HomeMy WebLinkAbout05-02-22 Study Session Agenda PacketSTUDY SESSION AGENDA
CITY COUNCIL
CITY OF WHEAT RIDGE, COLORADO 7500 W. 29th Ave. Wheat Ridge CO May 2, 2022
6:30 p.m.
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Public Comment on Agenda Items
1. Affordable Housing Strategy and Action Plan
2. Short-Term Rental Lodgers’ Tax
3. Staff Report(s)
4. Elected Officials’ Report(s)
Memorandum
TO: Mayor and City Council THROUGH: Kenneth Johnstone, Community Development Director
FROM: Jeff Hirt, Senior Neighborhood Planner DATE: April 22, 2022 (for May 2 study session)
SUBJECT: Affordable Housing Strategy and Action Plan
PURPOSE: The purpose of this study session agenda item is for City Council to get an understanding of the
purpose and anticipated outcomes of the Affordable Housing Strategy and Action Plan (“Plan”)
and provide initial feedback on the project. Attachment 1 includes more detailed study session goals and three questions the project team would like for City Council to come to the meeting ready to discuss. This is the first of three anticipated Council meetings on this project in 2022.
BACKGROUND:
Addressing affordable housing is one of the City and State’s most pressing issues. The Colorado Department of Local Affairs awarded the City a grant in October 2021 for this Plan with City Council’s support via Resolution 45-2021 on September 13, 2021. This grant stems from a new State program to support local governments in developing affordable housing strategies. The City has no such strategies in place nor any recent community-specific housing needs
assessments in contrast to peer nearby cities. This grant enables the City to complete this work that acts as a foundation for future City decisions related to housing. City Council approved the budget allocation and contract award on March 28, 2022 for the firm czb to complete this work. The related City Council memo provides more background on the
grant application and the need for this project. Czb will share more project information and some initial key Wheat Ridge housing market findings at the May 2 study session to inform the discussion. The next City Council discussion on this topic is planned for late Summer 2022 and will include more detailed findings from the data analysis and stakeholder conversations and a strategy preview for Council’s consideration.
CITY COUNCIL FEEDBACK REQUESTED The project team is requesting that City Council come prepared to discuss three key questions about this Plan on May 2, as summarized in Attachment 1:
1. What does the term “affordable” mean to you?
2. Who are you most concerned cannot afford to live in Wheat Ridge? 3. What do you want to learn or get out of this project? Attachments
1. Affordable Housing Strategy and Action Plan Discussion Prompt
Item No. 1
Discussion Prompt for May 2, 2022
City Council Study Session
Affordable Housing Strategy and Action Plan
Council
understands the
purpose, general
scope, and timeline
of the project.
Goals for
Study
Session
Council understands
the boundaries of this
specific project and
the need for future
work.
Council shares
questions and
project aspirations
with staff and czb.
Staff and czb
understand specific
items of interest
from Council.
It may be true that ten or fifteen
years ago, Wheat Ridge would
not have been categorized as
a place with a major housing
affordability problem. Since
at least 2010, Wheat Ridge
housing costs have been on
the rise, but one could also
argue that it has been relatively
affordable compared to other
options. But even pre-Covid,
it was clear that none of that
really mattered any longer—it
was becoming increasingly
expensive to rent or buy in
Wheat Ridge. The last two years
have only seen matters get
worse in that regard.
As Council anticipates the Study Session, we ask that you give some
thought to the following questions and come prepared to discuss:
This new project, the Affordable
Housing Strategy and Action
Plan, is not aimed at proving
there is an affordability
challenge. Rather, it is aimed
at determining the scope and
scale of the challenge, who is
most affected by it, what the
City would like to do about
it, and how the City might
respond over time. The project
will include plenty of technical
analysis, and produce data to
inform both policy makers and
the general public, but ultimately
it will lead to important policy
discussions that depend on
more than just data.
This brings us to the purpose
of the May 2 study session.
The project is just now getting
underway, and an important
step is to talk to City Council
about aspirations, questions,
and concerns it may have, both
as a body and as individual
council members. This
discussion will allow staff and the
consulting team to understand
what is on Council’s mind(s) as
the project begins, and provide
some guidance as to where the
project might direct more or less
attention.
