La Plata County has designated approximately $50,000 in its 2016 budget proposal to contract an auditor to take inventory of local nontraditional lodging units, which could result in additional lodgers tax revenue.
The current lodgers tax for La Plata County and Durango is 2 percent and is levied on the area’s approximately 35 hotels and inns, as well as Airbnb units, vacation rentals by owners and other short-term rentals. Short-term applies to any room or house rented for fewer than 30 days.
But some of the less traditional rentals, such as Airbnb or homeowners who simply decide to rent out the house while away for the holidays, are unaccounted for in the county and may not realize the tax applies to them, county and city officials say.
“We’re going to spend more time next year to get more information about that,” Assistant County Manager Joanne Spina said. “Honestly, in many cases, I don’t think they are aware that (the tax) applies to them. The first step is to identify if there are those units that aren’t paying it and try to offer some education.”
The county does not license the businesses. Instead, the state is responsible for collecting lodgers tax and reallocating the revenue back to the county. There is no record of how many in the county fail to collect or are even aware of the tax, which would be the purpose of the county’s planned audit.
Durango’s regulations on vacation rentals were reworked only a few years ago. One of the stipulations requires anyone renting rooms or houses to include their designated permitting number in any advertisements, so renters can see they are in compliance with city code. Unlike the county, Durango logs its vacation rentals.
“We’ve worked hard to get information out to the community and let them know that the permit is required, and there are certain zones where rentals are not allowed, but it’s an ongoing enforcement process to monitor the listings,” City Planner Scott Shine said. “Both our department and code enforcement are frequently contacting property owners.”
Chris Bettin is among the 59 people registered to rent vacation properties in Durango and has rented out a home he owns on East Second Avenue since summer 2014.
“I was involved with the city’s public process to come up with the ordinance on vacation rentals, and one of the outcomes was the process for renting out property was streamlined,” Bettin said. “I pay my share of the lodgers tax. I think maybe there’s a lack of information for some folks (who don’t pay the tax), or they’re not seeking out the information. The city made an effort to increase the education.”
The county is now trying to follow suit, but Bob Kunkel, executive director of the Durango Area Tourism Office, said the county may still be at the point where collection and enforcement of the tax are actually costlier than the revenues collected.
Examining Durango’s reported tax numbers by month dating back to 2010, the revenue has traditionally seen a spike into the six figures for the months of July through October. Last month, the city collected $139,181 in lodgers tax, and $851,255 to date in 2015.
In 2014, the tax raked in a total of $908,035 for Durango. The amount has grown steadily in the past five years. In La Plata County, $259,507 was collected in lodgers tax last year and a total of $113,495 for the first and second quarters of 2015. Revenues go to DATO to spend on marketing and advertising to bring more tourists to the Durango area.
The lodgers tax was established locally in 1980 at the request of lodgers and is low compared to the 6.6 percent national average. Kunkel said talk of increasing it comes up once every few years.
“We’re still at 2 percent, and you look at what others are,” Kunkel said. “But then you also look at how we’re doing. We’ve had five years of growth, so is it necessary?”
Raising the tax would require separate ballot items in the city and county, and officials would have to educate voters on the fact that the tax is not a burden on residents, Kunkel said.
He condoned increased efforts to collect the tax.
“It just keeps the playing field level,” he said. “It’s fair to the people who are in business who are collecting it and following the rules. But as far as collecting it, we just have to prepare for that. I don’t know if there’s a technology solution to it, but you can’t have people just running from house to house.”
jpace@durangoherald.com
