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Ketchum voters will decide on May 17 whether to approve an initiative by the city to raise local sales taxes to fund a variety of programs to add to the stock of workforce housing.
The ballot will ask citizens a two-part question:
Should the city add “workforce housing provision and support” to a list of authorized uses for local-option taxes?
Should the city increase local-option taxes by percentage-point increases of .75% on retail sales, 2% on lodging, 2% on by-the-drink liquor and 1% on building materials, with the extra tax revenue going to exclusively fund workforce-housing projects?
Voters will have the option of casting a single vote either in favor of or against the proposal.
Per state law, changing the city’s LOT ordinance will need approval of at least 60% of Ketchum voters.
The initiative to increase the self-imposed local taxes is part of a far-reaching city Housing Action Plan to develop new affordable housing, preserve the affordable units that exist and bring some existing market-rate or under-used units into the affordable-housing pool. Through analysis, Ketchum has determined that it needs to develop, preserve or convert 660-980 affordable, workforce units over the next 10 years, depending on the city’s population growth rate. Some funding sources exist but the projects—which, in a conceptual form, are estimated to cost $5.5 million to $7.5 million per year —are generally not yet funded.
City Council members voted 4-0 Monday to adopt the Housing Action Plan through a resolution that allows it to be changed and updated.
One major source of funding identified in the plan is the proposed changes to the city’s local-option taxes. If voters approve the proposal, it could add some $2.8 million to annual LOT income—a projection based on revenues from the last fiscal year—that would be used only for workforce-housing initiatives. The money would not be tied to restrictions that typically come with federal or other outside contributions.
Other sources of funding identified by the city include philanthropic, employer and investment funds. The city is using $864,000 in federal, non-renewable American Rescue Plan Act funds toward housing initiatives and brings in some money through so-called “in-lieu” fees charged to developers who opt not to include required affordable housing in a project, but those sources are not enough to make a substantial dent in the housing goal, city officials have said.
“A regular revenue stream is needed to implement the Housing Action Plan and help leverage philanthropic and business participation,” a city informational brochure states.
Currently, eligible uses for Ketchum LOT funds include transportation, recreation, capital improvements, emergency services, promoting the city to visitors, property-tax relief, and costs related to collecting and enforcing the taxes. The funds have been allocated to yearly line items in the city budget to fund operations such as the Mountain Rides Transportation Authority and the Visit Sun Valley business and marketing organization, as well as emergency services. Some of the money is slated to go toward funding a rebuild of one of the city’s main thoroughfares, Sun Valley Road.
Housing projects are currently not an approved use of LOT funds.
Currently, Ketchum collects a 3% LOT on room sales (including both hotel rooms and short-term rentals), a 3% LOT on by-the-drink liquor sales, and a 2% LOT on general retail sales and building materials (but excluding groceries). The city is authorized by the state to collect the taxes through a law that allows small resort cities to tax specific sales categories to offset in their budgets the financial impacts of hosting high numbers of visitors. The city has estimated that visitors pay about 72% of the local taxes in Ketchum.
The percentages include a 1% LOT in the same sales sectors collected through a voter-approved initiative to support commercial air service in the Wood River Valley. Those tax funds are set aside and transferred monthly to the Sun Valley Air Service Board, which allocates the funding to subsidize and market commercial flights into Friedman Memorial Airport in Hailey.
The current approval of the city’s general LOT lasts until the end of 2027. The so-called “1% for Air” tax is approved until the end of 2023. Voters must renew the taxes for them to continue to be collected beyond those dates.
In fiscal year 2021, the city collected a total of about $6.15 million in local taxes, including the city’s portion and the “1% for Air.”
If approved, the amendment to the LOT ordinance would raise the city’s LOT percentages to 2.75% on retail sales, 3% on building materials, and 5% on lodging and liquor. When added to the state sales tax of 6% (and other lodging taxes), Ketchum would have an 8.75% tax on retail sales, 9% tax on building materials, 11% tax on by-the-drink liquor and 13% tax on lodging and short-term rentals.
