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Ketchum proposes increasing tourism taxes for housing

A spread-out crowd sits in a plaza in downtown in Ketchum to hear people speak about adorable housing challenges.
Rachel Cohen
Boise State Public Radio
More than 100 people gathered in downtown Ketchum last year for a demonstration in support of affordable housing.

On the ballot this May for voters in Ketchum will be a measure city officials say is the best way to generate funds for workforce housing.

The Ketchum City Council passed an ordinance Monday night to ask for residents’ support in increasing local option taxes for workforce housing.

The proposal includes raising the sales tax on retail goods from 2% to 2.75%, on building materials from 2% to 3%, and on lodging, short-term rentals and liquor from 3% to 5%. That would generate an additional nearly $3 million annually solely for workforce housing, according to city estimates.

Currently revenues from the local option tax – only available to Idaho’s resort cities – can just be used for purposes Ketchum voters have approved like public transportation, emergency services and capital improvements.

The ballot language proposes changing that by adding “Workforce Housing Provision and Support” as a valid use of the tax revenue.

“We really need to find a source that’s reoccurring every year to go towards housing,” said Jade Riley, the Ketchum city administrator.

The money could go toward several programs housing consultants are identifying as the most promising near-term solutions to Ketchum’s affordable housing shortage. That could mean rental assistance or a new program to incentivize renting to local workers, among other things.

The biggest pushback the council received was on the tax for retail goods – initially proposed as a 1% increase. Some business owners feared it could drive sales toward Amazon instead and some local residents worried the tax would burden them and not just tourists.

“It is really important to me that we have a lot of local leaders on board with us and that’s a lot of business owners,” said Council Member Courtney Hamilton.

The council voted to lower the increase on retail by a quarter of a percent.

An ongoing effort to address the lack of affordable workforce housing in Ketchum has concluded the city needs between 60 and 100 housing units to become available each year to keep up with growth and demand. That could include new construction, the conversion of short-term rentals to long-term ones, or the preservation of existing housing options.

A review of other Mountain West resort cities found Ketchum far lags its peers in terms of city funds dedicated toward housing, as well as the number of deed-restricted units available.

City officials, including housing consultant Carissa Connelly, say dedicating some LOT revenue towards housing is one of the most sustainable options available because several methods used to create affordable living options in other resort communities – like inclusionary zoning and real estate transfer taxes – are not permitted under Idaho law.

The measure will appear on the May 17 election ballot and needs 60% of voter support to pass.

Correction: This story originally said the local option tax measure needs two-thirds of voter support to pass.

Find reporter Rachel Cohen on Twitter @racheld_cohen

Copyright 2022 Boise State Public Radio

As the south-central Idaho reporter, I cover the Magic and Wood River valleys. I also enjoy writing about issues related to health and the environment.

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