Measure passage saved some small inns, B&B owners say
SUMMIT COUNTY – Local innkeepers are ecstatic following the passage of a bill that will change the way county assessors tax bed and breakfast property, calling it a victory for struggling small businesses.House Bill 1358 gained final approval May 8, the last day of the legislative session. The bill changes the definition of bed and breakfast lodging for tax purposes to include inns with 13 rooms or fewer and dictates that the square-footage of rented rooms is assessed as commercial property, while common living areas are assessed as residential property. The ground under the inn, or the footprint, is assessed using the residential-commercial ratio of the inn, and the surrounding land is taxed as residential or agricultural, according to the law.The new, explicit guidelines might mean big financial savings for many Summit County innkeepers. The residential tax rate is 9.15 percent, while the commercial tax rate is 29 percent.”This year, people are definitely wondering what their revenues are going to be, and this bill alleviates some of the anxiety about costs,” said Sharon Rowe, owner of the Gazebo Country Inn in Salida and president of Bed and Breakfast Innkeepers of Colorado, a trade group representing many Summit County owners. “We wanted to help small-business owners stay in business, and I think we accomplished that.”Rowe said some B&Bs in Summit County stand to benefit greatly. The Western Skies Inn in Montezuma, for example, sits on 22 acres, Rowe said. The land had been taxed at 50 percent residential and 50 percent commercial; under the new law, it’s all residential.Georgette Contos, co-owner of the Evans House Bed and Breakfast in Breckenridge, said her taxes went from $4,000 to $11,000 last year. Without House Bill 1358, Contos said, she would have been out of business.”A small business can’t survive that,” Contos said. “We’re extremely pleased the bill passed.”In considering the bill, legislative analysts estimated the state would collect about $140,000 less annually in property taxes due to the change. Summit County Assessor Denise Steiskal said if Gov. Bill Owens signs the bill into law, it will have an impact on her job, but what impact remains to be seen.”It will affect the way we do things,” Steiskal said. “But it’s only just come across my desk, and I’ll have to wait for the Division of Property Taxation to interpret it and give us some guidelines.”Friction between county assessors and innkeepers was the impetus for the bill, Rowe said. As early as 1989, innkeepers and B&B industry associations began to notice disparities from county to county in how individual establishments were being assessed for taxes. In 1998, after correspondence and negotiation with innkeepers, the state’s Division of Property Taxation adopted the Bed and Breakfast Appraisal Standards. The document is a guideline, as opposed to law, for county assessors, the elected officials who determine tax bills.But Rowe learned in January the state tax division intended to change the assessment guidelines, and she had just three days to mount a protest. Not satisfied with the response from tax officials, the association turned to elected representatives for support. Rep. Kay Alexander, R-Montrose, offered support, along with Summit County’s state senator, Democrat Joan Fitz-Gerald, and sponsored the bill.To the innkeepers’ surprise, legislators linked their bill to House Bill 1265. The latter proposal, which also passed, clarifies the tax code to exclude rental condominiums from the commercial assessment rate. Innkeepers find fault with the fact that a condo can be rented 365 days a year and is taxed at residential rates, while a bed and breakfast room rented for one night qualifies it as commercial. Analysts estimated that House Bill 1265 would cost the state more than $1.5 million in taxes that could have been collected on condominium units.”We didn’t speak up for that one,” Rowe said. “But we did urge the legislators that, if they voted for one, they should vote for the other.”Reid Williams can be reached at (970) 668-3998 ext. 237 or firstname.lastname@example.org.
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