Hot Sulphur Springs reopened development after years of water and sewer restrictions. Now voters will decide whether a new 4% construction materials tax takes effect in 2027.
For someone planning to build a $600,000 home in Hot Sulphur Springs, November's election could change how much cash they need before construction even begins.
Under Ballot Question 2A, a proposed 4% use tax on construction and building materials would require an upfront deposit when a building permit is issued. For a project valued by the town at $600,000, that deposit would be approximately $12,000.
It would not necessarily be the final tax bill. The town could reconcile the deposit against actual taxable materials costs after construction.
But the money would be due before the permit is issued.
That distinction matters in a community where new construction has only recently become possible again.
After years of restrictions tied to water and sewer capacity, Hot Sulphur Springs lifted its development moratorium in April 2026. The town also adopted updated land use regulations and a new zoning map this spring.
Now, just months after reopening development, residents face another decision about the cost of building.
On November 3, 2026, Hot Sulphur Springs voters will decide whether to approve Ballot Question 2A, creating a 4% use tax on construction and building materials beginning January 1, 2027.
The measure is projected to generate approximately $200,000 in its first full fiscal year.
For property owners, builders, and buyers considering vacant land, the question is more immediate: How would the proposed tax change the cost and timing of a construction project?
How the Proposed 4% Construction Use Tax Would Work
The proposed tax is established in Ordinance No. 2026-08-20-430, which would take effect only if voters approve Ballot Question 2A.
Although the proposed tax rate is 4%, the initial payment is not calculated as 4% of the entire construction budget.
Instead, the ordinance establishes a Use Tax Deposit calculated using the following formula:
Town-assigned project valuation × 50% × 4% = Initial use tax deposit
In other words, the upfront deposit equals approximately 2% of the project's valuation as determined by the town.
What Could the Deposit Cost?
Town-Assigned Project Value | Initial Use Tax Deposit |
|---|---|
$250,000 | $5,000 |
$400,000 | $8,000 |
$600,000 | $12,000 |
$750,000 | $15,000 |
$900,000 | $18,000 |
$1,000,000 | $20,000 |
These examples illustrate the proposed ordinance's deposit formula. Actual amounts would depend on the valuation assigned by the town and the applicable provisions of the ordinance.
The deposit would be collected before the building permit is issued.
That means a buyer planning a custom home would need to account for the payment alongside architectural plans, engineering, site preparation, permit fees, utility connections, and other preconstruction expenses.
For projects financed through construction loans, buyers should also discuss how the deposit would fit into their financing and cash-flow arrangements.
The Deposit Is Not Necessarily the Final Tax
The proposed ordinance provides a process for determining the actual tax owed on construction materials.
Within 36 months after a certificate of occupancy or final inspection, the town may reconcile the deposit against the actual taxable materials.
If the final tax exceeds the deposit, the owner or contractor would owe the difference within 30 days of the town's determination.
If the deposit exceeds the final tax, the town would refund the overpayment within 30 days.
For a property owner, this creates two separate financial considerations: the amount due before construction and the final tax liability after the project is complete.
The proposed reconciliation period also means some of the deposited money could remain with the town for an extended period after construction.
It's Not Just New Homes: Remodels Could Be Affected Too
One detail that deserves attention is the range of construction activity covered by the proposed ordinance.
The language extends beyond permits for new single-family homes.
It includes building, fence, right-of-way, development, and other permits issued or approved for construction within town limits.
That means permitted improvements to existing properties could also fall within the ordinance.
For example, a property owner planning a significant renovation, addition, or other permitted construction project should determine whether the proposed tax would apply.
The ordinance defines construction and building materials broadly.
Potentially taxable materials include:
- Flooring and plumbing fixtures
- Fireplace inserts
- Site lighting
- Certain landscaping materials, including trees and shrubs
- Other materials incorporated permanently into the completed improvement
Temporary items that do not become part of the finished project are treated differently under the ordinance.
The key distinction is that the proposed tax is tied to taxable construction materials, not simply the purchase of vacant land or an existing home.
Buying an existing home without undertaking permitted construction would not, by itself, trigger the proposed construction materials tax.