1 2 3 4
What does the term “affordable” mean to you?
Who are you most concerned cannot afford to live in Wheat Ridge?
What do you want to learn or get out of this project?
ATTACHMENT 1
Memorandum
TO: Mayor and City Council
THRU: Patrick Goff, City Manager FROM: Allison Scheck, Administrative Services Director Gerald Dahl, City Attorney
DATE: May 2, 2022 SUBJECT: Short-Term Rental Lodgers’ Tax ISSUE: Short-term rentals (STRs) are defined as dwelling units or portions thereof used for lodging
accommodations for transient occupancy, for compensation, for a period of less than thirty
consecutive days. STRs are subject to the City’s 10% lodgers’ tax, in lieu of sales tax. At the Regular Business Meeting on March 28, 2022, Mayor Pro Tem Hultin and Councilmember Hoppe requested that the lodgers’ tax pertaining to STRs be studied at a future meeting. Specifically,
they requested to evaluate lowering the STR portion of the City’s current lodgers’ tax and dedicate
those revenues to affordable housing and/or homelessness initiatives. PRIOR ACTION: Effective January 1, 1986, the City has collected 5% lodgers’ tax on the rental or furnishing of
accommodations for periods less than 30 days. At the 1998 election, Wheat Ridge voters increased
the lodgers’ tax to 10% with the incremental revenue dedicated to improving infrastructure and increasing crime prevention resources in areas throughout the City but specifically in the motel district of I-70 and Kipling.
In February 2021, Council passed ordinance 1709, enacting a licensing program for STRs and
making conforming amendments to the City’s tax and zoning code. STRs, by definition, are covered under “Lodging Services.” STRs began obtaining licenses in May 2021 and remitting lodgers’ tax in August 2021.
FINANCIAL IMPACT:
Lodgers’ tax revenues are split among the General Fund, Crime Prevention Fund and Capital Improvement Program Fund. As mentioned above, the incremental 5% lodgers’ tax revenue, as passed by voters at the 1998 election, is dedicated to increased crime prevention activities (30% of total revenues) and infrastructure improvements (20% of total revenues). The following table lists lodgers’ tax revenues by year and fund beginning with 2019.
Item No. 2
Staff Report: Short-Term Rental Lodgers’ Tax May 2, 2022
Page 2
Fund Percentage of total 2019 2020 2021 2022 (estimate)
General Fund 50% $ 756,359 $ 426,294 $ 744,243 $ 750,000
Crime Prevention Fund 30% $ 453,815 $ 254,341 $ 405,602 $ 450,000
Capital Improvement Program Fund 20% $ 302,544 $ 169,561 $ 270,435 $ 300,000
Total 100% $1,512,718 $ 850,196 $1,420,280 $1,500,000
Based on the first seven months of tax collections, the City estimates the lodgers’ tax revenues from
STRs to be approximately $240,000 per year. These revenues are split among the General Fund (50%), Crime Prevention Fund (30%) and Capital Improvement Program Fund (20%) as is the case with all lodgers’ tax revenues.
Based on tax collections, the estimated STR business in Wheat Ridge is valued at approximately
$2.4 million annually. For each one percent reduction in the lodgers’ tax (i.e. 10% to 9%) the City will receive approximately $24,000 less in lodgers’ tax revenue. DISCUSSION:
Staff received research assistance from the Colorado Municipal League (CML) to compile a Metro
Denver summary of STR applicable taxes as presented in the following table.
