Monarch opposes Salida occupancy tax proposal

The City of Salida has proposed a funding source for the negative cash operations of the Community Pool that will be entirely borne by visitors to Salida. This is unjust, as it requires any visitor to unwittingly provide what amounts to a charitable contribution to the town of Salida. The proposed tax of $4.82 per room night would bring in approximately $600,000 in revenue to the City to pay for operating losses of the pool and presumably the new contemplated recreation center. Very few of these visitors will actually use the pool, and if they do, are also be required to pay a daily fee for that privilege.

One can only imagine that the need for this tax has arisen from poor planning, administration and operations of the pool. The failed new pipeline was a massive net loss to the city, (though it has received a grant of $1,500,000 to have the water line replaced) as well as the new roof and structural improvements. It’s not surprising to see the City propose a funding source for the loss, however this is not the best means of doing so.

From the City website, the 2008 expected revenue from pool operations is $260,000 and the cost to operate the pool is $450,000 for an ANNUAL operating loss of $190,000. Originally, the City had proposed a $2.00 charge per room night. Why now the $4.82 per night proposal?

Perhaps the City is thinking that it will cover the annual operating loss of $190,000 and THEN WHAT? Well, the City 2008 budget contemplates the construction of an addition to the pool, presumably a recreation center that will cost $3,500,000 in 2009. It can certainly expect to have operational losses on this facility as well, perhaps as much as $300-400,000 per year. What better way to cover this cost than to charge it to unsuspecting visitors?

The City’s position is that visitors to the community itself are by far the largest user group of the pool. If this is true then why on City letterhead does Trish Bews, write as follows for the 2008 budget:

Department Purpose
“The stated mission of the Salida Recreation and Aquatic Center is to provide excellence in recreation, education, and fitness to enhance the quality of life in our community.”… “Being City-funded, our recreation programs are geared toward locals.”

2007 Department Accomplishments
Too many to list, but all are community oriented.

Hence, the City is contradicting itself as to the purpose and use of the pool.

The City also believes that visitors to town just will not notice an “extra” charge of $4.82 to their hotel bill. I can assure you that they most certainly will. Mixing a flat fee and a percentage tax charge to bills will bring scrutiny to visitor charges and create anger that will modify behavior.

Visitors just do not come to the Valley to swim in the pool, which as far as “Hot Springs” go is a complete farce. When the pool was closed for repairs, there was no drop in visits or CCVB revenue from the lodging tax. The pool is not an attraction that brings in visitors; it is merely an amenity to the town of Salida residents.

Hence, users of the pool should pay any negative cash flow from operations, meaning the community should pay through the existing sales tax of the town/county, which appear to contribute 80% of the operating revenue for the City.

Citizens should scrutinize the costs of operating the pool carefully. The relative utility of the pool and the proposed recreational building appear to be dubious at best given current City finances. City finances are in serious jeopardy given the current national economic situation and the likely rescission of contract by the purchaser of the Vandaveer property.

Taxing visitors for community projects sets a poor precedent and opens the door to further misuse of taxing privilege by the government. If this tax is approved, where does the process end?

Presently, Chaffee County visitors enjoy the best bang for the buck on outdoor activities. This valley offers the widest range and best quality of sports in any season. It also has the best price point by far. In winter, a skier can spend four days at Monarch, stay and eat in town, for what a day would cost at many of the other state ski areas. At Monarch, we intend to be price-sensitive and keep our end of the bargain in offering a great value for the recreation we provide. We simply ask that the City do the same.

Bob Nicolls
Monarch Ski Area

The Citizen is happy to provide a forum for comments and discussion. Please be civil, truthful, and relevant. Please suggest removal of comments that violate these standards. Real names are appreciated.

6 Responses to “Monarch opposes Salida occupancy tax proposal”

  1. Trey

    It may be true that "visitors just do not come to the Valley to swim in the pool". Neither do they come to Salida in order to "just" drive on our roads, increase congestion, take advantage of our police and fire services, or leave their garbage in our parks. Nonetheless, they do so while they are here, and in doing so create costs that locals must bear.

    The danger of any "tourist tax" is that if the elasticity of demand is high, a price increase could cause a decrease in the number of tourists, thereby eliminating the proposed benefit of the tax. If Salida or local businesses want to add constructively to the debate, it's this kind of information which would be especially useful to voters. Generally speaking, I see other variables (like the cost of gasoline) far outweighing the proposed lodging tax in whether or not visitors choose the Arkansas Valley.

