Will Avon get a construction materials use tax? Voters will decide in November

Council votes unanimously on second reading to put question on November ballot

Avon is the only Eagle County jurisdiction that does not currently have a construction materials use tax. Avon voters will have the chance to change that on Nov. 7, 2023.
Town of Avon/Screenshot

Avon voters will have the final say on a proposed 4% construction materials use tax following a unanimous vote Tuesday by the Avon Town Council to put the question on the ballot for the Nov. 7 election.

Avon is the sole jurisdiction in Eagle County that does not have a construction materials use tax, after Minturn passed its 4% use tax in 2018. Vail, Minturn, Eagle and Gypsum all have use taxes beween 3 and 4 percent, and sales taxes that match Avon’s of 4%. 

A construction materials use tax is considered preferable to a sales tax in Avon’s case because it should be easier to collect. Sales taxes can often be difficult to track, and tax rates can be manipulated across locations, while a use tax can be collected with more consistency.

The proposed construction materials use tax should generate more revenue for the town, according to Tuesday’s council discussion on the ballot question.

“I think that it is important: This is money that has been due to us that has not been paid to us because it has been an imperfect system through the sales tax route, so this is cleaning up money the town has been owed, and making it feasible to our collection,” said Mayor Pro Tem Tamra Underwood.

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The use tax would work as follows: When applying for a permit to build within the town of Avon, builders would have to pay an upfront 4% use tax on any construction materials they plan to use in their project. The use tax formula is typically calculated using the assumption that 50% of building costs are materials-related.

Following pushback from a member of the public at the first reading, town staff amended the ballot question to provide an exception for single-family and duplex residential building permits. For these projects, a building permit applicant will be able to request to pay the use tax after construction is completed, at which point payment in full of the use tax will be a requirement for an issuance of a certificate of occupancy. The use tax will also exempt projects under $50,000 within a calendar year, to allow for home improvements and other small projects, as well as exempting deed-restricted community housing projects.

This is not the first time Avon voters have seen a construction materials use tax on the ballot. Avon voters decided against a construction materials use tax in 2002, with 573 against the use tax and 379 in favor. Notably, the 2002 proposed use tax earmarked the money for transportation and recreation projects, whereas the current proposed use tax enables the town to use the collected revenue for any municipal purpose.

Town staff expects voters to be in favor of the use tax following voter polling last summer, which indicated that the majority of current Avon voters are in favor of a construction materials use tax. If Avon voters decide in favor of the construction materials use tax in November, it will go into effect beginning in 2024.

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Between now and November, the town of Avon will release a factual statement for the purpose of voter education with further information on the construction materials use tax. Per the Fair Campaign Practices Act, Avon Town Council members cannot campaign for or against the use tax with town resources, though they can use personal funding.

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