After some debate, Centennial council will explore adding lodging tax ballot question

Council members had mixed reactions to a 5% lodging tax proposal

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Following some debate during its July 18 meeting, Centennial City Council voted 7-2 in favor of further exploring the addition of a lodging tax question to the November ballot. 

Eric Eddy, the assistant city manager, presented the drafted ballot language for a proposed 5% lodging tax, making for an estimated revenue of $1.5 million in the first year. The tax would be imposed on the price of a short-term rental, meaning less than 30 consecutive days, in any hotel, inn, bed and breakfast or Airbnb located in the city.

Centennial currently does not have a lodging tax. With the city’s 2.5% sales tax rate on lodging services, the proposed 5% lodging tax would make for a combined total tax rate of 7.5%, Eddy said. 

For example, if a hotel room rate was $100 per night, the sales tax would be $2.50 and the proposed lodging tax would be $5, making it a total tax of $7.50, according to the staff report

Mayor Stephanie Piko asked how the proposed rate compares to Lone Tree and Greenwood Village, which she said are the locations Centennial competes against the most along the I-25 corridor. 

Eddy said Greenwood Village is set at a 3% lodging tax and a 3% sales tax on lodging, making for a combined 6%.

Lone Tree levies a 6% lodging tax and no sales tax on lodging services, making it a combined rate of 6%, he said. 

Piko said she is not sold on the 5% rate, saying it is not as competitive as the surrounding communities. She said she’d like a PDF copy of the ballot language to present to the community to get feedback and make sure people understand it. 

“I think there’s always an inherent disadvantage to a 14-line ballot question,” she said. “So, I always appreciate getting some feedback from people.”  

Timeline and need for community feedback

Councilmember Candace Moon asked Eddy if staff had a report from the business community about how they feel about the proposed tax. Eddy said staff has not yet gotten that information because further clarification is needed on the proposed language. 

“It becomes difficult for us to go to the business community and say we’re considering a lodging tax, with a couple of these questions unanswered. And that’s the purpose of the discussion tonight, is to really get some general consensus on whether or not we’re moving forward with this, at what rate, and what the revenues will be used for,” Eddy said.  

Council members Robyn Carnes and Christine Sweetland echoed Piko’s sentiment that the tax rate should be more similar and competitive to that of Lone Tree and Greenwood Village. 

As for what the revenue will be used for, the proposed ballot language states it is “to be spent on projects and services addressing visitor impacts in the areas of public safety and any other lawful municipal purpose.” 

To add the question to the November ballot, council has to adopt a resolution establishing the ballot question by Sept. 9, with Eddy proposing council make this decision during the Sept. 6 meeting. 

In the meantime, Eddy said staff will begin a process of reaching out to local businesses.  

“We do plan to come back to council prior to that September 6 date to share that feedback and, ultimately, to allow council the time to consider it prior to the formal action that would need to be taken on September 6,” Eddy said, estimating staff could provide an update on Aug. 15. 

Council members Carnes and Sheehan against considering lodging tax 

Councilmember Carnes voted against further consideration of the lodging tax. 

“I’m just gonna throw out, once again, is this the best time for it, given all that’s going on in our country right now?” Carnes said. 

District 4 Councilmember Don Sheehan said the potential revenue of the tax is minimal and the purpose of asking for the tax is unclear. He said the city has nearly $31 million saved up, and that much of that money is currently uncommitted to any projects. 

“We have a lot of money. Why would we ask for more?” Sheehan asked. “I think, in general, the lodging tax is the wrong answer at the wrong time.” 

He expressed concern about the impact a lodging tax may have on large businesses in Centennial, such as Comcast, Arrow Electronics and United Launch Alliance, which bring people to town for business. 

“They’re being pinched right now by these escalating prices, a recession that’s coming around the bend — so their business, their revenues are slowing down. If we throw another expense on top of what they’re doing, the answers might not be real happy,” he said. 

If a recession was to happen, Sheehan said he would not want “to add insult to injury by proposing that we add another expense to the businesses in our community.”

Sheehan also pushed back against the idea that a benefit of the lodging tax is that it’s primarily non-Centennial residents who pay it. 

“I’m not sure where we go from ‘Welcome to Centennial’ to ‘Stick it to strangers.’ And we’re not really sticking it only to strangers, but again, we’re sticking it to the businesses,” he said. “I think we need to be cautious in imposing something, or potentially imposing something, on the businesses of our city if we don’t have a damn good reason to do so. And we don’t have a damn good reason to do so.”  

