Registered voters in Frisco decided to raise the tax rate on short-term rentals by 5 percentage points within city limits.

The tax increase was supported by 539 voters, or 64%, and opposed by 301 voters, or 36%. A total of 840 votes were cast for the ballot measure.

“It was set up so 100% of the funds raised from this 5% excise tax on short-term rentals goes to workforce housing,” Frisco Town Council member Andy Held said Tuesday night following the results. “So it’s essentially going into our war chest for workforce housing.”

The town expects to generate $1.5 million in additional tax revenue during the first fiscal year, which runs from Jan. 1 to Dec. 31, 2023.

“For those who voted against it I would say that I really hope that it’s not going to affect their businesses or their lives in the least,” Held added. “It’s not like we are adding regulations or anything else on short term rentals.”

The additional funds are specifically earmarked as a supplement to Summit Combined Housing Authority’s 5A measure. The 5A measure is a 0.6% affordable housing tax that was recently extended for 20 years.

The funds will also help to address the rising cost of developing new housing or creating deed-restricted housing for existing residential properties.

The issue had been discussed heavily at Frisco Town Council meetings to decide the exact rate of the tax increase. Town Council originally threw out a tax of 7.5%, but other members wanted to raise the rate to 2%. Ultimately, Town Council was able to agree on 5%.

Frisco Town Council outwardly endorsed the ballot question at its March 8 meeting, stating that “affordable, widely available and safe housing close to schools and workplaces is fundamental to the mental, social, environmental and economic well-being of the Frisco community.”

The endorsement from Frisco’s Town Council also cited the 2020 Summit County Housing Needs Update report from the Summit County Combined Housing Authority.

The Housing Needs Update projects a need for 2,400 affordable housing units in upcoming years, with severe needs in the Tenmile area, where Frisco is located, as well as in the Upper Blue River area.

The update also mentions that year-round businesses in Summit County provide nearly 18,000 of about 21,000 total jobs.

Additionally, the Colorado Department of Labor reported in December that Summit County’s unemployment rate was at 2.9%, with a total of 1,451 job openings, which has resulted in an inability for employers to attract employees due to the lack of affordable housing.

Opponents of the tax did not think an increase of taxes was the right solution to solve Frisco and Summit County’s housing problem.

Summit Mountain Rentals owner Mary Waldman previously voiced concern, saying that the passing of the tax would make short-term rentals a scapegoat since vacation rentals are estimated to make up only 17% of the housing stock in Frisco.

The tax will go into effect June 1.