Dillon voters will make decisions in November on the town’s taxes for short-term rentals

Liz Copan/Summit Daily News archive
The sun fades over the Dillon Marina and surrounding condominiums on Thursday, Aug. 4, 2022.
Liz Copan/Summit Daily News archive

Dillon voters will have the option of setting new lodging and excise taxes directed at short-term rentals on Nov. 8.

The ballot initiative will offer voters the options of creating a 5% excise tax on short-term rentals and increasing its lodging tax from 2% to 6%. Council members voted unanimously to finalize the ballot questions Aug. 16.

If they passed, the town would expect to see a return of about $3 million total from both taxes, town finance director Carri McDonnell said. The maximum the town could receive is $4.5 million before triggering a refund.

The money received by the town would go toward town projects, addressing visitors’ impact on the town and offsetting the effects of short-term rentals. Workforce housing upgrades, street and parking improvements, redeveloping the town center, marina upgrades are among some of the improvements council members referenced when editing the question.

When council members worked on the ballot measures’ wording in June, Council Member Brad Bailey said, “Because we have infrastructure issues and parking issues, I’d like to make sure that these taxes go towards those specific infrastructure issues and not just in the general fund.”

“I think we’re assuming most people in Dillon won’t be paying this tax,” Mayor Carolyn Skowyra said as council worked on the ballot’s language in June.

As of Aug. 11, Dillon had 380 active short-term rental properties with 110 applications still to be completed, according to an Aug. 16 staff memo.

Hotels, unlike short-term rentals, provide their own, ample parking, McDonnell said in June when the town worked on the ballot’s wording.

“And not all short-term rentals create parking problems, but most of them do,” she added.

Therefore, the town determined hotels and motels could be exempted from the excise tax.

The town could not collect more than $3 million from the increased lodging tax and $1.5 million from its excise tax on short-term rentals in 2023. McDonnell said the town expects tax revenue from each tax in the $2 million and $1 million range in 2023, respectively. In following years, the town may retain all revenue it receives from the taxes.

In addition to the taxes, short-term rentals must also pay an annual fee of $250 and a parking fee of $300 per space if a unit does not have adequate parking. Units must have at least one parking area per bedroom plus one more.

Compared to other towns in the county, Silverthorne’s proposed ballot measures are the highest combined lodging and excise taxes. Silverthorne launched a 6% lodging tax with no excise tax. Frisco has a 5% excise tax on short-term rentals with a 2% lodging tax. Breckenridge charges short-term renters 3.4% as part of its Public Accommodation Tax in addition to a 2.5% sales tax.

Dillon council directed staff to increase the lodging tax and create an excise tax for short-term rentals at its May 17 work session meeting.

If passed, a third ballot question in Dillon would also address workforce housing. The town will ask its voters if it may draw $20 million in bonds using its 5A housing funds, increasing its available workforce housing capital to about $25 million.

“I think it’s a good opportunity for us to get some money in our pockets and be ready — available and ready,” McDonnell said, as the town looks at generating workforce housing along County Road 51 before the next election in November 2023.

The bond money would not be restricted to the County Road 51 project, but rather it could be used for any workforce housing project, including county projects the town wants a stake in, McDonnell said.

“There are a few other projects that are maybe coming down the pipe and other neighboring communities that maybe could support there, maybe do some buy-downs, maybe even buy some of our own property,” she said.

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