However, a subsequent renovation could.
Why Hot Sulphur Springs Is Considering the Tax Now
To understand the timing of Ballot Question 2A, it helps to look at what has happened with development in Hot Sulphur Springs over the past five years.
Beginning in 2021, the town imposed restrictions on new development and water and sewer connections because of infrastructure capacity concerns.
Those restrictions were extended and modified over time as the town worked through structural and capacity issues involving its utility systems.
In April 2026, the situation changed.
According to Sky-Hi News reporting on the town's building moratorium, trustees adopted Ordinance No. 2026-04-16-424 on April 16, ending the moratorium.
The ordinance was adopted as an emergency measure and took effect immediately, allowing development applications to move forward during the summer construction season.
For property owners who had been waiting to build, the decision represented an important change.
But lifting the moratorium did not eliminate the town's infrastructure needs.
Years of Infrastructure Challenges
Hot Sulphur Springs has continued addressing water quality, treatment capacity, and wastewater infrastructure.
The town has reported problems involving discolored drinking water, including iron and manganese sediment in the distribution system.
According to Sky-Hi News reporting on the town's water improvement plans, the town flushed approximately 90,000 gallons from its water system and planned additional regular flushing.
Residents have also experienced higher utility costs.
The same reporting indicated that water and sewer rates increased 20% in 2024 and another 20% in 2025.
Meanwhile, the town has identified major infrastructure projects.
Infrastructure Project | Reported Estimated Cost |
|---|---|
Green-sand filtration improvements at the water treatment plant | $1.5 million |
Wastewater lagoon liner replacement | $1.8 million |
The filtration project has been associated with federal funding efforts, while the lagoon replacement has been supported through a long-term financing arrangement.
These projects illustrate the financial demands facing a small community maintaining essential infrastructure.
However, an important distinction needs to be made.
Ballot Question 2A does not dedicate the proposed use tax revenue exclusively to water and sewer improvements.
The ballot language allows revenue to be appropriated and spent for any municipal purpose, according to policies adopted by the Board of Trustees.
That means the tax could provide additional flexibility within the town's municipal finances, but voters are not being asked to approve a tax restricted to a particular infrastructure project.
What the Proposed Tax Means for Buyers Considering Vacant Land
For buyers evaluating buildable lots in Hot Sulphur Springs, the proposed tax introduces another item into the development budget.
But it should not be the first question they ask.
Before calculating the cost of a new home, a buyer needs to establish whether the lot can actually support the proposed development.
That includes confirming zoning, permitted uses, utility availability, and applicable development requirements.
The Himebaugh HOA Question
One area where additional due diligence is particularly important is Himebaugh.
When the town lifted its moratorium in April, Sky-Hi News reported that the change did not immediately extend to the Himebaugh HOA area because of concerns about low fire-hydrant pressure.
The town's published ordinance information, however, describes Ordinance 424 as also lifting the moratorium for Himebaugh.
Those descriptions leave an important practical question for anyone evaluating property there.
Even if a broader moratorium has been lifted, does the individual parcel have the necessary utility capacity and approvals to proceed with construction?
For a Himebaugh lot, buyers should obtain written confirmation from Town Hall regarding water and sewer tap availability, fire-flow requirements, and any remaining development restrictions.
A lot's advertised development potential should not substitute for verification with the town.
Updated Zoning Regulations Matter Too
In May 2026, Hot Sulphur Springs adopted additional land use changes.
Ordinance No. 2026-05-21-426 established updated land use regulations, while Ordinance No. 2026-05-21-427 adopted a new official zoning map.
These changes matter for buyers evaluating older listings, vacant parcels, or properties previously marketed under different development assumptions.
Before relying on an advertised use or building concept, buyers should confirm what the current zoning permits.
The town's ordinances and moratoriums page provides a starting point for reviewing those documents.
Building New vs. Buying Existing: Does the Tax Change the Equation?
For some buyers, the decision between purchasing an existing home and building a custom property comes down to lifestyle.
An existing home may offer immediate occupancy, established landscaping, and fewer construction decisions.
A new build offers the opportunity to design a home around specific needs, preferences, and long-term goals.
