Council Favors Lodging Tax Allocations | Considers Home Rule Ballot Measure
by Christopher Pike
Aug 27, 2007 | 362 views | 0 0 comments | 10 10 recommendations | email to a friend | print

OURAY, Aug. 28, 6:33 a.m. – Where should money collected from a proposed increase in the Lodging Occupation Tax be allocated? After hearing from lodging business owners at its Aug. 20 meeting, the Ouray City Council agreed it should all go toward the promotion of tourism.

“The [Lodging Occupation Tax] for everything besides promotion is off the table,” announced Mayor Pam Larson after the council recommended language for a November ballot measure that would increase the lodging tax from $2 per room, per night, to $3.

Ouray has not increased the lodging tax in seven years. Projected annual revenues from the proposed increase are expected to approach $60,000.

Many of the more than 50 citizens in attendance at the meeting voiced objection over some of the spending options that had been under consideration. A citizens committee, comprised of representatives from the Ouray Chamber Resort Association, Mayor Pam Larson, Mouse Durgin and City Administrator Patrick Rondinelli, presented a distribution plan for the funds earlier this month, earmarking the first $1.25 of any Lodging Occupation Tax proceeds to the Tourism Promotional Fund to cover operating costs of the Visitor’s Center, and the remaining $.75 to a fund dedicated to business expansion, but not to emphasize the promotion of new businesses per se.

Instead, the committee suggested, that portion should be dedicated to the construction, installation and other acquisitions of street, water, drainage, sidewalk, lighting, signage, or other public facility improvements to be spent from the city’s Beautification Fund.

In a letter presented to council by several members of the lodging community, they asked that the Lodging Occupation Tax be raised no more than $1, and that all of the monies be budgeted for advertising and promotion of tourism. They reasoned that the current annual budget of $110,000 “is already too miniscule compared to other cities that compete for Colorado visitors,” considering rising inflation, recent hikes in property tax evaluations and gas prices, and the inability to raise off-season rates.

Some citizens in attendance questioned why only motels and hotels, and not restaurants, were the focus of the tax increase.

Councilman Bob Stouffer replied that city staffers informed council that the city cannot raise any type of sales tax, which is what any tax on restaurants constitutes, because the city is not a Home Rule community.

Council, in agreeing with the lodging and chamber community, will now consider a ballot measure that allocates all Lodging Occupation Tax revenues toward promotion of tourism – which would be earmarked for the Community Development and Ouray Chamber Resort Association funds.

Council also recommended raising the Lodging Occupation Tax fee for campground venders, who provide parking for tourists visiting in recreation vehicles, from $.50 to $1. Councilmembers Janet Armstrong and Marc Hitchcox were the most vocal in support of apportioning some of the Lodging Occupation Tax revenues for the creation of an affordable housing fund. The letter from the business owners, written by former Councilmember Barbara Uhles, suggested other funding sources for that type of program: “We understand the Ouray Council’s need for additional funding for both affordable housing and other pressing city needs. We do not, however, feel that [Lodging Occupation Tax] funds are appropriate for anything other than funding for promotion of Ouray.”

Added John Uhles: “We’re not against affordable housing, but this isn’t the way to do it.”

Council agreed, with only Armstrong favoring a ballot measure for affordable housing.

The Ouray Chamber Resort Association and members of the lodging community also recommended that the city switch to Home Rule, from its current statutory status, where “using tax dollars is a more suitable funding source for these types of expenditures.”

If the electorate were to approve a change to Home Rule status, council could propose a sales tax increase and utilize those funds for affordable housing.

At present, there is a statewide ceiling of 6.9 percent on the combined sales tax rate. Should the city become a Home Rule community, that ceiling could be removed with taxpayer approval.

In deference to an affordable housing program, which the town is addressing jointly with the Town of Ridgway and the county through the creation of an affordable housing authority, Mayor Larson asked City Attorney Greg Clifton if it was too late to begin the Home Rule process.

“It’s doable,” he conceded, but added, “I’m thinking that I might have to begin tonight after I leave here. It should have started three to four months ago.” There is a non-discretionary deadline for placing such a measure on the November ballot. “Do we drop everything we’re doing for a ballot question [on Home Rule], or look ahead one year to get everything going?” he asked.

A Home Rule effort would require two separate elections, either as special elections or during the regular November election cycle. The Home Rule process can be initiated by either a majority of the city council or by petition, signed by not less than 5 percent of the citizenry. In the first election, voters would be asked to approve the creation of a charter commission. If passed, voters would then be asked to approve the charter, created by the council-appointed commission.

At the close of the meeting, Larson tasked an advisory group with determining the feasibility of an effort for the first step toward Home Rule. She set Monday, Aug. 27 as a meeting time to consider whether an education campaign can be achieved effectively with the time remaining. “This really has to get off the ground,” emphasized Larson.

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