After some debate, the Centennial Council will consider adding a voting question on the Accommodation Tax

0

After some debate during its July 18 session, the Centennial City Council voted 7-2 to further consider adding an lodging tax question to the November vote.

Eric Eddy, Assistant City Manager, presented the ballot for a proposed 5% lodging tax that would result in estimated first-year revenue of $1.5 million. The tax would be levied on the price of a short-term rental, i.e. less than 30 consecutive days, at any hotel, inn, bed and breakfast or Airbnb in the city.

Centennial currently has no occupancy tax. With the city’s 2.5% sales tax rate on lodging services, the proposed 5% lodging tax would result in a total combined tax rate of 7.5%, Eddy said.

For example, if a hotel room rate is $100 per night, the sales tax is $2.50 and the proposed lodging tax is $5, for a total tax of $7.50 the personnel report.

Mayor Stephanie Piko asked how the proposed rate compares to Lone Tree and Greenwood Village, which she believes are the locations Centennial most competes with along the I-25 corridor.

Eddy said that Greenwood Village has a 3% lodging tax and a 3% sales tax on the lodging, which totals 6%.

Lone Tree charges a 6% lodging tax and no sales tax on lodging services, giving a combined tax rate of 6%, he said.

Piko said it won’t be sold at the 5% rate because it’s not as competitive as the surrounding communities. She said she would like one PDF copy of the language of choice Present to the community to get feedback and make sure people understand.

“I think there’s always an inherent downside to a 14-line choice question,” she said. “That’s why I’m always happy to get feedback from people.”

Schedule and need for community feedback

Council member Candace Moon asked Eddy if the staff had any input from the business community on how they felt about the proposed tax. Eddy said staff have not yet received this information as further clarification of the proposed language is needed.

“It’s going to be difficult for us to go to the business community and say we’re considering an accommodation tax if a few of these questions go unanswered. And that’s the purpose of this evening’s discussion, to really get a general consensus on whether or not we’re going to move forward with that, at what pace and what the proceeds are being used for,” Eddy said.

Council members Robyn Carnes and Christine Sweetland agreed with Piko that the tax rate should be more similar and competitive to that of Lone Tree and Greenwood Village.

Regarding the use of the proceeds, the proposed voting language states that they “shall be spent on projects and services that address visitor impacts in the areas of public safety and other legitimate community purposes.”

To add the question to the November vote, the Council must adopt a resolution setting out the voting question by September 9, with Eddy proposing that the Council make that decision during the September 6 meeting.

In the meantime, Eddy said, employees will start reaching out to local businesses.

“We plan to return to the Council before that September 6 date to share this feedback and ultimately give the Council time to consider it before the formal action that would need to be taken on September 6,” Eddy said. Estimate staff could provide an update on August 15th.

Councilors Carnes and Sheehan oppose a lodging tax

Councilor Carnes voted against further review of the lodging tax.

“I’m just going to say again, is this the best time to do that given everything that’s going on in our country right now?” said Carnes.

District 4 councilor Don Sheehan said the potential revenue from the tax is minimal and the purpose of demanding the tax is unclear. He said the city has saved nearly $31 million, and much of that money is not currently committed to any projects.

“We have a lot of money. Why should we charge more?” Sheehan asked. “I think in general the lodging tax is the wrong answer at the wrong time.”

He expressed concern about the impact of a lodging tax on large Centennial companies like Comcast, Arrow Electronics and United Launch Alliance, which bring people to the city for business.

“They’re getting pinched right now by these escalating prices, a recession that’s coming around the corner – so their business is slowing down, their revenue is slowing down. If we throw another issue at what they do, the answers might not be really happy,” he said.

Should there be a recession, Sheehan said he “doesn’t want to do any more damage by suggesting we add more costs to businesses in our community.”

Sheehan also objected to the idea that one benefit of the lodging tax is that they pay mostly non-centenarian residents.

