Dillon voters prone to see short-term rental poll measures throughout November election

Voters in Dillon could decide in November whether to to increase the town’s lodging tax from 2% to 6% and impose a new 5% excise tax on short-term rentals. Neither number is finalized, but Dillon Town Council voiced support for putting the question on the November ballot at a work session Tuesday.

The councilors present at the meeting voiced unanimous support for the taxes after seeing the results of Silverthorne’s and Frisco’s votes to impose similar measures. Silverthorne increased its lodging tax from 2% to 6% after 74.6% of voters agreed with the change, and Frisco imposed a 5% excise tax on short-term rentals after 64% of voters approved the measure. Frisco also has a 2% lodging tax in addition to the excise tax.

In addition to the the 8.875% sales tax, short-term rentals in Dillon would be subject to 19.875% in taxes if both proposed ballot measures pass in November. Hotels would be exempt of the 5% excise tax.

Town Manager Nathan Johnson said the largest excise tax in Colorado was 15% in Ouray.

The money generated from the taxes would go towards the town. Councilors listed a number of uses for the money, like workforce housing, roads, transportation, town-core projects and general infrastructure. Enterprise-funded areas like the marina would be ineligible, Dillon finance director Carri McDonnell explained.

“But it could be put into other improvements which might free up money for the marina,” she said.

Johnson said, in conversation with renters, he learned they want to see a correlation between the tax and improvements in the town.

“I like the language Silverthorne used,” Mayor Carolyn Skowyra said in reference to the wording of Silverthorne’s ballot question.

Silverthorne’s question stated the money would go to addressing visitor impacts on recreation, public safety, transportation and housing.

“I’m a strong supporter myself because I think the short-term rentals situation has created some problems like workforce housing,” councilor Dana Christensen said as he explained that the tax could help solve the problems short-term rentals create.

“I agree with Dana,” councilor Renee Imamura added, “and not just for workforce housing, but for other town improvements.”

Councilor Tony Scalise offered the council’s lone concern.

“I just want to make sure, with companies that are existing because of short-term rentals, we don’t take a big chunk out of them,” he said.

“And they don’t want a cap,” councilor Renee Imamura added. Dillon does not have a moratorium on the number of short-term rentals allowed in town.

Currently, short-term rentals are subject to a 2% lodging tax, in addition to an 8.875% sales tax. The sales tax would remain in effect regardless of the outcome of the proposed ballot measure.

Renters must also register with the town and pay a $250 fee. The fee covers a complaint hotline and staff time. In line with Silverthorne, Dillon also caps the number of occupants at two per bedroom, plus two.

The council has until August to settle on its exact language that would appear on the ballot. The council indicated it would place two questions for approval on the ballot, one for the excise tax and one for the new lodging tax.

Silverthorne’s lodging tax change does not take effect until July 1. Frisco’s tax changes go into effect June 1, and the town expects to generate $1.5 million in revenue from its excise tax by Dec. 31, 2023.