A lodgers tax increase approved by Durango voters in 2021 performed better than expected last year and is on track to outperform 2022 expectations as well, which means residents could receive payouts.
Durango City Council is figuring out what to do with excess lodgers tax revenues of about $684,000 collected in 2021. It can devise a way to distribute the money to Durango residents, or it can retain the money and allocate it for special use, which would require a ballot question to go to voters.
Regardless of the route City Council takes, councilors must reach a decision soon because the excess collections must be returned or voted to be retained by the end of the year, said City Attorney Dirk Nelson, during a City Council study session Tuesday.
City staff members provided council with several options for the excess tax dollars, including pros and cons for each option. Staff members recommended City Council pursue a utility bill credit, calling it “the best option to meet a 2021 deferred collections refund by Dec. 31, 2022.”
The utility bill credit can be doled out in one of two ways: A $135 credit to residential utility users or a $90 credit to all users – residential and commercial. Staff recommendations said the credit would be easy to apply. On average, residential users would receive the value of about one month of water, sewer, trash and recycling services.
The downside to implementing a utility bill credit is that applying it to commercial accounts would require more administrative effort to get it done in a timely manner. City Council would also need to figure out if all utility customers should receive the credit, including those who live outside town limits but receive city services, or if the credit would be given only to in-town utility customers.
Other options for returning the excess collections include:
- Payments to all registered voters – about 13,500 residents – in a payment of $50.64 per person.
- Offer free or supplemental transit services.
- Offer an approximately eight-month parking meter holiday, which would target only the downtown Durango area.
Sample ballot questions were also drafted by city staff members for councilors to consider. The samples asked hypothetical voters if they would authorize the city to allocate excess funds for just last year or last year and this year, and if the money should be used as originally intended or if the use could be changed.
Voters approved a 3.25% lodgers tax increase in April 2021. Of that, the city decided to allocate 55% to city marketing, 20% to city transit, and 14% to arts and culture programs. The remaining 11% can be use as determined by City Council.
Nelson said if a mail ballot question was posed to voters in November, the city would have about a month to conduct a payout before the end of 2022.
He said in reviewing options, city staff members considered options that could be implemented quickly, would be easy to implement and would not have high costs attached to their implementation.
During Tuesday’s City Council meeting, some residents advocated for specific uses of the excess lodgers tax money. Durango resident Emily Roller said she would like to see the excess money allocated toward workforce housing.
Roller said she moved to Durango in 2021 and had a difficult time finding an affordable place to rent. She ended up splitting a $1,700 per month rent fee with a roommate. She said she recently had to find a new unit and during her search she found studio apartments ranging from $1,400 to $1,800 a month.
She found two-bedroom units costing between $2,000 and $2,600 a month, she said.
“Prices here just aren’t conducive for the folks looking to live and work in the area,” she said. “... It’s common to have 10 or even 20 people ahead of you from my experience.”
She noted that Durango has budget allocations to help homebuyers, but she wants to make sure that renters aren’t being left behind. Many workers in Durango aren’t in a place to buy a home, she said.
“When thinking about the budget, I’m asking that the city look into either allocating funds or allocating housing for folks who live here (and work here),” she said.
Durango resident Sweetie Marbury said she supports reallocating excess lodger tax funding, but she wants to hear from City Council about what it will be used for.
“Maybe it would be building a police station with the fire department,” she said. “Or using the money to help local businesses that have not overcome the pandemic. Maybe housing incentives. A parking garage.
“I’m asking you to throw out suggestions for residents because we all like factual information before we make up our minds.”
She said marking the funds as “to be determined” is too vague.
City Council is scheduled to revisit the question of a lodgers tax payout or issuing a ballot question at its next public meeting on Aug. 2.
cburney@durangoherald.com
An earlier version of this story gave an incorrect dollar figure for excess lodgers tax revenues collected in 2021. The correct figure is about $684,000.
