Durango groups call lodgers tax a ‘landmark effort’

Behind the scenes collaboration gets measure on the ballot

In the fall of 2019, representatives of tourism, lodging, events and arts organizations gathered in the Strater Hotel’s Oak Room. Their goal: to negotiate a lodgers tax increase proposal to pitch to the Durango City Council.

After 18 months of negotiation – and for the first time in 40 years – Durango is asking residents to vote on the proposed increase during the April 6 municipal election.

The tax is not paid by Durango residents, but by people staying in hotels and motels.

If approved, the ballot measure would raise the lodgers tax to 5.25% from its current rate of 2%, in perpetuity.

Past attempts
In the past, similar efforts to increase the tax have ground to a halt. What’s different this time? Partnerships, said Chris Vivolo and Bill Carver, who represent lodging and arts organizations, respectively.

“It was a landmark event to have all of us come together,” said Vivolo, owner of the Durango Hampton Inn and representative for the Durango Area Hospitality and Lodging Association.

The city’s lodgers tax, approved in 1980 added a 2% tax to hotel and accommodation bills. It provides about $1 million each year – depending on hotel usage – for tourism advertising, transportation services and financing new facilities.

Durango was the second community in the state, after Aspen, to pass a lodgers tax. Others have caught up, and in 2019, the average lodgers tax in Colorado had increased to 3.6%.

Past efforts to increase the tax in 1990, 2007 and 2012, ground to a halt, according to Carver and Vivolo. They never received the approval of City Council and were never placed on the ballot.

“It really just stopped at the council and staff level because of competing ballot issues, and I would say, the council sensing a lack of community consensus around the use of it,” said Carver, co-owner of Carver Brewing Co. in Durango and former president of the Durango Creative District.

The ‘magic percentage’

This year’s proposed increase has that consensus, although it was hard-won through months of negotiations, said Vivolo and Carver.

In addition to DAHLA, Visit Durango, the Durango conference and event center group, and the Durango Creative District were involved from the beginning.

They were meeting separately until the city advised them to create a unified proposal – hence the Oak Room meeting.

“We just started working on, what’s the magic percentage that would work for everybody?” Carver said.

They came with different goals. For example, DAHLA came to the table with an idea about how much they wanted to collect for tourism marketing. The Durango Creative District wanted to fulfill its goal of finding a sustainable source of revenue.

But the partners really came together when the COVID-19 pandemic began, realizing the city would face economic impacts.

“We realized how fragile our economic situation can be. We need to put in place some visionary mechanisms to have Durango thrive,” Carver said.

They ran into challenges. The hoteliers were voluntarily electing to tax themselves but found that other sectors, like restaurants, were not willing to do the same, Vivolo said.

“Then we’ve got other entities looking for money – it really wasn’t the hotels’ money, but it was money they were raising,” he said. “It was challenging. We had a mindset of how much money we needed to get, and then it was going off in different places.”

The 11th hour

The stakeholder group put forward a plan: They would ask the city to increase the tax rate to 5%. Visit Durango suggested that 2.5% of the 3% increase would go to its marketing efforts and 0.5% would go to the Durango Creative District. (The creative district wanted a 1% allocation.)

But the City Council needed to provide for its transportation service, which is headed toward a budgetary shortfall in 2023, while investing in its creative economy and tourism industry.

They had to work through a few key “log jams,” Carver said.

The lodgers agreed to a higher tax rate to allow for transit funding. The Creative District agreed to support a smaller share for arts and cultural events, while Visit Durango agreed to a smaller allocation for tourism marketing.

“It was not easy,” Carver said.

“We were running out of time,” Vivolo said. “When you look at this timeline, it’s been years. To get this far, we just needed to get it done.”

Pushing against the state’s ballot measure deadlines, the city and stakeholders established the final language for the ballot measure: increasing the tax rate to 5.25%.

Of the total revenue raised by the tax, 55% would go to sustainable tourism marketing. Transit would receive 20%; arts and cultural events, 14%. The City Council would have 11% to shift flexibly between the other uses, based on the city’s needs.

The partners say the proposal is a landmark effort.

If it passes, Visit Durango, the city’s contracted marketing organization, will focus its efforts on sustainable tourism. That means attracting visitors to Durango during shoulder/off-season months, spreading both revenue and tourism impacts, such as overuse of natural trails, across an entire year rather than one season.

No other community in the state is funding sustainable tourism in this way, Vivolo said. Nor are other communities funding a creative district through a hotel tax, he said.

“If this doesn’t pass now, we can’t have another attempt for another two years,” Vivolo said. “We need this recovery to happen as quickly as possible.”

smullane@durangoherald.com