Town of Minturn is asking voters for a use tax on construction materials | VailDaily.com

Town of Minturn is asking voters for a use tax on construction materials

MINTURN — The Vail Valley's second-oldest town has long been strapped for cash, especially for capital projects. Voters this fall are being asked to create a capital fund by implementing a use tax on building materials.

Minturn Mayor Matt Scherr said if voters agree, the town will be one of several in the valley that have such a tax.

Avon is the only other town without one, but it collects sales taxes from The Home Depot.

Use taxes generate the most revenue in areas with a good bit of construction. Scherr said there hasn't been much building lately in Minturn. But, he added, that could change in the near future.

The U.S. Forest Service may sell its administrative site at Dowd Junction for future development.

That property is in the town boundaries. Some iteration of the Battle Mountain project is also lingering on the horizon, as is the future of the Union Pacific rail yard in town.

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Even with those yet-to-build projects in the future, Scherr said estimates indicate a use tax would have brought about $250,000 to the town in 2017.

'Pay for emergency services'

That amount is roughly the town's current contribution to a $2.5 million sidewalk project that will begin in 2019. About 90 percent of the project cost is being covered by state funds and grants. Still, Scherr said, it was hard for the town to cover its 10 percent.

To help come up with the money, the town has had to find savings elsewhere in the general fund.

That includes not providing any community contributions in 2019.

A use tax "would have given us the funds to allow our general fund to pay for emergencies," Scherr said.

Longtime resident and former council member Shelly Bellm helped town officials craft this year's proposal.

Bellm works in the town of Vail's Community Development Department and is familiar with that town's use tax, which voters passed in 2007.

Bellm said the current proposal for Minturn incorporates a number of the lessons learned in Vail. If approved, the tax would create a dedicated capital fund, which would reduce strain on the town's general fund.

"We could plan for capital expenditures," Bellm said.

Both Scherr and Bellm said one of the big hurdles in the past has been public understanding of how a use tax would work.

Here's how it would work

• When building permits are issued, materials account for half of the project's estimated value. The use tax — 4 percent — would be assessed on those materials. The first $10,000 worth of materials is exempt from the tax.

• The use tax is paid when the permit is issued. Whoever is buying materials then shows the building permit to the business selling the materials, exempting those materials from municipal sales tax.

Scherr said taking municipal taxes out of the costs of materials might encourage more local purchases.

"Vail helped the valley with its use tax," Scherr said.

Vail Daily Business Editor Scott Miller can be reached at smiller@vaildaily.com and 970-748-2930.

Ballot Issue 2A

Shall the town of Minturn’s taxes be increased by $500,000 in fiscal year 2019 and by whatever additional amounts are raised annually thereafter through the adoption of a use tax on the privilege of storing, using and/or consuming in the town of Minturn any construction and/or building materials purchased at retail inside or outside the town, at the rate of 4 percent of the retail cost of such materials, and shall the town be authorized to collect and spend such revenues, including any interest and investment income thereon, exclusively for capital acquisitions and capital projects in the town of Minturn as a voter-approved revenue change notwithstanding any revenue or expenditure limitation, including those contained in Article X, Section 20 of the Colorado Constitution?

Source: Eagle County Composite Ballot