    In the absence of compelling evidence that the proposed tax would be detrimental, I'm willing to ask visitors to improve Salida by helping to meet objectives set by the city council. Ultimately, taxes are an investment in the community, and it seems that we could use a bit of investment.

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  2. Bill Smith

    The sky is falling! Fear! Fear! Fear! Nothing less than the total destruction of our way of life as we know it is at stake.

    The proposed tax on a hotel room in Salida is slightly more than the price of a latte ($3.65). Slightly more than a delicious pint ($4). And slightly more than a value meal at the local fast food outlets ($4.79).

    But to read the Mountain Mail (if I believed it) such a tax would drive people away from the valley in droves. An extra $4.82 per night per family, would be the tipping point that turns Salida from a recreation destination into a wasteland, with empty motels, closed shops, trails overgrown with weeds because no one hikes there any more, a veritable post-apocalyptic shadow of its former self. All for the price of a gallon of diesel, all tourism jobs in county will be lost.

    Can we all calm down? The proposed tax is designed to fund the capital and operating costs of improvements to existing recreation facilities and the construction of new ones. Things this community is begging for, literally! For too long Salida’s recreation facilities, our parks, our playgrounds, our trails, our arts initiatives, have been funded by bake sales and GOCO grants. It is time for them to have a steady stream of income so that they can meet the residents and visitors current and future needs.

    Does anyone really believe that a family planning to come to Salida and ski for four days is going to go to Vail instead, because the lodging tax adds the price of a pizza to their vacation? (Monarch has the Hot Springs Pool listed at the top of their Around Town Activities page on their Website.) Does anyone really believe that a family traveling through town is going to keep going to Gunnison (which has a lodging tax), or to Canon (which has a lodging tax) for because Salida is going to charge each person the price of candy bar? (Salida Super 8’s describes its location as across the street from the Salida Aquatic Center).

    The lodging and recreation industries know that not every local amenity, by itself, brings visitors to town, and they count on and market a variety of activities. The lodging tax is designed to increase and enhance all the recreational facilities of Salida. The citizen’s of Salida currently pay the entire bill for the recreation department. No one likes to see taxes go up, but our parks and trails need investment and upkeep, and this proposal seems a fair way to include visitors in the group that pays for the amenities they come here for.

    Bill Smith

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  3. Mike Harvey

    In the 10 years that I have either been planning, fundraising or building the Salida Whitewater Park and Proposed Union Pacific River Trail I have learned how difficult it is to fund recreational projects in Slaida. The Whitewater Park was bulit for $.30 on the dollar by raising private funds, writing grants and begging. The list of projects that have been completed this way includes the Monarch Spur Trail, The Salida Steamplant, Riverside Park Bandshell, Alpine Park Playground, and many other of the ammenities that make Salida a great place to live and visit.

    There are other proposed projects that are in the pipeline and ready to go, but will require public money to be completed. The Salida Mountain Trails plan that was developed over the last three years by a hard working group of volunteers and would bring a world class single track system to "S" Mountain has been approved by the BLM. A proposal for a 2 mile trail along the Arkansas with leagal access to "S" Mountain from downtown has been submitted to the Railroad and could be completed in the next two years...but not without some new revenue stream.

    Salida is lucky to have so many citizens commited to making this a great place to live and visit, but the time has come for the City of Salida to create some revenue to continue to enhance our portfoliio of recreatoinal ammenities. Yes the pool needs work but this proposal is not all about the pool. More trails, more parks, more arts and theater, more live music all of these things take dollars and all of these things bring dollars into the community.

    Not every recreational project pays for itself. Some things like ball fields and pools you need to subsidize for quality of life reasons. So that families like mine can live and work in this valley. These quality of life improvements are what allows large employers to attract the kind of workforce that someone like Monarch needs to thrive.

    I have listened to both sides of this debate and feel that this lodging tax is a fair and reasonable way to collect some needed revenue from the largest sector of our local economy, tourism. I would urge Citizens to support this measure.

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  4. Don Jackson

    I hope I can add a different perspective to the comments above.

    First of all the cost of a latte, happy meal, or a pint is not material and its comparison really misses the point and dismisses the importance of this issue. The issue is one of competition. If the city was to add $4.82 to the cost of a hotel room Salida would have the highest Occupancy Tax in the state of Colorado except for the city of Denver, it would also have the highest combined tax rate on a hotel room in the state except for Pagosa Springs. This is based on fact, not exageration. And competitiveness is an important factor.

