Your ballot, explained: Frisco’s short-term rental excise tax
In addition to choosing members of Frisco Town Council, Frisco residents will see a tax question on their ballot. The question asks if the town should levy a 5% excise tax — a tax imposed on goods, services or activities — on the cost of short-term rentals.
If passed, the current 10.725% in taxes applied to short-term rentals would increase to 15.725%.
Over the past few months, Town Council has debated the size of the tax rate. It first threw out the idea of a 7.5% excise tax. Some members wanted to see a lower rate of around 2.5%. Ultimately, Town Council settled on 5%.
According to Frisco, Crested Butte has the highest short-term rental tax among mountain towns at 20.9%. Avon’s is 14.4%, Vail’s is 10.3%, Breckenridge’s is 12.275%, Dillon’s is 10.875%, and Silverthorne’s is 10.375%. Breckenridge’s figure does not include the bedroom license fee, and Silverthorne has a 6% lodging tax on the ballot, an increase from the current 2% tax.
Frisco’s excise tax is estimated to generate around $1.5 million in additional annual revenue during the first fiscal year: Jan. 1, 2023, to Dec. 31, 2023. The money is earmarked for workforce housing programs, supplementing Summit Combined Housing Authority’s 5A measure. The 5A measure is a 0.6% affordable housing tax that was recently extended for 20 years.
According to the town, the cost of developing new housing or acquiring and deed-restricting existing residential properties is greater than the current available funding as construction and housing costs continue to rise.
Summit Mountain Rentals owner Mary Waldman has attended multiple meetings to voice her opposition to the ballot question. Her company manages properties around the county, with 50 short-term rentals in Frisco. Waldman believes the town is making short-term rentals into a scapegoat.
“Vacation rentals are only 17% of the entire housing stock in Frisco,” Waldman said.
Waldman said the tax would price rentals in Frisco out of the competitive rental market. She said the guests would simply look at the total costs and book a cheaper stay in a neighboring town. If Frisco rentals are to stay in business, she said they will be the ones — not prospective renters — ultimately paying the price.
Because it could change the short-term rental market, Waldman said the tax may have the adverse effect where it raises less money since guests might not stay in Frisco, or people may decide to not short-term rent at all.
Waldman acknowledges that workforce housing is a challenging issue, but she would rather have a 2% excise tax to start off slow and see how it would impact the economy. She called the proposed tax shortsighted and irresponsible.
“I’ll support any taxes for workforce housing, but I want it to be reasonable and based on a factual data study without hurting one industry,” Waldman said.
Town Council endorsed the ballot question at its meeting Tuesday, March 8. According to the endorsement, “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 cited the 2020 Summit County Housing Needs Update from the Housing Authority. It 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 area.
The update also mentions that year-round businesses provide nearly 18,000 of about 21,000 total jobs in Summit County. Additionally, the Colorado Department of Labor reported in December that Summit County’s unemployment rate was 2.9% with 1,451 job openings, and the endorsement said that the lack of affordable housing results in the inability to attract employees.
If passed, the tax would take effect June 1. Ballots will be mailed to registered voters the week of March 14, and they must be received by the town clerk’s office by 7 p.m. April 5.
Shall town of Frisco taxes be increased by $1.5 million in the fiscal year commencing Jan. 1, 2023, and ending Dec. 31, 2023, and by whatever additional amounts are raised annually thereafter, by imposing a new excise tax, effective June 1, 2022, on the purchase of a short-term rental, at the rate of 5% of the price paid by the purchaser for the rental, all in accordance with town of Frisco Ordinance 22-01; and shall the town be authorized to collect and spend such revenue as a voter approved revenue change under Article X, Section 20 of the Colorado Constitution and solely for the purpose of affordable housing projects and programs?
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