Under new law, can collect up to 5 percent
A new law enacted July 22 by Gov. Kathy Hochul allows the Village of Cold Spring to collect a tax of up to 5 percent on hotel stays and short-term rentals booked through sites such as Airbnb.
The legislation to amend the state tax law was sponsored in the state Assembly by Sandy Galef, a Democrat whose district includes Philipstown, and in the Senate by James Skoufis, a Democrat from Orange County. Hochul also signed legislation that allows the City of Newburgh to collect a tax of up to 5 percent on hotel, motel or STR stays.
The Cold Spring bill passed in the Assembly, 118-32, with support from Galef and Jonathan Jacobson, a Democrat whose district includes Beacon. It passed the Senate, 36-27, with support from Skoufis, although Sue Serino, a Republican whose district includes the Highlands, voted no. The law will expire in 2025, when Cold Spring can request it be renewed by the Legislature.
Asked on Thursday (July 28) about her no vote, Serino said: “With the state sitting on a massive budget surplus thanks to the influx of federal funds and other factors, I don’t believe we should be advancing any new taxes. We should instead be promoting tourism and making it easier financially for individuals and families to travel and actually invest in our communities.”
Skoufis had previously assisted the Towns of Newburgh and Woodbury in getting amendments to state tax law; in May, after discussions with Skoufis, the Cold Spring Village Board approved a proposal by Mayor Kathleen Foley to file a request.
Airbnb collects room taxes for 35 New York counties, including Dutchess, which charges 4 percent. In 2012, the Putnam Legislature passed a 4 percent tax but newly elected County Executive MaryEllen Odell vetoed it, arguing that it would inhibit any future development projects that included a hotel, motel or conference center. In 2019, after short-term rentals became widespread, she told The Current she felt taxes on STRs should be levied and collected by towns and villages.
Before a Cold Spring tax is implemented, Foley said the board must first determine the rate, draft a local law and hold a public hearing. She said she hoped to have legislation in place by the end of the year.
A five-member ad hoc committee appointed by the Village Board is drafting recommendations for revisions to a local law governing short-term rentals. The existing legislation, adopted by the previous administration in 2021, has been criticized for being too complicated and difficult to enforce. Jennifer Zwarich, who chairs the committee, said she hopes it will complete its findings by the late fall.
Foley said that, over time, any revenue generated by an occupancy tax could offset fees charged to short-term rental operators. “But permitting and inspection fees will not go away; there are still staff and resource costs to the village,” she said.
The tax also would not affect efforts by the village and other municipalities to receive a portion of sales tax collected and sent to Putnam County, which in 2021 was $78 million. “The occupancy tax is entirely separate from sales tax,” Foley said. The Legislature did recently approve a one-time disbursement of sales tax to towns and villages that matches allotments from American Rescue Plan Act (ARPA) funds. Cold Spring’s share is $203,342.
The Legislature has yet to consider a proposal by Philipstown Town Board member Jason Angell and Village Trustee Eliza Starbuck in which the county would share 50 percent of any annual increase in sales tax revenue.
“The presumptive incoming county executive, Kevin Byrne [a Republican who is running unopposed], has indicated that he does not support making sales tax sharing permanent,” Foley said. “I hope he reconsiders this position. “
The Village Board would have little difficulty determining how to put the hotel tax revenue to use. Foley identified short-term rental costs, including staff time, software and enforcement, along with pedestrian safety and public restroom maintenance, as likely spending targets.
“We need more revenue to cover costs,” Foley said. “And it shouldn’t come only from village taxpayers.”
The occupancy tax, Foley said, will allow the village to collect revenue from visitors, easing the financial burden that tourism places on residents.
“I’m glad this new legislation recognizes how important tourism is to Cold Spring and how important Cold Spring is to the economy of our region as a whole,” Galef said in a statement on the day the bill was signed.
Skoufis added that while tourism supports local businesses, it can also “place a strain on local municipal services” and that a room tax supports tourism, “without placing further pressure on local taxpayers.”