Frequently Asked Questions (FAQs)
What is a Local Option Tax (LOT)?
The Vermont legislature approved a Local Option Tax (LOT) in 1998. A LOT allows towns to voluntarily vote to levy a 1% tax on rooms, meals, alcohol and retails sales. Voters must approve LOTs and towns can use the funds for a variety of purposes.
Describe the LOT being proposed for the Mad River Valley communities of Fayston, Waitsfield and Warren.
The LOT that will come before voters in Warren, Waitsfield and Fayston calls for the three towns to collect 1% on rooms, meals, alcohol and retails sales and use 100% of those funds to invest in projected and programs designed to strengthen and enhance the future of the Mad River Valley community. As when The Valley towns joined together in 1985 to create the Mad River Valley Planning District, Vermont’s first ever intra-municipal planning body, The Valley towns will be the first to create a multi-town LOT. The MRV LOT will raise $1,000,000, of which $700,000 will be retained and spent locally under local control. The state keeps 30% of LOT funds.
Why is this LOT being proposed now?
This LOT is being proposed now after five years of studies and planning work repeatedly demonstrated the need to invest in the community in ways beyond what skilled grant writers and the municipal property tax can accomplish.
How much will it cost me and my family?
Three separate and thorough analyses have consistently shown the impact on local residents will be $2.00 per person per month. For every dollar raised by the LOT, $0.12 will come from local residents, $0.21 will come from part-time residents, $0.12 will come from ski pass sales and $0.55 will be raised from visitors to The Valley.
What items will be taxed by the LOT?
In addition to one percentage point added to the state’s current rooms, meals and alcohol taxes, one percentage point will be added to retail sales already subject to the state sales tax. For a list of those items, click here: What Is Taxable and Exempt?
What will the governance process look like?
A negotiating committee with two members from the Fayston, Warren and Waitsfield select boards has recently completed drafting a Memorandum of Understanding (MOU) and Bylaws that detail the governance of the LOT. The MOU calls for each select board to appoint two representatives to the MRV LOT Commission. Those commissioners will review grant applications from community organizations and other groups seeking funding. That review process is public as are the deliberations of the MRV LOT Commission. The Bylaws provide the criteria for grant applications and include metrics to evaluate how projects will improve the economic and community vitality of The Valley. Click here to read the MOU:
What kinds of investment in the MRV is anticipated through the LOT?
Extensive work over the last five years has shown the following are the most critical areas to invest for the future of our community:
Can you describe a typical project for each of those investment areas?
An attainable housing grant could involve a public/private partnership where a developer would apply for funds to help purchase land or develop infrastructure such as water and wastewater.
The Mad River Path Association might apply for a grant to provide seed money to leverage a state or federal grant to purchase easements to extend the path.
Friends of the Mad River could apply for grant funding to extend its Ridge to River flood resiliency work as a community project.
Local efforts to provide a weekend bus from Warren Village to Warren Falls might include grant funding to incent an existing service like Alpine Limo.
Marketing grants could be used to create a French version of the Mad River Valley Chamber of Commerce website to better target the nearby Canadian market.
How will the funds be collected?
Merchants and vendors will collect the funds through an adjustment in the sales tax rate, which will be included in cash register receipts, for example. All tax receipts are remitted to the state. Each town will then receive the LOT funds from the state and will remit them to the Mad River Valley LOT Commission.
When does the LOT begin and when will projects be funded?
If taxpayers adopt the LOT and MOU at Town Meeting 2020, the tax will begin being collected on July 1, 2020. It is anticipated the MRV LOT Commission will receive funding in January 2021.
What is the experience of other Vermont towns that have implemented a LOT in terms of the impact on tourism and retail sales?
None of the 25 towns in Vermont that have implemented LOTs have seen negative impacts on rooms, meals, alcohol or retail sales based on state tax data. Based on state tax receipts, many towns have seen an increase in tourism as a result of increased funding and investment in marketing, community projects, etc.
How do other Vermont towns use LOT funds?
Many towns use LOT funds to re-invest in their local communities, specifically in housing, childcare, environmental projects, marketing, business development, transportation, infrastructure and other efforts that strengthen local economies and attract new families.
LOT Media Coverage: See www.mrvlot.org for Valley Reporter, MRVTV and WMRW coverage of the work to date.
Key data/information: MOU, Bylaws, Draft Grant Application can be found at