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Change in lodging tax law will help Colorado mountain communities build affordable housing

State lawmakers passed a measure changing how lodging tax revenue can be spent by counties, as long as local voters consent.

DENVER — Park County Commissioner Dick Elsner doesn’t mince words when talking about the impact of short term rentals on his county’s housing market.

“They’ve pretty much destroyed it,” he said. “In the entire county we’ve got I think the last number was 49 houses on the market. There is nothing in Park County that is really affordable.”

Short-term rentals have pushed the cost of housing in the county higher and higher and more owners are putting their rental homes on the short-term market, where they can make more money rather than renting to a longer term tenant.

“The sheriff’s department, when we hire deputies, they can’t find a place to live,” Elsner said. “They hired a doctor, he couldn’t find a house so they had to hire a different doctor.”

The tight market made news from the Colorado State Capitol last month even more welcoming for county leaders like Elsner. In March, Colorado lawmakers passed a measure that changed the law on how lodging tax revenue can be spent by county government.

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The previous law required counties to spend all of that revenue on marketing and promotion of tourism activities within the county. But the new bill, signed by the governor several weeks ago, will allow counties to use up to 90 percent of the revenue they collect from people staying in town to fund things that will help both workers and visitors alike.

“It can go to things like workforce housing or childcare or other infrastructure needs that those communities need in order to handle the visitors that are coming,” said Rep. Dylan Roberts (D-Vail), one of the primary sponsors of the bill.

“A place like Eagle County we calculated between $3 and 4 million a year for housing,” he said.

Many counties like Eagle and Routt, which Roberts represents, along with Park chose not to impose the tax in the past because they had to spend all of the revenue on promotion.

“We really didn’t feel the need to spend that money to promote tourism because we have about everything we can do right now with the people who come through,” Elsner said.

In order to impose the lodging tax or change the revenue use for any current lodging tax, counties would have to go to the voters.

Elsner is confident Park County would support it.

“I think a two percent sales tax on short term rentals will probably clear with about 80 percent of the vote,” he said.

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