In the future, if the city wanted to ask “for some serious money,” such as funding for a transportation management plan, however, Sheehan said that would be a legitimate ask, and he would have no problem asking taxpayers “for additional money, maybe big money, to do a very important project for the city.” 

A hotel near East Arapahoe Road and South Havana Street Aug. 2, 2018, one of the many in Centennial near the Interstate 25 corridor. Law enforcement officials told the Centennial City Council more hotels likely wouldn’t increase the risk of human trafficking in the city.
A hotel near East Arapahoe Road and South Havana Street Aug. 2, 2018, one of the many in Centennial near the Interstate 25 corridor. Law enforcement …

Sweetland counters Sheehan’s points

Councilmember Sweetland said she appreciates the points Sheehan brought up, but she had a few counterpoints to offer. 

“One of the things that makes Centennial unique is that we have no debt. So yes, we do have $31 million in the bank. But you know what? We have a lot of projects we can’t do right now because we don’t have enough money for that,” Sweetland said. “We wait until we have the money, and then we spend it.”

During strategic planning the council did in July of last year, it was projected that in the next five to six years, the city’s expenses will outrun its revenues, Sweetland said.

“We need to do something about that. So we can wait, in five or six years, and then ask our taxpayers five different ballot questions to increase taxes — five different things, including a lodging tax. Or, we can go to our taxpayers right now and say, ‘We’re gonna do some incremental changes in our tax code,” Sweetland said. “And actually, all we’re doing is asking our taxpayers to make that decision.” 

Sweetland said she would rather see the lodging tax rate around 3.5% to 4% to maintain competitiveness within the region. 

“I just think that we owe it to the taxpayers to actually give them the opportunity to make this decision, because in a couple years, we’re gonna ask them for a lot of money that they’re going to have to pay, by increasing their sales tax,” she said. 

She said that conversation would be a lot easier if council can show the incremental steps it has taken to help taxpayers save money in the long run. 

On Monday, July 18, 2022, council members Robyn Carnes and Don Sheehan were the two votes in opposition of further consideration of adding a lodging tax question to the November ballot. Sitting behind the desk on the left is Eric Eddy, the assistant city manager.
On Monday, July 18, 2022, council members Robyn Carnes and Don Sheehan were the two votes in opposition of further consideration of adding a lodging …

Councilmember Sutherland changes mind after hearing others’ feedback 

Initially, District 3 Councilmember Mike Sutherland was not in favor of exploring the lodging tax. 

“I really do think, sooner rather than later, we’re gonna have to go for the big ask. The big ask being an increase in our sales tax,” he said, noting that council will have to really make its case before going to voters to ask for a tax increase. “So, I’m inclined not to support this at this time, and I’ve given it a lot of thought.” 

District 4 Councilmember Marlo Alston said she views the lodging tax ballot question and potentially asking voters in the future to increase the sales tax as two different matters. 

“What I’ve heard is, ‘I’m not really in favor of it because I’m gonna count your pocketbook, and you may or may not think that it’s a great time.’ I don’t think that’s fair to our voters,” Alston said. 

Alston said she thinks the council owes it to residents and business owners to go out and collect their input on this. “Right now, I can’t say yes or no because I haven’t heard from either one of them regarding this.” 

District 2 Councilmember Tammy Maurer pointed out things the $1.5 million revenue could help the city pay for, such as funding the homelessness coordinator position the city has discussed developing, or helping fund the co-responder program with the Arapahoe County Sheriff’s Office, or increasing the number of resource officers in schools.  

“That’s what our ask is for — is for safety,” Maurer said about the purpose of the lodging tax. 

Piko said she appreciated Maurer pointing that out and that public safety is something residents have said they want more of. She also said that deciding whether to add a lodging tax ballot question is really difficult.

“There’s a lot for all of us to think about, and I think there’s a lot of questions for us to ask our constituents,” Piko said. “No one takes this lightly. We understand what we’re doing and that obviously, many of us are very torn between, you know, what the right path is for the city.” 

Following the comments of other council members, Sutherland said he was persuaded to get more information. Councilmember Richard Holt of District 3 also said he wants more information and to hear from the business community. 

With seven votes in favor of continuing to explore adding the lodging tax ballot question, Sweetland encouraged residents to contact council members and share their thoughts on the matter. 

“Now’s the time to let the mayor and all of us on city council know how you feel, so that we get a good gauge as to moving forward as well, because we are your representatives,” Sweetland said. 

Those interested in learning more about the lodging tax proposal can visit: centennialco.gov/Government/City-Projects-and-Initiatives/Lodging-Tax 

Centennial, Lodging Tax, November ballot, Centennial City Council

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