    I wonder what logic could be used to justify that fact?

    60% of the visitors to this valley simply pass through on their way to other destinations. The total cost of a night in a hotel is a factor in determining where they might stay. The fact that the visitor can stay in Gunnison, Canon City, Leadville, Buena Vista, Alamosa and many other cities along the major arteries to and from our valley, in a large part due to the addition of $4.82 to the cost or a nights stay is with out question a competitive disadvantage. Obviously it will not attract the visitor.

    The average guest in the city of Salida stays less than 2 nights in our City. We should be working towards opportunities to get him to stay longer.

    The lodging properties and other visitor industries are not opposed to a tax, what we are opposed to is a tax based on erroneous assumptions and on a lack of facts used in making the decision. Simply the lodging properties and other visitor based businesses should have been involved in the process.

    Additionally this style of flat tax will have a a greater affect on the smaller lodging properties since as the rate for a night decreases the tax as a percentage actually increases...thus its affect on the guests overnight stay. Thus no only do they have to worry about me (branded properties-Super8) wanting their business but they now have been placed at a greater disadvantage due to their own elected officials. Obviously many of these smaller properties are working hard to be competitive on their own.

    And is this the time to consider making our town less competitive! I am not sure what business some of the authors of the comments are in but I would ask, how you you feel if the city added $4.82 to the cost of a lift ticket, the cost of a ATV rental or the cost of an oil change. That sounds ridiculous does it not? Thus you can not understand what it feels like in our shoes.

    As a resident, business owner, partner in Monarch and owner of 5 acres on Highway 50 issues like this are important to me.

    In not one single article I have read has anyone suggested that the visitor industry is going to collapse, except here, that this is the end of Salida and we are now on our way to becoming a wasteland. Frankly I have a difficult time even responding to this lack of reason. Interesting that Mr. Smith is the one who asked us to all calm down but his letter contained the most amount of sarcasm.

    I have over 28 years in the lodging industry, 10 of it in the city of Salida. When I am concerned about an issue I talk to the people who are in the best position to know something about it. I feel that the lodging community has a wealth of information to share with any interested party.

    As I have said, although I am not generally for any tax that targets a specific segment of our economy, I was not opposed to a tax on hotel rooms. Frankly this is not my first rodeo! I know that most communities are always willing to place the burden on the unrepresented. This is not the first time that a community has targeted their "guests", and easily justified it. Like they don't already share in the burden since 60% of all tax revenues in this city are already paid by the visitor. Sure lets hit them once again. This is not the first time a community has chosen better them than me! I just want people to consider what the consequence might be. There are numerous studies out their regarding what excessive taxes have on business. Sure these are from industries as untrusting as the lodging industry. I was willing to accept the originally planned $2.00 because I did not feel it would harm us competitively. It was only after the amount was increased to $4.82 that I became concerned.

    I know I already mentioned it but it was noted that the citizens pay 100% of the cost of recreational facilities. This obviously not accurate since 60% of the sales tax, which does go into the cities coffers is actually paid by visitors. This 60% figure was actually given to me from Councilmen Tom Yerkey.

    In summary this is not the end of the visitor industry. But excessive taxation will have an effect.

    Don Jackson

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  5. Bill Smith

    I have to admit that Mr. Jackson is right - my letter was the one that contained the most sarcasm. His criticism of me on that point was correct. I admit that that my hyperbole was overstated. However, it was Mr. Jackson who sent out a a pdf which declared "Don't kill the Golden Goose, our visitor industry ... it is the life blood of our economy!" I sarcastically extrapolated this alarmist statement.

    I don't think the cost of the items I mentioned earlier dismiss the importance of the issue. I feel that the items mentioned place the issue in perspective. The items I mentioned are all things that visitors purchase when they are here in Salida. They show the cost of the occupation tax in relation to all the other things that people buy when they are here and are therefore very relevant to the discussion. A lift ticket is $54 a day, and a day of rafting is $100 per person. Those numbers are relevant as well.

    The money raised will go to build trails, improve existing facilities like tennis courts, and playgrounds and maybe even build new ballfields. Some will be spent on the pool, and while none of these things are what people come here for, it is disingenuous to suggest that they don't contribute to visitors satisfaction with Salida. The truth of the matter is that the tax will be spent on recreation and arts here in Salida. The things that, while they may not be the only reason people come to Salida, are what people engage in after skiing or rafting, after riding the Crest. If we have more trails near town, if the ballfields could handle more tournaments, if the playgrounds were in better shape - people would stay longer. My wife recently ran the Imogene Pass run. I have two small children and when I had to choose between Ouray and Telluride to hang out in while we were waiting, I chose Telluride, because it had much better parks and playgrounds. They got my tax money, I don't know it it was higher than Ouray, but they got because of the park in their town.