“I’m not sure where we go from ‘Welcome to Centennial’ to ‘Stay with Strangers’. And we don’t really just stick it to strangers, we stick it to the companies as well,” he said. “I think we have to be careful about imposing something on our city’s businesses, or potentially imposing something when we don’t have a damn good reason to do so. And we don’t have a damn good reason for it.”

However, if the city wanted to ask “for serious money” in the future, such as funding a traffic management plan, Sheehan said it would be a legitimate request, and he would have no problem asking taxpayers “for additional money, maybe a lot of money, to realize a very important project for the city.”

Sweetland counters Sheehan’s points

Councilor Sweetland said she appreciated the points Sheehan raised, but had a few counterpoints to offer.

“One of the things that makes Centennial unique is that we have no debt. So yes, we have $31 million in the bank. But, you know what? We have a lot of projects that we can’t do right now because we don’t have enough money to do them,” Sweetland said. “We wait until we have the money and then spend it.”

During strategic planning, which the council conducted last July, the city was forecast to spend more than its revenues over the next five to six years, Sweetland said.

“We have to do something about that. So we can wait five or six years and then ask our taxpayers five different voting questions to raise taxes — five different things, including a lodging tax. Or we can go straight to our taxpayers and say, “We’re going to make some incremental changes to our tax code,” Sweetland said. “And really, we’re just asking our taxpayers to make that decision.”

Sweetland said she would prefer to see the housing tax rate at around 3.5% to 4% to maintain competitiveness in the region.

“I just think we owe it to the taxpayers to actually give them the ability to make that decision, because in a few years we’re going to be asking them a lot of money that they’ll have to pay to finish raising their sales tax,” she said.

She said the conversation would be much easier if the council could outline the incremental steps it has taken to help taxpayers save money in the long term.

Councilor Sutherland changes his mind after hearing feedback from others

At first, District 3 councilman Mike Sutherland was not in favor of investigating the lodging tax.

“I truly believe we need to look for the big request sooner rather than later. The big demand is an increase in our sales tax,” he said, noting that the Council really needs to get its point across before going to the electorate to demand a tax increase. “So I tend not to support that at this point and I’ve given it a lot of thought.”

District 4 councilor Marlo Alston said she views the occupancy tax ballot issue and the potential for voters to raise the sales tax in the future as two separate issues.

“What I’ve heard is, ‘I’m not really for it, because I’m going to count your wallet and you may or may not think it’s a great time.’ I don’t think that’s fair to our constituents,” Alston said.

Alston said she thinks the council owes it to residents and business owners to go out and collect their contributions. “Right now I can’t say yes or no because I haven’t heard from any of them on the matter.”

District 2 Councilor Tammy Maurer pointed to things the $1.5 million in revenue could help the city with, such as: Homeless Coordinator position the city has been discussing developmentor helping to fund the co-responder program with the Arapahoe County Sheriff’s Office or increasing the number of resource officers in schools.

“That’s what it’s all about for us – security,” says Maurer for the purpose of the lodging tax.

Piko said she appreciated that Maurer pointed this out and that public safety is something residents have said they want more of. She also said it was really difficult to decide whether to add a voting question on the lodging tax.

“There’s a lot for all of us to think about, and I think there’s a lot of questions to ask our constituents,” Piko said. “No one takes this lightly. We understand what we are doing and of course many of us are very torn as to what is the right path for the city to take.”

Following comments from other council members, Sutherland said he was confident he would get more information. Councilor Richard Holt of District 3 also said he would like more information and to hear from the business community.

With seven votes in favor of further exploring the issue of adding the lodging tax, Sweetland encouraged residents to reach out to council members and share their thoughts on the matter.

“Now is the time to let the mayor and all of us on City Council know how you’re feeling so we can have a good guide to how we’re moving forward, because we’re your representatives,” Sweetland said.

Those interested in learning more about the Lodging Tax proposal can visit centennialco.gov/Government/City-Projects-and-Initiatives/Lodging-Tax

Share.

Comments are closed.