Your Ballot, Explained: Frisco’s Short-Term Rental Excise Tax
In addition to choosing Frisco City Council members, Frisco residents will see a tax question on their ballot. The question asks if the city should levy a 5% excise tax — a tax imposed on goods, services, or activities — on the purchase of a short-term rental.
If passed, the current 10.725% tax rate applied to short-term rentals would increase to 15.725%.
In recent months, the city council has debated the size of the tax rate. He first floated the idea of a 7.5% excise tax. Some members wanted to see a lower rate of around 2.5%. In the end, the city council opted for 5%.
According to Frisco, Crested Butte has the highest short-term rental tax among mountain towns at 20.9%. Avon is 14.4%, Vail is 10.3%, Breckenridge is 12.275%, Dillon is 10.875% and Silverthorne is 10.375%. Breckenridge’s figure does not include room license fees and Silverthorne has a 6% lodging tax on the ballot, an increase from the current 2% tax.
Frisco’s excise tax is expected to generate approximately $1.5 million in additional annual revenue in the first fiscal year, from January 1, 2023 through December 31, 2023. The money is earmarked for workforce housing programs implemented, in addition to the 5A measure of the Summit Combined Housing Authority. Measure 5A is a 0.6% affordable housing tax that was recently extended for 20 years.
According to the city, the cost of developing new housing or acquiring and restricting existing residential properties exceeds the funding currently available, as construction and housing costs continue to rise.
Summit Mountain Rentals owner Mary Waldman has attended several meetings to voice her opposition to the ballot issue. His company manages properties across the county, with 50 short-term rentals in Frisco. Waldman thinks the city is scapegoating short-term rentals.
“Vacation rentals make up only 17% of the entire housing stock in Frisco,” Waldman said.
Waldman said the tax would drive the price of rentals in Frisco out of the competitive rental market. She said guests would simply look at the total costs and book a cheaper stay in a nearby town. If Frisco rentals are to remain in business, she said it would be they — not potential tenants — who would ultimately pay the price.
Because it could change the short-term rental market, Waldman said the tax could have the negative effect where it brings in less money because customers might not stay in Frisco, or people might decide not to. not rent at all short term.
Waldman acknowledges that labor housing is a difficult issue, but she would prefer to have a 2% excise tax to start slow and see exactly what impact it would have on the economy. She called the proposed tax myopic and irresponsible.
“I will support any labor housing tax, but I want it to be reasonable and based on a study of factual data without harming an industry,” Waldman said.
City Council approved the ballot issue at its meeting on Tuesday, March 8. According to approval“Affordable, widely available, and safe housing close to schools and workplaces is essential to the mental, social, environmental, and economic well-being of the Frisco community.”
The approval cited the Summit Combined Housing Authority’s 2020 Summit Housing Needs Update. He predicts a need for 2,400 affordable homes in the coming years, with serious needs in the Ten Mile 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 jobs out of about 21,000 total 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 approval said the lack of affordable housing was reflected by the inability to attract employees.
If passed, the tax will come into effect on June 1. Ballots will be mailed to registered voters the week of March 14 and must be received by the city clerk’s office by 7 p.m. on April 5.