MUNICIPALITY Sales tax Lodging/ accommodations tax Total tax
ARVADA 3.46% 2% 5.46%
AURORA 8% 8%
BOULDER 7.5% 7.50%
BRIGHTON 3.75% 3% 6.75%
BROOMFIELD 4.15% 1.50% 5.65%
CASTLE ROCK 4% 6% 10%
CENTENNIAL 2.50%
2.50%
COLORADO SPRINGS 3.07%
3.07%
DENVER 10.75% 10.75%
EDGEWATER 3.50%
3.50%
ENGLEWOOD 3.50% 2% 5.50%
FEDERAL HEIGHTS 4%
4%
GLENDALE 3.75%
3.75%
GOLDEN 3% 6% 9%
GREENWOOD VILLAGE 3% 3% 6%
LAFAYETTE 3.87% 2% 5.87%
LAKEWOOD 3% 3% 6%
LITTLETON 3.75%
3.75%
LONE TREE 2.8125% 6% 8.8125%
LOUISVILLE 3.65% 3% 6.65%
LYONS 3.50%
3.50%
NORTHGLENN 5% 5%
PARKER 3% 3% 6%
SHERIDAN 3.50% 3.50%
THORNTON 7% 7%
Staff Report: Short-Term Rental Lodgers’ Tax May 2, 2022
Page 3
WESTMINSTER 7% 7%
WHEAT RIDGE 10% 10%
WOODLAND PARK 4.09% 5.70% 9.79%
It is important to note that some communities listed in the table do not have active licensing and enforcement programs, meaning that they are not actively pursuing tax collection on STR activities. TABOR Considerations
Creation of a new tax is subject to Article X, Section 20 of the Colorado Constitution – the
Taxpayer’s Bill of Rights (TABOR). Under TABOR, no new tax or increased rate for an existing tax may be imposed by the City unless it has first been approved by the voters. However, the elimination or reduction of an existing tax does not require a TABOR election. The reduction for the STR portion of the lodgers’ tax can be implemented by City Council adopting an ordinance. However, as
is the case of any other ordinance, Council can choose to adopt an ordinance and refer the question
to the ballot for Wheat Ridge voters to consider. Options for Consideration There are several options for consideration to help Council achieve the desired outcome. The options
range in complexity and levels of legislative action and resident involvement.
1. Budgetary/Administrative Process Should Council desire to keep STRs at the current lodgers’ tax rate of 10%, Council could decide to restrict the STR-generated tax revenues for housing and homeless purposes. This
would be achieved administratively through the annual budget process. No ordinance or
election is required in this scenario. 2. Reduce STR Portion of Lodgers’ Tax by Ordinance Council could reduce the STR portion of the lodgers’ tax rate by ordinance by amending
Section 22 of the City’s Code of Laws. In this instance, the STR tax is still subject to the split
among the General Fund (50%), Crime Prevention Fund (30%) and Capital Improvement Program Fund (20%). 3. Adopt an Ordinance Effective Upon Approval of Referred Measure
Council could pass an ordinance lowering the STR portion of the lodgers’ tax rate and
provide that the ordinance is only effective upon approval of a referred measure to the electorate. In this instance, the STR tax would be split among the funds as noted above. Sample ballot language is as follows:
SHALL ORDINANCE No. _____SERIES 2022, AN ORDINANCE REDUCING THE
RATE OF LODGERS’ TAX FOR SHORT TERM RENTAL LODGING FROM 10% TO ___%, BE APPROVED [OR… BE PERMITTED TO TAKE EFFECT] AND THAT THOSE REVENUES WILL BE USED FOR AFFORDABLE HOUSING AND/OR HOMELESSNESS INITIATIVES?
4. Referred Measure Asking for Voter Approval Council could refer a question to the electorate, asking whether the STR portion of the lodgers’ tax should be reduced. In this case, Council could also ask that the revenues generated specifically from STRs be exempt from the split among funds and instead be
Staff Report: Short-Term Rental Lodgers’ Tax May 2, 2022
Page 4
dedicated 100% to affordable housing and homelessness initiatives. Should the measure pass, Council will then pass an ordinance to implement the change. Sample ballot language is as follows:
SHALL THE RATE OF LODGERS’ TAX FOR SHORT TERM RENTAL LODGING BE
REDUCED FROM 10% TO ___%, BY AN ORDINANCE OF THE CITY COUNCIL AND SHALL THOSE REVENUES BE DEDICATED TO AFFORDABLE HOUSING AND HOMELESSNESS ISSUES?
Additional Considerations
• Timing Should a ballot measure be Council’s desire, an ordinance referring a question must be adopted by August 22 in order to meet the County’s deadline for the coordinated election.
• Election Cost The cost to add a question to this year’s ballot is approximately $20,000. Currently, $14,000 is budgeted in the City Clerk’s account to cover this expense. NEXT STEPS: Staff is requesting direction from Council on next steps with regards to applicable STR lodgers’ taxes.