Avon voters will see a construction materials use tax on the November ballot
Six council members vote in favor of sending the question to voters, even though a similar question failed last year
Chris Dillmann/Vail Daily archive
The Avon Town Council has officially referred the question of whether the town should implement a 4% use tax on construction materials to voters in November.
All six members of the council present during the council’s Tuesday, Aug. 27, meeting voted in favor of sending the question to voters, even though a similar question failed last year in a 60% to 40% vote.
This year’s proposed use tax would apply to all building projects in the town with total materials costs over $125,000. The 4% use tax would replace the town’s 4% sales tax on construction materials.
Avon’s government sees the use tax as a way to more effectively capture the funds that builders are already paying on projects they construct in Avon. This is because while sales tax on building materials is often paid wherever the materials are purchased, the use tax will need to be paid to Avon based on an estimated total construction materials cost for builders to receive their building permit from the town.
“Our estimate is that it will increase the amount of revenues by better collection by about 45%, maybe just a hair under 50%. In recent years, I think the average has been about $600,000, and so it may go up to around $900,000,” said Eric Heil, Avon town manager.
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If the use tax passes, the town will provide a letter for anyone who pays the use tax to take to other places they might purchase materials from that dictate an exemption from those towns’ sales taxes as well.
The use tax will be most productive for the town on very large construction projects, like hotels. In June 2023, the Town Council approved a hotel near Avon Town Hall that has yet to begin construction.
“If that doesn’t pull a building permit this year and the use tax passes, that will be a pretty hefty — it will be almost $900,000 just on that one building permit,” Heil said.
All revenue the town gathers from the use tax would go to the town’s community housing fund. Avon’s community housing fund goes to supporting every member of the Avon community — current and prospective — who wishes to live in the town but cannot afford free-market housing.
“I’m very much in favor of this. I think that it’s a shame that we’ve lost out in use tax that should have been paid by the far-away suppliers to construction projects in the town that never got submitted properly, so that might have gone, if there’s a window manufacturer in Cincinnati, it went to Cincinnati instead of the town of Avon,” said Tamra Underwood, Avon mayor pro team. “This should help correct that.”
What looks different from last year’s rejected use tax?
This year’s use tax ballot question follows a similar question rejected by Avon voters last year, but with a handful of critical changes.
This year’s version of the use tax includes an exemption for projects with a total building materials value of up to $125,000.
“Which I think is pretty generous, and compared to all the other communities is wildly more generous. I think $10,000 is the most we’ve seen in other communities for an exemption,” Heil said.
The exemption will be limited by a time constraint. An exempt project’s three-year budget must be within $125,000. “So that we don’t get property owners trying to do an addition on their house and try to game it and do a $125,000 project this year, next year, the year after, the year after that,” Heil said.
Heil suggested that the Town Council add it to the town’s policies to reevaluate the exemption every three years and decide if the exemption amount needs to be increased. The Town Council can amend the town’s ordinance stating the exemption relatively easily to raise the exemption amount in the future if warranted.
“You can always provide more of an exemption, not less than what’s in the ballot question,” Heil said.
Also, while most projects will be required to pay the use tax upfront to receive their building permit, applicants working on single-family or duplex projects can request to defer payment until the project is completed.
Why has the town been putting out information about the use tax?
Town staff and council voiced during the Aug. 13 meeting that because this is a presidential election year, which usually leads to higher voter turnout, there may be a different outcome in this year’s vote. The town has also been trying to increase voter education through a multi-part educational campaign targeted at Avon voters.
The town has been running informational advertising over the summer, including articles in the Vail Daily, information on the town’s website and a mailer to Avon voters ahead of Tuesday’s council meeting. According to the Fair Campaign Practices Act, the town cannot issue any more statements for or against the use tax following the council’s approval of the ballot question on Aug. 27.
“As town staff, on town time, we’re not able to use any town resources to advocate for or against ballot issues,” Heil said.
The town can issue a factual statement about the use tax question, including a pro/con list for voters. The council can also issue a resolution issuing support for the ballot measure, which will likely occur toward the end of September.
