Mountain towns can use tourism taxes for recreation, worker housing

Voters in mountain towns may soon redirect traditionally levied lodging taxes to attract visitors to housing and recreational infrastructure.

Governor Jared Polis signed House Bill 1117, bipartisan legislation allowing that option, went into effect Thursday in Edwards. Since 2002, voters in 29 Colorado counties have approved a tourism marketing lodging tax. The new legislation allows counties and local marketing districts to spend up to 90% of lodging taxes previously collected for tourism on affordable housing, child care for local workers and “improvement of the ‘visitor experience’, which includes investments in recreational infrastructure such as trails.

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It’s the kind of proposal Colorado tourism officials have traditionally opposed. But after the past two years, with a pandemic-driven real estate frenzy fueling a housing crisis and a labor shortage threatening rural communities overwhelmed by visitors, many Colorado tourism developers back the plan to reallocating marketing dollars.

“There was a lot of consternation about it. Lots of difficult conversations. But tourism is not against it,” said Lucy Kay, president and CEO of the Breckenridge Tourism Board. His office in 2016 changed its mission from “come here!” marketing to include visitor impact management. “We all need housing. This helps us support critical issues for the hospitality industry. We would like these places to be better by having tourism and that tourism is not seen as just an impact.

Many of Colorado’s strongest regional tourism organizations, including in Aspen, Breckenridge, Telluride and Vail, moved away from pure marketing several years ago. These groups are now working to reduce the impact of visitors, spending accommodation taxes to attract new businesses to town and training workers and tourism campaigns that educate visitors to care for natural resources and respect local communities.

But Colorado laws for marketing districts that collect lodging taxes prevented spending on capital projects other than visitor information centers. House Bill 1117 changes that, marking a fundamental shift in tourism spending, with a focus not just on visitors, but locals. The bill allows voters to decide how to allocate lodging tax revenue between promoting tourism, housing, child care and improving recreation, but it requires that at least 10% remain devoted to tourism marketing.

“A visitor’s experience is also strongly influenced by the ability of the host community to support its residents and the local workforce with housing and other essential services, as well as a strong quality of life that accompanies our incredible natural and cultural assets,” the bill states. “Strong support for the needs of our residents is essential to the long-term health of our communities and our economy.

Gunnison County renamed its tourism association to Tourism and Prosperity Partnership in 2019, using a 4% lodging tax collected by the county’s marketing district to support economic development, the University Western Colorado and local entrepreneurs and businesses, while promoting visitors. friendly events.

But when the county had to expand a parking lot at a trailhead, install new signs, or build a pit toilet near a popular trailhead, TAPP couldn’t help.

“So we see this as a shot in the arm, helping us to manage visits better,” said TAPP boss John Norton, who last year suspended the marketing of summer tourism as crowds hammered the understaffed businesses of Crested Butte. “It’s hard to argue that affordable housing in the Valley – or really anywhere in Colorado – isn’t a worthwhile use of these funds. Hopefully more affordable accommodations will balance visitor demand and the situation of our employees, which has not been the case.

Help Wanted signs in storefronts of businesses in Crested Butte, Colorado on Saturday, August 14, 2021. (Dean Krakel, Special for The Colorado Sun)

Gunnison County Commissioner Jonathan Houck worked with other counties to ensure recreation infrastructure investments were part of Bill 1117. He said he hoped voters would approve spending increased for items such as signage, visitor apps and trailheads.

“If you want people to come back, you have to take care of the resources you have and you have to be able to reinvest money,” he said.

Income from housing tax is not enough to build affordable housing. But that’s enough to get started. Gunnison County, for example, spent $250,000 on utilities and engineering that allowed a private developer, Gary Gates, to build the 77-unit Paintbrush apartment complex in Gunnison that opened. at the end of last year.

“It’s like a $40 million project and we spent $250,000. For me, this is the sweet spot for the expansion of local marketing district dollars,” Houck said. “We can have the money to leverage bigger investment for housing.”

There are 29 counties in Colorado and six local marketing districts that collect lodging taxes to promote regional tourism, including Alamosa County, Estes Park, Gunnison County, Moffat County, Steamboat Springs and Vail.

Yampa Valley Housing Authority Executive Director Jason Peasley, pictured May 7, 2021, led his organization’s efforts to build the 48-unit affordable housing development on the west side of Steamboat Springs. The Housing Authority aims to build 600 homes by 2030. (Matt Stensland, special for The Colorado Sun)

Visit Estes Park plans to protect its tourism marketing budget while using additional lodging tax revenue to work with partners on housing projects. Kara Franker, CEO of Visit Estes Park, said her group is pursuing “destination stewardship,” which seeks a balance between quality of life for residents and a vibrant visitor economy “while protecting our cultural and natural resources. “.

“What better way to champion this values-based approach than to work with the community on important issues like workforce housing and child care,” Franker said. “We want to be part of the solution.”

Tourism officials admit that smaller communities could see their tourism marketing budgets slashed due to the overhaul of lodging taxes. Legislation requires that at least 10% of accommodation taxes remain within the tourist promotion band.

Reducing support for groups moving into destination management could slow progress in helping communities better educate and manage visitors, said Cathy Ritter, a former director of the Colorado Office of Tourism whose Best Destinations Group now consults for many tourism dependent communities.

“Places where people are frustrated with waiting longer than usual to be seated at their favorite restaurant should be prepared for some of those restaurants to disappear if tourists leave,” said Ritter, who advocates for tourism. sustainable with campaigns that target what it calls “low impact travellers”.

Every few decades or so, some legislator or group will propose cutting funding for Colorado’s tourism promotion, thinking that the state’s mountains and attractions don’t need campaigns because visitors will naturally flow in. This notion was tested in 1993, when voters declined to support a statewide tourism marketing tax and tourism campaigns died down. The state’s share of the US vacation market plummeted, and it took the state 20 years to regain that share of US travelers. There’s even a case study — “The Rise and Fall of Tourism in Colorado” — which shows what happens when the tourism promotion ends.

Ritter sees whispers of 1993 in House Bill 1117’s fettering of tourism marketing power. She fears lawmakers and even tourism-dependent communities are making long-term decisions based on the influx of visitors offsetting a few years of trips lost during the pandemic lockdown.

This year, rising gasoline costs and prices are already “eroding quickly” vacation plans, Ritter said.

“Communities that hinder the ability of their destination organizations to do their job can suddenly look around and say what happened to our economy? What happened to all those tax receipts we had in 2021? said Ritter. “The sad reality is that many other places and states see value in supporting their tourism economies. These are the places that will be the winners when the going gets tough. »

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