Aspen to debate extra bed tax
Aspen, CO Colorado
ASPEN, Colorado – Marketing officials say they have the necessary signatures to push forward a 1 percent lodging tax but it will be up to the Aspen City Council whether the entire town should vote on it or just several hundred people who live within a designated boundary.
Officials from the Aspen Chamber Resort Association (ACRA) said they expect to have 60 percent of the commercial property owners located within a proposed local marketing district signed onto a petition asking the City Council to put the tax on the November ballot.
ACRA officials only need 50 percent of the assessed property valuations within the district signed on, according to state statute, but Colorado law is vague enough that it’s up to council to put it on the ballot.
Now at issue is whether an additional bed tax should be voted on by all Aspen residents or just the 750 or so that live within a determined boundary in which the lodges located there would charge a 1 percent fee on nightly room rates in addition to the already established 0.5 percent lodging tax.
ACRA officials on Tuesday will present to council the signatures of owners that represent more than $210 million worth of property within what’s being called the Local Marketing District (LMD), as well as make their case that only registered voters who live within that boundary should vote on the additional tax.
Marketing officials said they think their chances of getting the tax passed are greater with a smaller pool of voters than the entire electorate, which could be as many as 3,000 people.
The 0.5 percent lodging tax only won by a margin of 80 votes when it was passed in a citywide vote in 2000, and other bed taxes have failed at the polls over the years.
But Debbie Braun, president and CEO of ACRA, said she’s not naive in thinking the plan could backfire.
“This could come back and bite us in the butt,” she said, adding it’s crucial that the right campaign be crafted to convince voters within the district that an additional 1 percent bed tax is needed. It’s estimated that it will generate about $1 million annually for additional marketing of the resort.
The current 0.5 percent lodging tax is dedicated to summer marketing and raises about $600,000 annually. Unlike winter marketing that is funded primarily by the Aspen Skiing Co., there is no significant resource established to market the summer other than the existing lodging tax, chamber officials said.
In addition to the $600,000 budget, Braun and other chamber representatives have found themselves in recent years asking the council for more money, which comes out of the city’s general fund. This year, an additional $200,000 was given to augment this summer’s marketing campaign in response to the recession.
“We can’t keep robbing the general fund,” Braun said, noting that Aspen falls well below other ski resorts in dedicated marketing dollars – Snowmass Village spends $4 million a year on marketing.
Braun said ACRA is amenable to putting a 5-year sunset provision on the additional tax in an effort to quell concerns that it will turn tourists off.
While Braun said about 90 percent of local hotels and lodges are supportive of the LMD, there are smaller properties who think guests won’t want to pay an additional tax.
Marketing officials point out, however, that room rates will likely remain relatively low throughout next year and a new 1 percent tax will still put nightly rates below what has been charged in the last few years.
ACRA representatives said it’s an opportune time to ask for the approval of the district because economic conditions have motivated lodge and commercial property owners into increasing marketing efforts.
“Some property owners said they are against taxes in general but most have been positive,” said Warren Klug, ACRA board chairman. “I think we’re following the right plan … we’re not pricing ourselves out of reach.”
By state law, there would be a district board to oversee the use of the funds generated by the LMD. It’s anticipated that the money will be used by ACRA Destination Marketing to compliment its current efforts, but it could be spent by a separate entity.
“We’re doing all of this with the hope that ACRA takes it and augments it with what we are already doing,” Braun said.
The council will consider the ballot measure on Tuesday at 4:30 p.m. in council chambers in the basement of City Hall. If the council agrees to move forward with a LMD, there would be two public hearings before it’s placed on the ballot.
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