Opinion | Tony Jones: Don’t bite the hand that feeds
A recent article in the Summit Daily News on sales tax collections for Summit County and the towns within drove home the importance of short-term rental sales tax income to local government coffers.
The article detailed the increase in this revenue stream that towns and the county saw in 2021 over previous years and noted that sales tax collections from short-term rentals were higher than any other category for several of these entities. Those numbers didn’t take into account the added economic benefits of the industry from short-term renters spending their hard-earned cash in restaurants, bars, grocery stores and rental shops.
The article also pointed out that these financial inputs to general funds enable the county and municipalities to provide upgrades and services to the benefit of residents, such as paving streets and building playgrounds. Given this, one might think that there would be widespread support for this industry among residents and government officials.
But at various forums, members of the public often demonize the short-term rental industry and government officials have used language that paints it as both the source of problems, such as workforce housing, and the solution to those same problems. Often these proposed solutions include implementation of excise taxes and other fees on short-term rentals, the revenue from which is to be earmarked for workforce housing. Meanwhile, as this debate over the industry is going on, some local Realtors are sounding alarm bells over slumping sales that they believe can be at least partially attributed to short-term rental over-regulation.
Presumably, one reason for these regulations is to lower the number of short-term rental units available in hopes that this will also reduce overcrowding caused by tourism and free up properties for workforce housing. But it’s a fallacy to believe that owners of second homes will convert their properties to long-term rentals in significant enough numbers to make a dent in the workforce housing deficit. And such regulations represent a slippery slope that could result in current short-term rental owners fleeing and potential second-home buyers with short-term rental plans avoiding the county for greener pastures.
So let’s consider a scenario wherein increased costs for participating in the short-term rental industry start to outweigh the benefits of continuing in it and the industry, and much of the tourism it supports, is significantly reduced. In this scenario, there will certainly be fewer tourists clogging roads or using services, but there’ll also be fewer of them eating in our restaurants or sampling the wares at the breweries.
Will this result in more housing for the workforce? Probably not, as converting expensive Summit County real estate to long-term rentals is not an attractive option. Moreover, falling home prices will make second-home owners reluctant to sell their properties at a loss, and those properties will sit mostly vacant until the market recovers enough for them to at least recoup their costs.
You’d also have fewer tourists generating sales tax income for the county through rentals and other tourism-dependent industries. And it’s these industries the workforce that we’re trying to house primarily works in. Fewer tourists require fewer workers to serve them, and fewer workers require less workforce housing. Problem solved?
Tired of sharing the slopes and the hiking trails with out-of-towners? No worries. In the scenario outlined above, residents will outnumber the tourists participating in these recreational activities. Of course, how those residents will be able to afford a lift ticket without a job or with a lower paying job might become a challenge. And remember that those hiking trails are maintained by the county and municipalities, so which services or amenities do you think they will cut first when they scale back due to lower tax revenue?
Let’s hope those folks pressing government officials to “do something” about overcrowding and the short-term rental industry in Summit County are doing so with eyes wide open and understand the need for a plan to replace the revenue that tourism brings. And to those officials, realize that when those revenue streams dry up and governments can no longer provide the amenities and services that residents have come to expect, they will be looking to you for answers.
Tony Jones’ column “Everything in Moderation” publishes biweekly on Thursdays in the Summit Daily News. Jones is a veteran of the IT industry and has worked in the public and private sectors. He lives part time in Summit County and Denver. Contact him at email@example.com.
Tony Jones' column "Everything in Moderation" publishes biweekly on Thursdays in the Summit Daily News. Jones is a veteran of the IT industry and has worked in the public and private sectors. He lives part-time in Summit County and Denver. Contact him at firstname.lastname@example.org.
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