Voters go for Avon short-term rental tax

Revenue from the tax will fund future community housing projects in the town

If passed, the tax is estimated to generate between $1 million and $1.5 million in the first year for community housing initiatives and housing-related activities in the town.
Chris Dillmann/Vail Daily File

Votes tallied by 9 p.m. indicate that Avon voters will approve a tax on short-term rentals in the town. The revenue generated from the new tax will be allocated toward a dedicated community housing fund.

As of 9 p.m. Tuesday, 70% of the counted ballots supported the tax.

The tax is estimated to generate between $1 million and $1.5 million in the first year for community housing initiatives and housing-related activities in the town. It will go into effect on Jan. 1, 2022.

Avon residents and voters were asked to approve a 2% tax that would be applied to any rental property that is rented for less than 30 days. Only residential, non-commercial properties — of which only the Comfort Inn doesn’t apply — will be taxed.

In its 2018 Community Housing Plan, the town stated a goal to secure local funds for housing and to seek new funding sources. However, this summer, as the lack of affordable housing units across the county created mounting challenges for local employers, the town got serious about securing a funding source to help address this housing crisis.

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Avon Town Council first began discussing the possibility of a short-term rental tax in August of this year as a way to fund future community housing plans, projects and purchases. Currently, the town has no dedicated funding source for community housing.

The town’s existing community housing fund has no ongoing or consistent source of funding. In 2020, the town transferred in $250,000 from its general fund and it intends to transfer 10% of the revenues generated in 2020 by the Real Estate Transfer Tax to the fund. And for the last few years, this fund has been primarily used for the Mi Casa Avon Deed Restriction program.

Now, having a dedicated funding source will “give us a decent base to start working on housing projects,” said Town Manager Eric Heil on election night.

“I think Avon will be in position where we can start pursuing the construction of, the development of housing projects to start bringing housing units on by the tens if not hundreds over the next several years,” he added.

Overall, Heil said the tax will be “huge” for the town and will help simplify the many aspects of community housing — from land acquisition and construction to development and financing. Without a dedicated funding source, these aspects can be nearely impossible, he added.

Council was split on putting the tax to voters — 5-2 with Council members Amy Phillips, Lindsay Hardy, Scott Prince, Chico Thuon and RJ Andrade voting for the measure and Mayor Sarah Smith Hymes and Council member Tamra Underwood voting against it.

In opposition of the tax, Underwood and Smith Hymes expressed concerns about the ballot question not being ready for voters. Underwood expressed a desire to conduct research and plan marketing around the tax, before putting it to a vote.

On election night, Smith Hymes reiterated that she and Underwood were hesitant about the tax.

“I felt like we just hadn’t done enough work before we put it on the ballot, but clearly the community wants it and so it’s great, I’m glad it passed,” she said.

Smith Hymes added that the tax’s passing speaks volumes about the need for community housing.

“It is top of mind for absolutely everyone, everywhere,” she said. “It’s always been a problem, it’s been a problem since the beginning o ski resorts, but it is the most acute it’s ever been, truly. Clearly, this is a message that everyone in the community recognizes that we’re in a dire situation and we have to do something about it.”

Other concerns about the tax were that it would prevent visitors from choosing Avon over other mountain destinations when all taxes were applied to visits. Currently, Avon rental properties are subject to a total tax of 12.4%. This includes a 4% local Avon sales tax, a 1.5% county sales tax, a 2.9% state sales tax and a 4% Avon accommodations tax. This places Avon’s rate as 1.69% higher than Beaver Creek’s rate and 2.6% higher than Vail’s. Higher than Avon’s rate are Crested Butte at 18.4%, Telluride at 15.15% and Snowmass Village at 12.8%.

The hope for this tax, if it passes, is that it will not only enable Avon to further its current community housing plans and projects — such as expanding and furthering Mi Casa Avon and the development of town-owned land — but it will enable the town to participate in partnerships with Eagle County municipalities for new projects across the valley as well as be leveraged to obtain state and federal housing funds.

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