Council discusses adding nightly rentals to BID tax

Should nightly rentals pay the Business Improvement District (BID) tax like hotels?

Hill City Mayor Mike Verchio brought this up for discussion at the Hill City Common Council meeting Feb. 12. 

“We’ve had a big growth in nightly rentals. So what I would like to do is to bring everyone into that tent, and that’s not something that can happen overnight,” said Verchio. 

It would start with the 2025 nightly rental reservations and take effect in January 2025. 

“The problem is that we would need to notify their booking agents,” said Verchio. 

This includes sites like VRBO and Airbnb, which put the prices out and have to give accurate information. Therefore, time would be needed to communicate the change.

The change would include all nightly rentals, which Verchio said is the equivalent of another 40-room motel in town. 

Along with this, Kim Benning, one of the new members of the BID board, owns nightly rentals. 

“So they would have representation on there too,” said Verchio. “This is something they don’t pay. It goes on the customer’s bill.” 

“I don’t think there will be any pushback,” said alderman Ethan Walker. “I have nightly rentals, and there wouldn’t be pushback. I would be shocked.”

Verchio said the city is not like the state. The city would not come and audit. It would be all voluntary. 

Pat Wiederhold clarified that the BID district was just Hill City proper, and Verchio confirmed this.

Walker asked if campgrounds and cabins already pay the BID tax. Verchio said unless they are in town, they do not pay it. Currently, a business has to pay the BID tax if it has 11 units or more. 

“In order to do what the mayor is proposing, we have to go back and amend the first BID district because we’d have to do two things,” said city administrator Brett McMacken. “One, it doesn’t currently include residentially owned properties so we would have to add that to the list of zoning.” 

“The second thing we’d have to do, is we’d have to stipulate who all would have to contribute,” said McMacken. “We’d have to sit down and map that out.” 

Once participants were defined, McMacken said the city would have to communicate that to whoever was impacted. Those people would have to adjust their bookings because the rates will change. 

In the past, McMacken said there were problems with people already having reservations booked out so the city would want to give advanced notice to avoid most of those issues when implementing. 

Verchio said that is why it would be a year away. 

“And then that money is collected by those operators, owners, and then they work with Stacia (Tallon) to submit those on a monthly basis,” said McMacken. “So we get that directly from them. That doesn’t go through the state.” 

Connie Wolters asked if this would include bed and breakfasts, and Verchio said it would. 

Wiederhold asked if this would include the campground in town. McMacken said that is what the council would need to determine. 

“That’s something that’s going to have to be decided,” said Verchio. “Some of those places sometimes make reservations for 2025 in the summer of 2024. So these are decisions we’re going to have to make fairly quickly.”

There was no further discussion that evening.