TAXES, FEES & BUSINESS REGULATIONS

Boulder Chamber Guiding Principles

Taxes, fees, and regulations maintain important public services and infrastructure, but they must appropriately balance the cost and associated impacts in a manner that protects our economic vitality and keep Boulder affordable to a wide diversity of businesses and individuals.

The Boulder Chamber seeks clearly delineated rates that will not unduly burden business activity in any sector. We support ample notice, measurable goals, clear explanations, and adequate input opportunities for affected businesses whenever the city or state consider new and/or renewing taxes, fees, and regulations.

We expect transparency in analysis and decision-making processes, along with regular accounting of expenditures. In general, we will always scrutinize proposed tax initiatives to ensure they are addressing a genuine need. For example, the Boulder Chamber is highly supportive of our open space program and has endorsed public funding to meet the community’s land preservation goals. However, even with respect to open space, we must always ensure that the need justifies further expenditures, particularly when asked to endorse additional tax initiatives.

Our local economy is affected by the cumulative impacts of rising taxes, fees, and other costs of doing business in Boulder. Small businesses, startups, creative professionals, and non-profits often experience the effects disproportionately. Along these lines, there is a concern that continued reliance on increased sales tax as a revenue source to meet community needs is reducing the competitiveness of Boulder’s small businesses.

In addition to efforts to reduce direct government-levied costs on businesses, we encourage streamlined regulations and approval processes that do not impose a further burden on business. We note that an examination of the regulatory environment that prevents or stalls creative projects or initiatives may be appropriate. Further, with any mandated investment to meet new regulatory standards, we will seek public support to mitigate or eliminate the immediate cost impacts on local businesses.

Issue Areas And Positions

Affordability for Small Businesses

The Bottom Line: The Boulder Chamber supports measures that continue to make our community an affordable location for small businesses, start-ups, non-profits, and creative professionals, as they are important providers of jobs and services. Small businesses serve as the dynamic foundation for our innovation ecosystem; they are the places we shop, restaurants we frequent, and sources of support for our neighbors and causes that move us while playing a critical role in our economic welfare.

Though our larger companies offer a diversity of opportunities and economic value, small businesses represent the majority of employers in our community. In many instances, too, our locally grown small start-up businesses become the larger corporations that balance our economic ecosystem. And with respect to our non-profits, statewide reports have found that they account for more than 5% of the gross product, accounting for more than $4 billion in wages. Given those reasons, we have a clear interest in protecting affordability for our small business and non-profit base in Boulder.

City of Boulder Economic Sustainability Strategy Update

Economic vitality in the City of Boulder is a public/private collaboration to promote a healthy economy that supports the outstanding quality of life enjoyed by its residents and sets the framework for a positive business environment. The last time a guiding economic vision or policy document has been developed by the City was in 2013. It is essential that we work collaboratively to update a long-term vision and near-term strategies for a sustainable path to economic development that fosters innovation, competitiveness, and maintains a positive business climate while enhancing community character and preserving environmental quality. We recognize the City of Boulder is conducting a city-wide retail study in 2019, but we believe a more robust vision and set of guiding principles should be developed as a community to shape our future policies oriented towards Boulder’s economic vitality.

Head Tax

The Boulder Chamber generally opposes the pursuit of new taxing mechanisms that impose additional cost burdens on business and their employees. Further, it is inappropriate to pursue additional tax resources, particularly a new taxing mechanism, without clear goals and need for revenue.

Development Impact Fees

Over the past several years, the Boulder Chamber has been involved in the conversation about the impacts, benefits, and costs of development in Boulder with a diverse range of community members representing a variety of interests.

The Boulder Chamber supports responsible and effective proposals for addressing our affordable housing needs. The 2018 increase of the commercial linkage fee did not meet that test, providing minimal affordable housing benefit, while its impacts on commercial rents has imposed a new hurdle of increased cost on businesses that hope to make Boulder home. The impact is particularly acute for small independent businesses and start-ups.

The Bottom Line: The Boulder Chamber continues to oppose any linkage fee increase above the $12 per square foot rate. The Boulder Chamber accepted $12 per square foot rate as a compromise balance between generating resources for affordable housing and avoiding rates that further increase rental costs for small business and make commercial development infeasible. There are many other, more responsible and effective policy options for addressing our affordable housing needs.

