Part 1 of a two-part series.
Voters in three Wood River Valley cities this month have the opportunity to decide whether they support no-net-increase changes to an existing air-service tax to direct some of the revenues to support community-housing initiatives.
Hailey, Ketchum and Sun Valley have all put forth ballot measures that—in similar but not identical ways—ask voters to choose if their city’s “1% for Air” local-option tax should be adjusted to allocate 0.5% to support commercial air service and 0.5% for affordable-housing programs.
The supplemental “1% for Air” taxes were introduced a decade ago to add an additional sales tax to existing city local-option taxes to support commercial air-service routes to the Wood River Valley and visitor-related marketing. They are assessed in different sales categories in the three cities, though they have all been targeted to mostly impact tourists.
In Ketchum and Sun Valley, voters will also determine whether to extend the supplemental tax, which is set to expire in those cities at the end of the year.
Each of the city measures needs 60% voter approval to pass. The votes in the three cities will take place Tuesday, May 16, with early voting open through May 12 at the Old Blaine County Courthouse in Hailey.
The three cities are authorized by the state to collect local-option taxes through a law that allows small resort cities to tax specific sales categories to offset in their budgets the financial impacts of hosting large numbers of visitors. The taxes are applied to a range of categories in the cities, from by-the-drink alcohol sales to charges for hotel rooms. The funds are used to support a variety of city services and projects, including funding emergency services, repairing streets and providing public transit.
The supplemental “1% for Air” tax funds are set aside and transferred monthly to the Sun Valley Air Service Board, which allocates the money to subsidize and market commercial flights into Friedman Memorial Airport in Hailey, as well as to support other tourism-related marketing and outreach. The funds have regularly supported two organizations, the Sun Valley Tourism Alliance—which uses the name Visit Sun Valley in most of its operations—and the Fly Sun Valley Alliance.
It has been determined by some Wood River Valley leaders and officials that a full 1% supplemental LOT is no longer needed to support air service and marketing, though several have stressed that they believe maintaining strong commercial air service to the valley is critical for the economy and the quality of life for many locals.
At the same time, numerous elected officials have prioritized maintaining and establishing community housing amid what has been determined to be a crisis-level shortage of affordable housing and workers in the region.
In all three cities, supporters of the measures and some elected officials are stressing that none of the proposals would raise taxes.
Hailey ballot measure
Hailey’s supplemental LOT—applied to car rentals and revenues from hotel rooms and short-term rentals—has been approved through 2050. Its measure asks if its 1% tax proceeds—approximately $165,000 in fiscal year 2021—should be split evenly between support for air service and housing for Hailey citizens and workers who are housing-burdened.
If the Hailey measure fails, the city would continue to collect the “1% for Air” as it currently exists. If the measure passes, the city would “conduct a robust public process to ask the Hailey community what types of community housing projects they wish to fund,” the city states on its website.
The city has determined that if the measure is approved by voters, it will have approximately $79,000 in the first year to spend on housing initiatives.
Hailey’s “original LOT”—which taxes restaurant food, by-the-drink alcohol, lodging and car rentals—will not be affected by the vote on the supplemental LOT this month. It was also previously approved by voters to be in place until 2050.
Ketchum ballot measure
Ketchum’s supplemental 1% LOT was first approved by voters in 2013 and eventually extended to the end of 2023. It is collected on receipts from hotel rooms, short-term rentals, by-the-drink liquor and general retail goods, including building materials but excluding groceries. In the 2021-22 fiscal year—which ran from October 2021 through September 2022—the city’s 1% LOT yielded slightly more than $3.1 million.
Through its original city local-option taxes, Ketchum assesses a 1% LOT on retail sales, 2% on lodging, 2% on by-the-drink liquor and 1% on building materials. In addition, the “1% for Air” LOT is assessed in the same categories.
The Ketchum ballot question asks voters whether they are in favor of or against extending the 1% supplemental tax for five years starting on July 1, 2023, and splitting the revenue to allocate 0.5% to support air service and 0.5% “for the preservation and creation of community housing.”
The original city LOT will not be affected by the vote.
The city put an initiative to increase LOT percentages charged in Ketchum before voters last May but the measure did not pass. By law, the city had to wait a year before putting a similar initiative on the ballot again.
The ballot last May asked citizens if they approved of using LOT revenue for housing initiatives and if they concurrently approved raising the LOT percentages charged in specific categories. A significant difference between last year’s and this year’s measures is that this year’s proposal does not include any tax increases—only an extension of an existing tax.