While the city has conducted an educational campaign about the proposed tax increases and numerous residents have called for its approval, others have expressed opposition. Ketchum resident Mallory Walker has campaigned against the new taxes, suggesting that the city should simply add the word “housing” to approved uses.
“Amend the wording, don’t impose a new tax,” he wrote in a letter to the editor published in the Express last month.
In a May 1 rally in Ketchum Town Square to support affordable housing and the tax initiative, City Councilman Michael David—speaking as a resident, not a politician, he said—made the point that existing LOT collections are not sufficient for housing programs and encouraged citizens to participate in the May 17 election.
“LOT is a local sales tax allowed for Idaho resort cities to provide revenue on chosen tourist-related items.” - City of Ketchum
Agreed. The LOT, if used as intended, gives financial relief to the residents/workers of Ketchum from the need to provide additional services required by visitors/ tourists that place an undue financial burden upon the taxpayers of the city.
Unfortunately, the increase in LOT tax that the Ketchum voters are being asked to vote on will not just increase the tourist related items, but will hit the pocketbook of the people it was designed to give relief to, the residents/workers of Ketchum. The proposed increase of non-tourist related collections (Retail and Building Materials) that this vote is asking for, will be approximately 50% of the total collection!
Keep the LOT a “Tourist Tax” and vote “NO” on May 17.
Every voter needs to take the time to read and understand what these LOT taxes are all about. At the end of 2021, Ketchum had over $3M in LOT taxes and over $13M in unrestricted funds. If they would sell the City Hall/Fire Station properties, like they should and as a fiscally responsible city would, those funds could be used in a fiscally responsible manner. In addition, that new development's owners would be paying taxes rather than Ketchum handing out endless funds to an out of state developer that is not paying a dime. The tax revenue that is being lost by not selling these properties lacks all common sense...but, why not spend over $800K PER UNIT on Bluebird ???? The locals should NOT be taxed for a situation that is not their fault. As Perry stated, PLEASE read the housing plan before you vote.
Good golly Miss Mollie! You would thing the Cory would want people to read the plan to why are voting on. But would you believe it’s no longer on the website? https://www.projectketchum.org/local-option-tax/
The Mayor and Council are campaigning for a referendum on a plan they won’t let you read. If this is the level of transparency before the vote, can you imagine how transparent they will be after the vote? We need to hold them accountable. Vote AGAINST so we can finish the plan.
Pretty convenient that our elected officials will most definitely blame all of us for their absolute lack of vision and action during the past decade if this measure fails.
100% agree with PB&J! This taxing solution is out of control! How is it possible that our WRV city gov'ts have record revenues and yet at the same time they are demanding we locals must now increase our taxes to 8.75% on retail sales and 9% tax on building materials?! This is crazy! Wake up, people. There are other solutions!
This is the wrong approach. Raising the LOT on locals to over $2.5mm a year is not necessary. It’s taxing the victim to benefit the mugger. We could have increased the lodging LOT more. The educational effort by the City is….I am searching for the right word….promotional? Incomplete? For example, did you know that the Legislature is likely to raise the state sales tax in the next session by 2%? That would take the Ketchum sales tax to 10.75%. Is there anywhere in their “education” that tells you the dollars spent by locals on LOT? Nope. And they seem to be playing a bit loose with the English language. To most people, “workforce” means people who work. Not to the Ketchum City Council! That is far too limiting a definition. They have changed the word to mean people who don’t work and have no intention of working. Don’t believe me? Read the housing plan. It;s right up there in the definitions. Other massive flaws in their approach. 1. They are trying to meet the demand for housing, not the need for housing. The demand is infinite. The need is for specific types of working people. And they have zero criteria for how to allocate money. That means they can spend it on whatever pet project they want, with no accountability. Why should be be surprised? Read the plan—carefully. If you want a page by page analysis of the plan, email me: boylehp@yahoo.com. Don’t rely on the City to “educate” you—do your own research. The more you learn, the more frustrated you will get. There are solutions for our housing challenges—taxing locals when it should be tourists to implement this plan is not it.