While the current City Council majority tripled the linkage fee to $30 per square foot in 2018, to be phased in over the course of three years, we ask them to pause prior to authorizing an automatic increase each year in order to fully understand the fees impacts and benefits. The effects of the linkage fee increase will occur over a longer period of time than the proposed three-year phase-in timeline, but we need to be aware of the impacts as they arise.

The Boulder Chamber has requested the following economic metrics as benchmarks that be understood about conditions in Boulder prior to the fee increase. The City of Boulder should track these metrics in comparison to our neighboring communities in Boulder County:

  • Number of businesses, and employment, by industries (some industries, particularly low margin industries and small businesses, are disproportionately impacted).
  • Sales tax revenue.
  • Building permits by product type (retail, office, industrial, hotel).
  • Number of square feet developed by product type.
  • Commercial rents.
  • Commercial occupancy and vacancy rates by product type.
  • Comparison of affordable housing revenues via the linkage fee, at the prior ($9.53 and $12) amounts versus at the increased rates.
  • Number of affordable housing units built with linkage fee funds to date and as a result of fee increases.

Comprehensively understanding the impacts, benefits, and functionality of the fees in relation to development and small business affordability in the community will provide the City with better information for adjusting fees appropriately and the associated effects that those adjustments will consequently have on the community and our economy.

Sugar Sweetened Beverage Tax (Implementation and Impacts)

The Boulder Chamber supports access to, and investment in, programs that promote healthy food choices for all members of our community and applauds the positive impacts of the programs funded by the Sugar Sweetened Beverage Tax revenue. At the same time, there is also concern about the economic impacts of the Sugar Sweetened Beverage Tax. Since its implementation, sales tax revenues collected from grocers in Boulder are down, while those revenues are up in surrounding communities (2018). This can be attributed to overall competitiveness across the region, but we often hear concerns that it’s the Sugar Sweetened Beverage Tax that is influencing consumer decisions to shop outside of Boulder. This is a concern we can’t afford to ignore in an era of declining sales tax, let alone the impact on our local businesses, especially when at two cents per ounce, Boulder’s tax is the highest in the nation. We continue to be concerned about the unintended negative impacts and logistical challenges the tax has imposed on local businesses such as Boulder’s natural foods industry, health products, or our small businesses such as restaurants and retailers. One proposal for supporting restaurants and stores as they lose revenue due to reduced sugar sweetened beverage purchases is to provide them with financial assistance to help market the sale of healthier beverage choices.

Responsible Regulation for the Cannabis Industry

The Bottom Line: The Boulder Chamber will work to maintain a predictable business climate for all businesses and industries by continually seeking the appropriate congruence between state law and local ordinances and opposing laws and regulations that are based on unsubstantiated perception, as opposed to fact-based concerns.

Given the nascent nature of this industry, we support the ongoing collaboration of a community-based body with City staff in balancing the complex interaction between state law and local policies.

We note that, as our experience with the cannabis industry grows and initial concerns prove unfounded, it will be appropriate to conduct a more thorough regulatory review. Boulder’s initial regulations now appear to be relatively excessive compared to surrounding communities, which is a threat to the competitiveness of our local businesses and has led to investment by local companies in industry innovation outside of Boulder.

We should always strive to maintain equity for the cannabis industry in areas as diverse as energy efficiency regulation and regulatory enforcement penalties. Along these lines, application of the City’s Energy Impact Offset fees to this industry needs further development through collaboration with industry and community members.

Related Issues of Importance

  • Federal Tax Reform: We will monitor the impacts of federal tax reform on our local institutions and businesses and will advocate for adjustments that address areas of unique and/or significant concern.

  • State Financing Reform: Support efforts to provide relief from the tangle of constitutional tax and revenue provisions, such as TABOR, and address the disproportionately high tax rates on commercial property due to the Gallagher Amendment. One mechanism for addressing Gallagher is to support equalization of the tax burden on businesses and residential property in any future request for additional property tax.

  • Online Sales Tax: The Boulder Chamber urges our legislators to address concerns regarding costs and time requirements related to compliance with the complex new sales tax reporting requirements, particularly for small business and sole-proprietorships. Colorado has 344 taxing jurisdictions and a combination of city, county, and special districts creating 638 unique tax rates. There is a critical need to simplify the reporting and develop a one-stop sales tax portal. It is imperative that the state’s administrative requirements for online sales be adjusted to save our small businesses from adverse effects of the new onerous formula requiring multiple unique sales tax reports. We support investments in simplifying the system and creating resources for our small businesses and sole-proprietorships to comply without imposing additional costs.