The third in a multi-part series.
Business leaders across several industries sent Denver City Councilmembers who entertained a climate tax proposal a clear message that a tax on electricity and natural gas would be “irresponsible” and “taxing businesses further is not the answer.”
The breadth of opposition revealed through a Western Wire open records request details estimates of increased costs, from thousands to tens of thousands of dollars annually. There were also widespread concerns with the business community’s lack of representation in the city’s stakeholder process and frustration about policies that appeared to unfairly target certain commercial and industrial segments without any cost analysis. The city was widely criticized by restauranteurs, marijuana growers, environmental groups, and property managers.
Restaurant owners across Denver rejected the proposed climate tax, using their own business examples as evidence. For example, they noted restaurants rely on natural gas as a basic utility. Business owners pointed to proponents on city council of the tax on electricity and natural gas who failed to incorporate their views due to outright exclusion from the policy conversation itself.
Several restaurant owners argued that restaurants will suffer especially under the new electricity and natural gas usage tax, as they are heavy users of natural gas for cooking, and traditionally, food outlets are operated on a very slim profit margin.
One of the most identifiable names included in the emails was from former-State Sen. and Denver City Councilwoman Paula Sandoval, a restaurant owner and member of a politically well-connected Democratic family that includes current Denver City Councilwoman Amanda Sandoval.
“I requested an analysis from XCEL energy of what it would cost my business and annually it will be approximately $3,000 or $250/month,” Sandoval wrote on August 21 in an email to Councilwoman-At-Large Debbie Ortega.
“As a restauranteur in your district, I think it is irresponsible for Denver City Council to push a ballot initiative that will increase the taxes on my business without a proper stakeholder process. I urge you to have a stakeholder process where constituents can communicate concerns with the proposal to council members before you stick us with a yearly bill of over $43,000,000,” she continued.
As previously reported by Western Wire, that includes the admission by Denver City Council President Jolon Clark’s staff that businesses were intentionally left out of the process due to time constraints in the development of the proposal.
“Due to the reduced timeline between the citizen initiative and the mayor’s small work group, there wasn’t sufficient time to bring commercial and industrial owners to the discussion,” the document concedes. President Clark and Councilmember Paul Kashmann sat on the small work group, and included members of the Mayor’s staff.
A form letter used by several business owners called the stakeholder process for the climate tax “completely unacceptable.”
“Good public policy is created when policymakers engage with the community to find solutions, and the lack of stakeholder process on the proposed utility tax solely on businesses is completely unacceptable. Keeping your doors open in the restaurant business is hard enough. In fact, 95 – 97 cents of every dollar spent in a restaurant goes back to the people, the place, and the food. This doesn’t leave a lot of room for increased costs like a new tax on natural gas that will be particularly impactful to restaurants,” the letter continued.
“Please work with us instead of going around us and hold a stakeholder process that will allow restaurateurs the opportunity to participate in a thoughtful conversation. Thank you for your time and consideration. I am hopeful that now and in the future City Council will work with the business community before recommending or creating any new law that will directly impact businesses,” the letter concluded.
Restauranteur Michael Long submitted added his own preface to the August 9 email, taking issue with the council’s plan to tack on taxes to an industry already reeling from minimum wage hikes.
“Many businesses are already struggling to remain profitable with the yearly increase in minimum wage, which is resulting in a loss of jobs as kiosks replace people at fast food counters and restaurants using table tables to directly order food and beverage instead of using a server. Taxing businesses further is not the answer. Why not ask each city government department to find 5% in annual savings. It can be done,” Long wrote.
Karen Kristopeit-Parker, owner of The Fresh Fish Company, and Robert Newell of Poppies Restaurant also sent emails directly to city councilmembers.
Peter Meersman, Chief Strategy Officer for the Colorado Restaurant Association, echoed the sentiments of many of the organization’s members to Councilwoman Kendra Black.
“Hi Kendra. I’m hopeful you will not support this new tax. Ask any restaurant in your district how it will effect (sic) their costs. I respect Council’s desire to help clean the environment, but putting this on the ballot with no input from affected businesses is both heavy-handed and short-sighted,” Meersman wrote on August 9.