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“LOT is a local sales tax allowed for Idaho resort cities to provide revenue on chosen tourist-related items.” - City of Ketchum
Agreed. The LOT, if used as intended, gives financial relief to the residents/workers of Ketchum from the need to provide additional services required by visitors/ tourists that place an undue financial burden upon the taxpayers of the city.
Unfortunately, the increase in LOT tax that the Ketchum voters are being asked to vote on will not just increase the tourist related items, but will hit the pocketbook of the people it was designed to give relief to, the residents/workers of Ketchum. The proposed increase of non-tourist related collections (Retail and Building Materials) that this vote is asking for, will be approximately 50% of the total collection!
Keep the LOT a “Tourist Tax” and vote “NO” on May 17.
Every voter needs to take the time to read and understand what these LOT taxes are all about. At the end of 2021, Ketchum had over $3M in LOT taxes and over $13M in unrestricted funds. If they would sell the City Hall/Fire Station properties, like they should and as a fiscally responsible city would, those funds could be used in a fiscally responsible manner. In addition, that new development's owners would be paying taxes rather than Ketchum handing out endless funds to an out of state developer that is not paying a dime. The tax revenue that is being lost by not selling these properties lacks all common sense...but, why not spend over $800K PER UNIT on Bluebird ???? The locals should NOT be taxed for a situation that is not their fault. As Perry stated, PLEASE read the housing plan before you vote.
Good golly Miss Mollie! You would thing the Cory would want people to read the plan to why are voting on. But would you believe it’s no longer on the website? https://www.projectketchum.org/local-option-tax/
The Mayor and Council are campaigning for a referendum on a plan they won’t let you read. If this is the level of transparency before the vote, can you imagine how transparent they will be after the vote? We need to hold them accountable. Vote AGAINST so we can finish the plan.
Sorry for typos. On a plane.
This will make it more expensive to live here. They should be trying to help people not chase more away.
Pretty convenient that our elected officials will most definitely blame all of us for their absolute lack of vision and action during the past decade if this measure fails.
100% agree with PB&J! This taxing solution is out of control! How is it possible that our WRV city gov'ts have record revenues and yet at the same time they are demanding we locals must now increase our taxes to 8.75% on retail sales and 9% tax on building materials?! This is crazy! Wake up, people. There are other solutions!
This is the wrong approach. Raising the LOT on locals to over $2.5mm a year is not necessary. It’s taxing the victim to benefit the mugger. We could have increased the lodging LOT more. The educational effort by the City is….I am searching for the right word….promotional? Incomplete? For example, did you know that the Legislature is likely to raise the state sales tax in the next session by 2%? That would take the Ketchum sales tax to 10.75%. Is there anywhere in their “education” that tells you the dollars spent by locals on LOT? Nope. And they seem to be playing a bit loose with the English language. To most people, “workforce” means people who work. Not to the Ketchum City Council! That is far too limiting a definition. They have changed the word to mean people who don’t work and have no intention of working. Don’t believe me? Read the housing plan. It;s right up there in the definitions. Other massive flaws in their approach. 1. They are trying to meet the demand for housing, not the need for housing. The demand is infinite. The need is for specific types of working people. And they have zero criteria for how to allocate money. That means they can spend it on whatever pet project they want, with no accountability. Why should be be surprised? Read the plan—carefully. If you want a page by page analysis of the plan, email me: boylehp@yahoo.com. Don’t rely on the City to “educate” you—do your own research. The more you learn, the more frustrated you will get. There are solutions for our housing challenges—taxing locals when it should be tourists to implement this plan is not it.
Welcome to the discussion.
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