Salida lodgers rally to block proposed occupancy tax

Citing a flawed process, flawed rationale and forecasting dire consequences. Salida lodging property owners will attempt to persuade Salida City Council to remove a proposed occupancy tax question from the November ballot.

As proposed by City Council, Measure 2B asks voters to approve a $4.82 occupancy tax per room night. The estimated $550,000 to $600,000 in revenues generated by the tax would be allocated to the Salida Hot Springs Aquatic Center, trails and other recreational and cultural amenities, specifically the SteamPlant Theater and Event Center.

Earlier today, Mayor Chuck Rose and interim City Administrator Mike Copp met with the lodging community to discuss the measure. At the time, Rose and Copp, citing the opinion of legal counsel, said there was no way to withdraw the question from the ballot. Information came to light later in the day, researched by the Colorado Hotel and Lodging Association, causing the city’s law firm, Leavenworth and Karp, to acknowledge that state statute “does provide that the city council could withdraw the ballot question no later than 25 days prior to the Nov. 4 election.”

However, County Clerk Joyce Reno said she had already ordered the November ballot and that 2B cannot physically be removed. Therefore, if council were to pass a resolution to withdraw 2B from the ballot, the net result would be votes cast on the measure would simply not be counted. The deadline for Council to pass such a resolution would be Oct. 10.

The lodging community intends to lead the effort to lobby city council to pass the necessary resolution to withdraw the occupancy tax question at the next regularly scheduled council meeting on Oct. 6.

In exchange for withdrawing the current occupancy tax measure from the ballot, de facto Salida lodging industry leader Don Jackson is proposing that lodgers create a committee to work with city council to “create an opportunity to address (the city’s) priorities and come up with a solution that we can all support.”

The reason 2B doesn’t enjoy the lodgers support is their contention that basic assumptions were flawed, that lodgers’ input wasn’t sought, and that the new tax would make Salida’s lodging tax disproportionately high, in fact among the highest in the state.

Market analysis
Statistics from the statewide lodging association demonstrate that the proposed occupancy tax would propel Salida to among the top three destinations with the highest total percent tax on lodging in the state; second only to Pagosa Springs and higher than even Denver. Jackson contends the flat tax (the city isn’t able to charge a percentage tax) unfairly discriminates against smaller motels with lower average base rates and will have an exaggerated affect in the off-season, when occupancy rates are already weak.

Who uses the pool?
The city contends the pool is a visitor attraction and that the lodgers would benefit most from its improvement. Jackson, whose Super 8 Motel is directly across the street from the pool, respectfully disagreed. The pool “does not draw visitors in appreciable numbers,” Jackson said. “If the pool didn’t exist it would not affect occupancy.” A chorus of lodgers chimed in in agreement with their own stories of how little interest there is among their guests in using the city pool.

Steve Office of Thomas House Bed and Breakfast followed up that the cost to run the pool should be borne by the user and that visitors shouldn’t be forced to pay for something they may or may not use.

Lack of input
Sitting squarely on the hot seat fielding lodgers’ questions and criticism for nearly 90 minutes today, Mayor Rose conceded the city’s decision process with respect to the occupancy tax question was flawed.

Rose explained that when council was contemplating its revenue raising options for Salidans top three concerns – affordable housing, roads, and the pool – there was no full-time city administrator, and the city was understaffed.

Rose explained the pool had an operating deficit of $198,000 last year and is a “substandard facility” and that simply isn’t an acceptable situation.

Salida Chamber of Commerce Executive Director John Englebrecht, whose office is next door to the pool, estimated that 10 people per week come into the chamber office to complain about the “deplorable situation” at the pool.

Rose said a fiscal enhancement study conducted by Councilman Hugh Young identified a variety of funding options for roads and the pool including the occupancy tax.

But Rose put the onus of responsibility for the occupancy tax being on the ballot solidly back on the lodgers saying, “You should have been paying attention” and challenging them to form a lodging association and “bring a solution” to city council.

Some lodgers said that the occupancy tax, as first proposed at $2 per room, while not great, was supportable. For most, it seems the flash point came when the proposed occupancy fee was inexplicably raised to $4.82.

In solidarity with the lodgers at today’s meeting were representatives of Monarch Mountain, Pinon Real Estate and Frosty Roe, president of the Land Trust of the Upper Arkansas.

Roe predicted that while the occupancy tax would be most felt by the local innkeepers the trickle down effect would also negatively impact restaurants, retailers, rafters and other businesses. Roe worries that belt-tightening by businesses impacted by the occupancy tax could negatively impact the Land Trust’s revenue stream from its Common Cents for Conservation voluntary donation program. The program’s top two contributors are the Super 8 and Monarch Mountain.

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2 Responses to “Salida lodgers rally to block proposed occupancy tax”

  1. Don Jackson

    Here is an update as to where we are in the process. We are working towards an agreement with the city that states if the city ordinance passes regarding the $4.82 amount the city council will agree to pass a measure that reduces the amount to $2.50. Then as the average daily rate for the city of Salida increases the tax would increase a similar amount.

    I feel that this initial amount would not create a significant competitive disadvantage regarding the cost of lodging accommodation in the city.

    We hope to have an agreement in front of the city council at the next meeting on October 6, 2008.

    A gathering of lodging properties held at the Gateway Inn on Tuesday accepted this in theory and asked to move forward with an agreement on the wording to place in front of the council.

    it would be very beneficial to have the support of the visitor industry at the next city council meeting.

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  2. Mike Harvey

    I applaude Don and the lodgers for working with the City of Salida on this issue. I think everyone can see that the process should have been more proactive, involving the lodgers on the front end.

    I hope that people who support recreational and arts improvements for the City of Salida will also come to the October 6th meeting to support our council on this issue.

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