CC Council Kills Lodging Tax Plan

lodging-tax

By Rick Langenberg:

 

 

Proposed lodging taxes in Cripple Creek are about as popular as the prospects of gambling in Manitou Springs or racetrack slots in Pueblo.

In yet another blow for ways to generate more city revenue by imposing a levy on guests at local hotels, motels, bed and breakfast establishments and recreational vehicle areas, a possible lodging tax ballot proposition never made it past the drawing board. 

Following an informal public workshop, the Cripple Creek City Council promptly agreed last week that the current time isn’t right for doing a tax that may hurt the casino industry and may not do that much for the town’s bottom line, based on current lodging occupancy rates and the amount of rooms given away free to gaming patrons.“I can’t think of a worst time to do this,” said Councilman Chris Hazlett, the owner of Ralf’s, who cited a spree of financial obstacles the casino industry currently faces.  “We will chuck it for now,” concluded Mayor Bruce Brown.

As a result, city residents won’t face any ballot questions this November. However, the public workshop raised concerns about the financial health of the gaming industry and the city, and whether the government may have to start cutting services, unless it finds alternative revenue sources. Finance Director Paul Harris cited a lodging tax as a good vehicle to raise money in a way that wouldn’t impact local residents.  Based on a survey done about four years ago, he said the city currently has about 500 overnight lodging and recreational vehicle units. A lodging tax of some kind could raise more than $200,000 a year, based on previous estimates.

A last-minute workshop on the possibility of a placing a lodging tax proposition on the November ballot got the attention of local gaming operators, who spoke in strong opposition to the idea.  This ran consistent with previous trends as Cripple Creek business owners and voters have given the idea a cold response for the last 20 years. A previous lodging tax ballot issue, aimed at supplementing monies for Cripple Creek marketing, was strongly rejected by the voters in 2010. But local business operator and Cripple Creek/Victor RE-1 School Board member Tim Braun told the council that it should seriously consider some type of lodging tax this time, or else the county would impose a similar levy and would snag all the potential monies from this tax. He stressed that a real possibility exists for the county to put a lodging tax on the election ballot in the future, a development that would shut the doors on the town from receiving any of this revenue.  “You are leaving it wide open for the county to do it,” said Braun.

Despite the city’s previous unsuccessful attempt at lobbying for a lodging levy, Braun believed that much opposition to the idea dealt with concerns over taxing unpaid rooms given way to casino patrons on a complimentary basis. To counteract this problem, the business owner proposed having these customers pay the lodging tax, which could be assessed as a flat nightly fee or a done on a percentage basis, instead of the casinos. “It doesn’t impose on the casinos any extra expense,” said Braun. He questioned if any gaming customer would really object to paying a $5 lodging nightly fee, especially if they are getting a free room. And with this extra money, he suggested that the city could allocate these additional funds for needed marketing.

However, his idea of having lodging guests pay the tax for comp rooms raised the ire of several gaming operators. “It just doesn’t make sense,” blasted Eric Rose, general manager of Century Casino. “It is just another tax on the casinos.” Mike Smith of the Double Eagle stressed the dire straits condition of the local industry. “This is a dismal  gaming market,” said Smith. “This market is going to get smaller. Things aren’t working well…You can’t look at the casinos as bottomless pits of money.”

Similar sentiments were echoed by Kevin Werner, general manager of the Wildwood casino.  Moreover, he stressed that Cripple Creek is a gaming town and urged the council to make good business decisions.  “We need to approach this with some strong business sense,” said Werner. The Wildwood manager, though, said he would be open to the idea of taxing non-complimentary rooms, but allocating these monies strictly for marketing, with the casino operators playing a lead role in deciding on how these funds can be used.

But city officials and leaders said they couldn’t agree to this condition. Harris said if times get tough, the city couldn’t make guarantees about spending this pot of money for marketing over such needs as emergency services and police.  He said the city could try to use most of any potential lodging dollars for marketing, but needed some flexibility. Councilman Terry Wahrer agreed and stated that the lodging fund dollars should go into the general fund.

However, Werner responded that city needs to exert the same level of control that the Wildwood casino does in running its gaming establishment. “We control our money,” said Werner, who continued to push for allocating future lodging money for additional marketing dollars. Wahrer, though, stood his ground and reaffirmed his belief that this money should be part of the government’s general fund. After receiving public comments, the council immediately agreed to scrap the idea of a lodging tax for this year’s election. If it wanted to propose such a levy, it has to finalize its ballot language by the end of July.

Fiscal blues

City officials, though, are worried about the town government’s bottom-line and are trying to do what they can to spark more economic development.  Besides  embarking on a $4.5 million facelift of Bennett Avenue, the council agreed last week to alter its development code in way that could make current vacant casino properties easier to develop by re-establishing commercial zones in the downtown area.  These could allow gaming property owners more flexibility for the types of uses for these buildings.  Previously, casinos were located in what was considered as a business and historic section of town and didn’t have much leeway, if their project didn’t work out as a gaming establishment.

The council last week also agreed to ease up on some of the historic restrictions for certain projects located in the business buffer areas to spark more small business development. If a project under consideration is less than 3500-square feet, the property owner or business operator won’t have to get approval of the building’s historic façade, a regulation that has existed since the beginning of gaming. According to city officials, this change could lower the development costs for future business owners  and make the town more user-friendly from a development perspective