Through analysis, Ketchum has determined that it needs to develop, preserve or convert 660-980 affordable-housing units over the next decade or so.
If voters pass the measure, the housing funds “would be placed in a designated account to be used solely for the provision and support of community housing,” the city website states. If the measure does not pass, the city would have no funds for housing “for the next several years” and the Fly Sun Valley Alliance would lose funding from Ketchum when the existing 1% LOT approval expires, the website states.
Sun Valley ballot measure
In Sun Valley, voters will be asked two separate questions. They will have the choice of supporting either, both or neither.
Sun Valley’s ballot asks these two questions:
- Should the city replace the existing 1% LOT with a 0.5% LOT for five years starting on July 1, 2023, for the purpose of supporting commercial air service?
- Should the city replace the 1% supplemental LOT with a 0.5% LOT for affordable housing for a period of five years starting July 1, 2023?
Sun Valley assesses its original city local-option tax and the 1% supplemental tax in the same categories. Including the supplemental tax, it collects a 4% LOT on room sales (including both hotel rooms and short-term rentals); a 4% LOT on food, beverage and by-the-drink liquor sales; a 4% LOT on recreation fees, product rentals and event tickets; a 2% LOT on building and construction materials; a 2% LOT on lift tickets and ski passes; and a 3% LOT on general retail sales.
In the 2021 fiscal year, Sun Valley collected nearly $1.1 million from the “1% for Air” tax.
If both measures pass, a 1% supplemental LOT would divided equally between air service and housing for five years starting July 1. If neither passes, the “1% for Air” will expire on July 1 and no LOT would be assessed for housing.
If the 0.5% for air service passes and the additional 0.5% for housing does not, the current “1% for Air” LOT will be reduced on July 1 and no LOT for housing would be collected. If the air-service initiative does not pass but the housing initiative does, the air tax would expire on July 1 and the 0.5% housing tax would be implemented on July 1. ￼
In Part 2, a look at why the cities are proposing the changes.
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There are no publicly available plans for how the housing portion would be spent. There is no data to support the extent of the housing issue. So please think twice about allocating millions into another bureaucratic black hole. BCHA has been a fiasco, does not understand the status of the deed restrictions on its current inventory, the current income status of the residents, nor which are being rented as airbnb's. Deep sigh...
This is misleading. It makes it sound like most of this money goes to air service. That hasn’t been true for years. Most of the money is channeled via the SVASB to Visit Sun Valley. Has anyone ever seen how that gets spent? The minority that goes to support minimum revenue guarantees for some, not all, of the air service to SUN, has been building up in a bank account. We are talking millions of dollars here. What we also never hear about is how much the IKON pass has impacted winter visitors. Much of the increment in winter tourism has come from IKON promoting Sun Valley. But yet, Sun Valley Co always wants more. And no IKON pass buyer pays LOT on their pass purchase, while locals who buy from SVC do pay that LOT. There is very little transparency in how the money all flow. Fly Sun Valley is using some of the money they get from us to push people to vote for this tax. Can a taxpayer funded nonprofit use taxpayer funds to advocate for a tax that benefits that non-profit? I had recommended they scrap the air fee for now and just raise 1% for housing, which a priority for teachers, first responders, city employees, nonprofit workers and healthcare worker. But that’s not what they are doing. They changed this from workforce housing to community housing. Why? Don’t we have a shortage of workers due to lack of housing? Do we really need more retirees moving here on the taxpayer dime? It it makes sense as Ketchum defines workforce as including both people who work and people who choose not to work. And then, some of this money has been going to subsidize housing for, you guessed it, SVC. And Coldwell Banker. As I work through it, it seems like corporate welfare. Why can’t SVC and other big tourism companies pay to promote themselves? And pay their employees a living wage? Why are locals taxed any amount for their benefit? This just seems to me to be part of the plan to turn this place into Aspen.
Ahhhh, HPB the bloviator is back online. Bloviation to the max!
Agree - the business community is driving the politicians. Credit where credit is due... the SVED messaging has worked, and now local housing activists have been co-opted into the growth agenda. Eliminate zoning and parking restrictions, go 4-5 stories high, wreck the character which sets us apart... and in 20 years we'll not only be Aspen, we'll still have a "housing crisis".
“Hailey’s “original LOT”—which taxes restaurant food, by-the-drink alcohol, lodging and car rentals—will not be affected by the vote on the supplemental LOT this month. It was also previously approved by voters to be in place until 2050.”
Is this correct? I’m recalling this being approved till 2050 through executive fiat, as was the town square, and campgrounds.
Welcome to the discussion.