Cripple Creek Hedging its Bets on Future Lodging Tax Pro-Broadband Initiative Facing Voter Scrutiny Rick Langenberg

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The city of Cripple Creek is rolling the dice on the prospects of local voters agreeing to approve possibly $600,000 in additional annual revenue from a proposed 6 percent lodging tax assessed on overnight rooms that visitors pay for.

The lodging tax proposition will appear on the November ballot. If it goes into effect, officials say the city will get a little breathing room in financing a growing level of services and can spend more money on marketing and promoting tourism. However, the biggest obstacle facing the city deals with past history, as several previous lodging tax efforts have failed miserably.

But Cripple Creek leaders contend that times have changed with a better economy and a more business-friendly environment. Plus, they say the town must address the fact that they can’t continue to dip into their savings account to operate the city.

With no objections from any residents or casino operators, the city council last week unanimously approved a resolution that puts a proposed lodging tax on the Nov. 8 ballot.

Following a lengthy workshop, the council agreed to set the proposed tax at 6 percent and impose a $600,000 annual revenue limit per year on the levy. Realistically, though, town leaders are projecting that based on the current lineup of non-comp, paid rooms in the city, Cripple Creek could only generate about $400,000 in extra revenue if the proposition passes. The elected leaders have hinted that the lion’s share of these extra monies would go into marketing and promotional efforts, but they fell short of making any firm stipulations on the ballot question.

“You lose your flexibility,” warned Finance Director Paul Harris during a workshop last week. Harris reminded the council that the town had to foot the bill for many services and still was struggling due a low number of betting devices. Gaming device fees serve as the primary way the town government is funded.

Harris stated that if tough times occurred, the city may put itself into a position that it couldn’t fund basic services, such as infrastructure and police. He stressed that the device count has reached a two-decade low and the town has been using its savings account to fund operations.

Several council members, though, questioned if the ballot question may fare better if the extra money is tailored specifically towards marketing and events. “It is for the benefit of the citizens,” said Mayor Pro Tem Steve Zoellner, who threw out the idea of adding ballot language to stipulate putting the money towards marketing and tourism purposes. But at the same time, he wanted to allow the town government to use the funds for other municipal services if needed.

However, City Attorney Lee Phillips cautioned about doing that. “That is a highly risky endeavor,” said Phillips, who cited concerns over a “breach of faith” perception if the city restricted how the money could be allocated, and then had to spend it for something else. Both he and Harris proposed keeping the options open as far as how the money can be used.

But most elected leaders agree that marketing will be the primary beneficiary of these funds, if the lodging tax gets approved by the voters. They also raised questions about their ability to campaign for the issue.

“You don’t surrender your citizenship,” said Phillips. He gave the green light for council members to lobby for the passage of the issue, as long as no public monies are used.

City Administrator Ray DuBois emphasized that a lodging tax would actually benefit the casinos and the community. With this extra money, both he and Harris stated that this would ensure the continued stability of the joint advertising campaign between the city and the casinos. City officials and leaders also noted that Cripple Creek is one of the few destination and tourist-related areas in the state that doesn’t have a lodging tax.

According to DuBois, the local casino association has supported the measure as long as comp rooms are not taxed.

The city currently has a lineup of approximately 510 nightly rooms, according to a fact sheet provided by Harris. But 50 percent of these are given away free to regular players at local casinos. Based on its analysis, the city would only be able to tax about 255 rooms.

Even with taking comp rooms out of the equation, DuBois noted that the issue would require a lot of public education. Past efforts to support a lodging levy haven’t occurred due to considerable opposition from the gaming community. This time, no major casino operators have opposed the tax.

Another big hurdle involves a big ballot, with the presidential elections slated for this fall. “We have a lot of things placed on the ballot,” said Councilman Tom Litherland. “This thing may get lost.”

Telecommunications vote approved
In fact, the proposed lodging tax proposition was just one of two ballot issues approved by the council last week.

The council also okayed a measure to allow, with voter support, plans to permit the city to free itself from restrictions that bar the town from entering the telecommunications arena. This will mainly deal with doing leases and entering into partnerships with private providers to assure better communications capabilities for local residents and business operators.

Cripple Creek, along with several governmental entities and school districts in Teller County, wants to try to snag grants for improved broadband Internet, cell phone and emergency radio services. The Teller and lower Ute Pass area combined could be eligible for more than $9 million in grants.

But according to DuBois, the city would be restricted from doing any type of partnership with private providers for the “middle mile” to offer complete broadband service to residents. Currently, Teller County basically resides in the “Dark Ages,” according to the definition of broadband Internet, with less than 5 percent having the speeds required of this designation.

A jackpot of grants through the state and federal government are available. But unless local voters in cities and the county agree to “opt out” from the restrictions of current state legislation, with SB152, their choices are limited and the costs are extremely high for private providers. More specficially, the governments can’t do any partnerships, period, with private companies.

During last week’s meeting, DuBois made it clear that the city isn’t interested in starting a cable company or becoming a private Internet provider. He said they mainly want to work with private companies to provide better broadband connections to local residents.

According to DuBois, citizens in cities and counties throughout Colorado have overwhelmingly approved this opt-out measure. Unfortunately, he said a state plan to reverse this earlier legislation, which would have negated the need for a local ballot issue, didn’t occur this year.

The council unanimously approved the measure, but expressed some bafflement over why this issue had to come before a local vote. But this will become a common trend throughout the county. Similar ballot measures will most likely come before voters in Victor, Woodland Park and Teller County.