    Now Mr. Jackson says that 60% of our visitors (I assume visitor means people staying at his hotel) are only here for one night and are on there way somewhere else. It seems to me that the way to encourage these people to stay longer is to increase the options and quality of things they have to do while they are here.

    Or perhaps these people are truly just passing through, don't care what we have to offer and are only interested in price. If that is the case I don't imagine many of them stay in Salida right now since, according to Mr. Jackson's charts it is cheaper right now to stay in Canon CIty, Gunnison, and Alamosa. And even with the tax increase, these price sensative folks will surely stay in Salida rather than BV, since we are currently $13 cheaper than BV and after the tax we will be more than $8 cheaper still.

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  6. Don Jackson

    I wish to clarify a few points.

    First of all I am a great supporter of the Salida Hot Springs Pool. I believe I might be the pool's single biggest customer. We love the pool and include the pool as an amenity in all of our packaging and promotion. In a meeting with the Mayor to discuss the occupancy tax he mentioned that the council felt that the lodging industry would benefit the most from improvements to the Salida Hot Springs Pool. It was this feeling that was used to justify first... the original tax at $2.00 and then the increase to $4.82. The pool along with many other amenities that our town has to offer surely do contribute to an overall experience. In my opinion a great experience!

    I can not agree and I can state that the lodging industry does not agree with the statement. Thus any conclusion drawn from that statement should be reconsidered. That is my premise.

    Mr. Smith is absolutely correct when he states that improvements in the visitor experience will in fact help us in attracting more visitors and having them stay longer. The question is should the visitors be the one to pay for that. It may not be the best example but it seems like inviting someone to dinner at your home and then presenting them a check. Should the visitors bear the cost for the improvements and then also pay a cost of entry? I am also a partner in Monarch. Would it be acceptable to add a surcharge to the cost of a lift ticket to cover parking lot maintenance? I think not! It is assumed that the cost is included in the lift ticket price.

    I truly believe that the economic impact on the visitor must be considered. I also believe that the lodging industry is probably the closest to the visitor. In today's economic and competitive environment I am not confident that I can add $5.00 to the cost of a room night in my hotel. In fact I have reduced my rates. I am concerned going forward. Would this same logic not be valid for adding the tax. The result to the visitor is exactly the same. I do understand the thought process behind looking at the cost of a weekend in Salida, but we must think about things from the visitor's perspective and studies have shown that unfortunately taxes do have an impact in the decision making process. It does not always make logical sense but it does surely give the visitors an indication of how welcome in the community they might be. Again not always does rational thinking win out when you consider visitor decision making. Taxes are a 4 oops 5 letter word.

    The American Hotel Motel Association just completed a study of the consequences any increase in lodging tax greater than 2% has on business and the number of visitors. The report is sobering. This information should be considered.

    I am concerned that we may be heading down the wrong path. I think we are developing what I call the "Santa Fe Mentality". I managed the Hilton in Santa Fe for 10 years. During that time Santa Fe was selected as one of the top destinations in the world. Honestly we thought we could do no wrong. We really felt we were the prettiest lady at the dance and most importantly we thought our visitors thought we were the prettiest also. Well guess what? Santa Fe did take a big bite out of that "Goose" and things are very different today. The hotel rates increased, that taxes increased, the cost of doing business increased and the overall experience decreased in a large part because the value proposition decreased. Price is one factor in that proposition.

    The competition for the visitors dollar is fierce. It is important to maintain competitiveness. Competitiveness means a good value to the customer. And yes it is important to improve the visitor experience. However, we must do it in a rational manner with as much research as possible. Take it out of a financial world and an emotional world. That is where the best decisions are made.

    The council must adopt a paradigm of "Do no harm". In working with the city on this issue I feel we have come to a point where we can increase revenue and Do no harm. That number is $2.50. At that point we are able to raise a good chunk of revenue and also maintain competitiveness. Where is the lack of reason?

    It does make sense. We also have an opportunity to scale upwards as rates increase. Does that not make good sense?

    Call me cautious... I am. But I am very confident that the tax at $4.82 imposed immediately will have a significant impact on the visitor. That should not be risked in this environment.

    I hope this helps.

    Don Jackson

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