-of-town owners who do little to contribute to Salida’s costs [of providing services]…finally, I am very disturbed about the message to voters if you overturn this – you’re always saying ‘every vote counts’. If you change the numbers that we voted on, the message is perfectly clear: our votes don’t count. What a shame.”
Rogers’s comments were greeted with applause from the room. Other commenters raised similar points.
“We’ve heard from the voters twice [on this issue],” said Joey Rovinsky. “The other voices I would like you to think about are the future voices. The money you are raising is enabling more people to get housed and make Salida more affordable. Those are voices you aren’t going to hear tonight.”
Nancy Wallace, an STR owner, asked, “Where is the analysis? There have been no workgroups [on the subject of the impact of STR taxes and fees on tourism.] There’s been a huge impact in reduction in tourist nights. There’s been a whole lot of talk about parking and its impact on tourism. There are only 221 STR owners who are funding the entire affordable housing fund – I am not going to turn my house into a long-term rental.”
“[STRs are] a new problem to our community, this didn’t exist ten years ago,” said Ricki Boucher: “These are homes that are being used as businesses and paying residential tax rates. So please just consider what the voters have already put into place – and you aren’t alone, the entire state of Colorado and other places are having to deal with the impacts of a new type of business, so we are breaking new ground. Consider the unintended consequences of the commodification of housing.”
“2,400 Chaffee County households are paying over 50 percent of their income on rent,” said Salty Riggs. “I don’t know if any STR owners are spending over 50 percent of their income on rent. I don’t think we can spare the $174,000 that we would be losing … it’s unfathomable to take money away from funding these projects and put it in the pockets of STR owners.”
“My gut feeling is that the room tax is too high,” said Chris Eaton, a downtown business owner. “But you’re not showing people the data that it’s costing the city sales tax revenue. Do your homework and do the math and then show it to the people.”
“STR fees and taxes are not the only source of funding for the affordable housing fund,” noted Doon. She cited examples of other funding streams such as the “fees in lieu” that developers pay for inclusionary housing.
Critelli led off Council discussion with an impassioned plea to his fellow members to respect the will of the voters, who had twice elected to support the STR room tax rate. “If I don’t agree with Council but the majority decides, then I back them up usually. I won’t be able to do that if you decide to go against the will of the people. I will throw you under the bus – because if you go against the will of the people it is an abuse of power. If there was a reasoning [for the rate change], like data — not gut feeling, not conjecture, but real hard data — I might support it.”
“One piece of data that we do have is that we almost exceeded our TABOR limit [on the affordable housing fund]. That suggests to me that there’s no proof that people are leaving Salida in droves – it suggests the opposite,” he added. “Essentially, tourism is paying for [affordable housing]. We’ve already been given the directive by our boss — the people — and what we should be talking about is how to spend that affordable housing money.”
“If we vote to overturn an election and within a year of the election, it is an abuse of our power. Tell me I’m wrong, debate me.”
None of his fellow members seemed inclined to do so. “I was concerned about STR rentals going down and having sales tax revenue go down as a result,” said Harald Kasper. “Now I have to agree that that was a gut feeling, I didn’t have data to support that, and so I will be voting ‘no’.”
“I will reiterate that we do have data, we do have numbers,” said Naccarato. “The STR tax [collection] is right where we predicted. Those dollars are doing just what they are supposed to be doing; why don’t we let the numbers tell the story? We are still in a housing crisis. If the state law changes [allowing for STR taxation at commercial tax rates], we can revisit it, but now is not the time.”
“My gut feeling was to back off on the amount, but we cannot go against the vote of the people,” said Pappenfort.
After some further discussion, Naccarato made a motion to reject Ordinance 2024-03 on final reading. Critelli seconded, and the motion passed unanimously, to applause from the public.
The SCC’s next regular meeting is scheduled for 6:00 p.m. tonight, Tuesday, February 20.
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