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Durango to ask voters for permission to keep excess lodgers tax revenue

City wants to use about $1.1 million for housing, parking and the arts
Durango City Council identified affordable and workforce housing, transportation and parking, and arts and culture as funding targets for excess 2021-22 lodgers tax revenues. The city will ask voters for approval to allocate the funds in a ballot question scheduled for the November election. (Durango Herald file)

Durango City Council voted unanimously Tuesday to move forward with a ballot question requesting voter permission to keep an anticipated $1.1 million in excess revenues collected in 2021 and 2022 from a lodgers tax.

City Council wants to use the money for housing, parking, transportation, and arts and culture. Sixty-six percent of excess revenues would go to housing while 20% would go to parking and transportation, and 14% would go to arts and culture projects. If voters reject the ballot measure, the money would be refunded to residential utility customers, which would amount to about $218 per account based on current estimates, said Jarrod Biggs, assistant financial director.

The city conducted a survey to gauge how residents would like to see the city spend the excess lodgers tax. Respondents overall favored using excess funds for affordable and workforce housing projects, but additional parking, transit services, and arts and culture funding also received support.

The extended survey did not ask residents whether they favored a refund over allowing the city to use the money in various ways.

Two hundred and thirty-three survey responses ranked housing as their No. 1 choice for how to spend the excess lodgers tax, Jarrod Biggs, assistant finance director, said at Tuesday’s City Council meeting.

The city collected about $684,000 more than its projected $900,000 last year after voters approved a lodgers tax increase. This year, the city predicts it will again surpass its initial estimate, resulting in a total of about $1.1 million in excess funds for last year and this year.

Mayor Barbara Noseworthy and Councilor Kim Baxter were initially unwilling to commit to moving forward with a ballot measure unless City Council agreed to create a ballot question that asked residents to dedicate all excess lodgers tax revenues to housing projects.

Baxter said the city still lacks a long-term source of funding to support housing projects and the excess lodgers taxes could help in that effort until the city finds a concrete funding source. Noseworthy said the lack of affordable housing is the city’s biggest issue and it needs to be prioritized.

But councilors Jessika Buell and Melissa Youssef were unwilling to commit all excess funds solely to housing. They said responses to the lodgers tax survey showed interest is high in supporting parking and transportation and arts and culture projects.

City Manager José Madrigal must notify La Plata County that the city plans to put a ballot question on November’s ballot.

Residents who attended Tuesday’s City Council meeting had differing opinions about what should be done with the excess lodgers tax.

Some said the money should be refunded to residents and pointed out that the real refund value for 2022 won’t be known until the end of the year.

Others supported the continued allocation of money to the arts and culture fund.

Dave Peters said he is not in favor of the lodgers tax ballot measure.

He said although he supports solutions to affordable housing, he doesn’t like using the lodgers tax to address it.

“Citizens really appreciated the recent TABOR refund from the state,” he said. “The city would really gain praise and trust if you refund excess lodgers tax funds now. I really feel the odds of voters allowing the city to keep their refund is extremely low. Why would you spend a significant amount of taxpayer money on a ballot measure that probably has very little chance of passing?”

He noted the recent lodgers tax survey didn’t include a question asking people if they prefer a refund and said the optics of the survey “were not that good” for that reason.

Kathryn Waggener, executive director for the Durango Creative District, commended City Council for the lodgers tax contributions to the city’s arts and culture fund.

Arts and culture projects that were awarded funding from the Creative Economy Commission, which receives its funding from the lodgers tax, are proof that the lodgers tax has an “ongoing community benefit beyond the cosmetic,” she said.

“This feeds into affordable housing, advocacy for improved transportation and the ongoing loop of social good in our community,” she said.

cburney@durangoherald.com

An earlier version of this story erred in reporting utility customers would receive about $300 credit if voters reject a ballot measure in November in which the city of Durango is asking to keep about $1.1 million in excess lodgers tax revenue. The projected refund would be about $218, but even that is subject to change based on how much is collected in 2022.

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