Efficiency And Sustainability Sector
Restaurant owners were not the only group alarmed by the City Council’s tax plans. Several environmental business consultants expressed reservations as well.
Susan Nedell, Mountain West Advocate for Environmental Entrepreneurs (E2) and a registered lobbyist in the state of Colorado for the Natural Resources Defense Council, responded to an email about the proposed carbon tax on August 13. She shared concerns with other groups, including environmental advocacy groups, on the approach Denver applied to introducing the carbon tax proposal.
“I consulted with my colleagues who work with the city more than me. We don’t have an official stance, but share the same concerns as some of the other enviro groups,” Nedell wrote. “There was very little input from equity groups and environmental groups in the language. While dropping the residential requirement helps the initiative be a bit more equitable, there is still a long way to go and there should be a longer stakeholder engagement process,” she added, referring to earlier proposed language that included residential consumers as well as commercial and industrial properties in a tax increase.
“There are examples from other cities, but because the process is so rushed, there is not time to learn from those examples . . . If there was more time, we could help with data and examples,” Nedell added, including reaching out to NRDC, the group she lobbied for in the past. E2 co-founder Bob Epstein serves as Chairman of the NRDC Action Fund.
Paul Zoby, CEO of American Energy Assets, originally emailed Nedell for her input, forwarding the response he received to Councilwoman Black that same day.
“Kendra – See the response below. This is typical of feedback I’m getting across the efficiency and sustainability sector. We can support the goal, but not the approach,” Zoby wrote.
Broader Business Community
The business community itself, including contractors, hotel and restaurant associations, local unions, realtors, and Xcel Energy, the city’s utility, wrote to Denver City Council in a coalition letter on August 12, calling for a more robust stakeholder process for what would be an unprecedented tax on businesses by a major U.S. city.
“We strongly support efforts to address climate change and our collective groups have been working positively on a number of recent climate issues in the City. However, we believe this significant and costly proposal should at the very minimum undergo a full and transparent City Council process to ensure it is adequately analyzed before being referred to Denver voters,” the coalition wrote.
“As you are aware, an initiative such as the one proposed has never been implemented in any major city in our country. Due to this fact, there are significant unknown impacts, as well as questions and concerns that would benefit from a thorough analysis and discussion from City Council and the community, small businesses and employers that are impacted by this measure,” they added.
Property Managers
Those impacts were illustrated by an August 8 email from Joe Stanoch, Associate at CRL Associates, Inc. in Denver, to Councilwoman Black. According to his calculations for the company’s building, “YTD the tax would cost them $18,608.86 and extrapolated to a yearly total it would add up to $31,897.47,” Stanoch wrote.
In addition to the thousands of dollars in new tax costs, the building owners have already added costs to be environmentally certified as lower emission properties, and the new tax in effect penalizes those efforts, he continued.
“Additionally, as you can see from their site here, they are an ENERGY STAR and LEED Gold certified building so they are already at the top of the industry in terms of energy efficiency. I think that’s what upsetting to a lot of these buildings is that they are already doing everything they can to maximize their energy efficiency, but they’ll still be continually taxed,” Stanoch added.
Other property owners could see annual additional tax costs exceed six figures, according to Stanoch’s analysis.
“We have another building downtown whose tax last year would’ve been $38,299 and we are still running the numbers on others, but there are a few that will likely be over $100,000,” he concluded.
Marijuana Industry Exemptions
Kristi Kelly, Executive Director for the Marijuana Industry Group, emailed Council President Clark on August 13 to express support for alterations in favor of incentives over tax penalties, including exemptions from the electricity tax if the company uses renewable energy or other efficiency measures.
“In order to incentivize companies to be efficient with energy, regardless of size, and to reward those companies that are adopting energy efficient measures, we would like to explore having the tax not apply to companies who 1) receive their energy from a carbon-neutral source or 2) whose energy use is less than the industry benchmark determined by the sustainable energy office,” Kelly wrote.
“We should do what we can to empower businesses to embrace energy saving practices, as such, we’d like to see the ballot language dedicate a percentage certain of the tax revenue to energy savings incentives, including credits and rebates,” Kelly added.
