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DURANGO • Durango and La Plata County have come up with an innovative way to address acute shortages in housing and childcare for their local workers.

In November, a majority of La Plata County voters approved a ballot measure to reallocate 70% of lodger’s tax revenue used for tourism marketing to housing and childcare, instead.

The lodger’s tax vote came after a change to Colorado law in 2022 that allows the tax money to be spent on things other than tourism.

Other mountain resort areas in Western Colorado recently have voted to do the same thing, including San Juan, Dolores, Grand, Chaffee, Eagle, Summit, Clear Creek and Gilpin counties, the Gunnison Local Marketing District, and the towns of Ridgway and Montrose.

Lodging taxes are becoming a palatable way for voters in highly touristed areas to address workforce needs because they are generally paid by out-of-town visitors, not locals. The idea is that local workers power the tourism industry, so visitors should contribute to efforts that support a stable workforce.

In addition to funding new housing projects, the new dollars are being used to help families pay for child care or to boost wages for teachers.

Previously, all of the lodger’s tax in La Plata County — paid by visitors to the county — was spent to promote tourism through Visit Durango, a destination management and marketing organization.

The county anticipates collecting about $850,000 in revenue in 2025, said Meghan Graham, strategic management director at La Plata County.

With the reallocation, $238,000 is budgeted for child care projects, while $178,500 will go toward housing initiatives, according to Graham. $255,000 — or 30% — will still go to tourism.

Graham said that child care and housing have been top priorities for community members the past two years, according to an annual survey conducted by the county.

For childcare funding, the county will seek a third party to review applications seeking funding and make recommendations to the board on how the money is distributed, a similar process officials used to distribute American Rescue Plan money.

Graham said that childcare capacity is the most needed area of assistance, as well as income equity and language equity.

La Plata County is home to eight licensed family homes and 24 licensed childcare centers, down from 16 and 32, respectively, according to the Colorado Sun. In 2023, only 60% of residents in need of early child care services could receive it, according to The Durango Herald.

The housing component of the money will go to the Regional Housing Authority, as well as the La Plata County Homes Fund, which the county already funds, but the reallocation will make up for a budget shortfall.

“We’re in a pretty constrained revenue scenario for 2025 and had to make some pretty significant cuts,” Graham said. “So, the commissioners decided to use the housing portion of the lodger’s tax reallocation for that operational funding for those two entities.”

Reimagining approach to tourism

The City of Durango is also making changes to how it thinks about tourism. Last month, the city hired Mike French to lead a new “prosperity office” overseeing tourism, housing and economic development.

The idea for such an office came from city manager Jose Madrigal, French said, and it seeks to foster collaboration among the three interconnected sectors.

“By aligning strategies and resources, the office ensures that decisions reflect a holistic approach — balancing priorities to advance shared goals and better serve the community’s overall interests,” French said. “This integrated model encourages cooperation, rather than competition, enabling us to create sustainable solutions that support prosperity for all.”

There are already numerous housing initiatives underway in the city. One is the Residences at Durango, a motel conversion west of downtown that will provide low-income housing. French said units will start becoming available this month.

The Residences at Durango will fill a need for housing stock for people who make between 30% and 60% of the area median income, French said.

A 2022 study found that rental costs in the Southwest Colorado region “are substantially higher than Fair Market Rent estimates.”

The city has also acquired a piece of land in the Rivergate subdivision in south Durango, where it hopes to use a public-private partnership to build affordable housing, according to French.

French’s economic development purview will include exploring tax incentives for businesses and grant money for the community.

“I don’t think a community like ours, just a smaller rural mountain community, can really separate tourism economy from economic development, can really separate housing from economic development and any more housing from tourism,” French said. “Housing creates capacity for tourism. Tourism is an engine, one of the main pillars for our economic prosperity.”

Visit Durango-city merger proposed

One of the first agenda items for the new office is pursuing a merger with Visit Durango.

“Some of the turnover at Visit Durango — and changes and review of their spend and financials — had the city start to consider where there might be some opportunities to find efficiencies,” French said. “We looked at their organizational structure, and there’s some natural overlap in sustainability and community engagement.”

The destination management nonprofit is also on board with the merger, with Visit Durango board of directors chair Ken Stone writing a letter of support for the merger addressed to the city manager.

French said work on the merger will start immediately in 2025 and any changes will have to be approved by Durango City Council.

As of Jan. 1, the city took over management of the Durango Welcome Center, which Visit Durango has previously managed under a contract with the city.

Voters inside Durango city limits did not vote on the measure, but Visit Durango will still receive lodger’s tax collected by the City of Durango.

A tumultuous year for Visit Durango

The proposed merger comes after the organization’s executive director, Rachel Brown, resigned in May. Brown did not give a reason for her resignation but it came amid the county exploring the lodger’s tax reallocation and the city having a hard time receiving invoices from Visit Durango.

It was also discovered that the former Board of Directors Chair Jenny Roberts had been convicted of multiple felony counts, including forgery and identity theft in the past. Roberts said she did not have access to Visit Durango’s finances, but the organization underwent a third-party financial audit.

The audit was completed by the firm Eide Bailly LLP and found several issues, such as flawed expense reporting and potential conflicts of interest by board members. Visit Durango considers the audit to be positive, and the city said that its oversight would fix the issues.

The organization has been led by interim executive director Barbara Bowman since October.

“The recent events served as a useful tool in fostering trust and close collaboration between Visit Durango and the city, which then resulted in the merger discussion,” Bowman said.