But the financial comparison deserves attention.
If Ballot Question 2A passes, permitted construction within Hot Sulphur Springs would carry an additional tax consideration beginning in 2027.
For a buyer comparing a vacant lot with an existing home, that means accounting for the proposed tax deposit when evaluating the cost of building.
The existing-home market also provides an alternative worth examining.
According to the Colorado Association of REALTORS' September 2026 Grand County report, countywide single-family market conditions included:
- Median sale price of approximately $1.1 million
- 53 closed single-family sales
- 91 days on market
- 369 single-family homes in inventory
These are Grand County figures, not Hot Sulphur Springs-specific statistics.
They do, however, demonstrate that buyers have existing inventory to evaluate alongside potential construction projects.
The right decision depends on more than the proposed tax.
Land costs, site conditions, utility connections, construction pricing, financing, timing, and the availability of suitable existing homes all influence the comparison.
The most useful approach is to compare the complete cost of ownership rather than focusing on the advertised price of a lot or an existing house.
Exemptions and Credits Could Reduce the Final Tax
The proposed ordinance includes provisions that may reduce the amount ultimately owed.
These are particularly relevant for contractors purchasing materials from multiple jurisdictions or owners incorporating qualifying renewable energy equipment.
Taxes Already Paid Elsewhere
The ordinance provides credits for qualifying taxes paid on construction materials in other municipalities.
If an equal or higher qualifying municipal tax has already been paid, the Hot Sulphur Springs use tax may not apply to those materials.
If a lower qualifying tax has been paid, the ordinance allows a credit up to the applicable town rate.
Materials Purchased From Local Retailers
Qualifying purchases from retailers holding a valid Hot Sulphur Springs business license may also be eligible for credits or refunds related to town sales tax already paid.
The ordinance includes documentation and submission requirements, so owners and contractors should retain invoices and verify the applicable deadlines.
Renewable Energy Components
Certain components used to generate electricity from renewable sources are exempt under the proposed ordinance.
These include qualifying solar modules, trackers, inverters, and racking.
Energy-storage devices are specifically excluded from that exemption.
These provisions are important because the initial deposit formula is only an estimate.
The final amount owed would depend on the project's actual taxable materials and any applicable exemptions or credits.
Important Dates for Hot Sulphur Springs Property Owners
Date | Development |
|---|---|
April 16, 2026 | Town adopts ordinance ending the development moratorium |
May 21, 2026 | Updated land use regulations and zoning map adopted |
November 3, 2026 | Voters decide Ballot Question 2A |
January 1, 2027 | Proposed use tax begins if approved |
Following construction | Deposit may be reconciled within the ordinance's specified period |
For buyers or owners already planning construction, these dates make timing an important part of the conversation.
A project moving toward permitting in late 2026 may face different requirements than one permitted after the proposed tax takes effect.
However, buyers should not assume that submitting an application before January 1 guarantees an exemption. Permit issuance, the timing of materials use, and any applicable transitional provisions should be confirmed with the town.
Frequently Asked Questions
What is Hot Sulphur Springs Ballot Question 2A?
Ballot Question 2A asks voters to approve a 4% use tax on construction and building materials used within the Town of Hot Sulphur Springs. If approved, collection would begin in 2027, with approximately $200,000 projected in the first full fiscal year.
Would the tax apply to every property in Hot Sulphur Springs?
The proposed tax applies to qualifying construction materials used or consumed within town limits. It does not automatically apply to every real estate purchase. Permitted construction and improvements may trigger the tax.
How much would the tax cost to build a $600,000 home?
If the town assigns a project valuation of $600,000, the proposed deposit formula would produce an upfront payment of $12,000. The final tax would be based on taxable construction materials, subject to applicable credits and exemptions.
Is the construction use tax the same as a water or sewer tap fee?
No. Tap fees relate to utility connections. The proposed use tax applies to qualifying construction and building materials. The two are separate costs.
Does the proposed tax apply to property outside town limits?
The proposed ordinance applies within the Town of Hot Sulphur Springs. Properties in unincorporated Grand County may be subject to different taxes, fees, and development regulations. Buyers should verify the jurisdiction of the individual parcel.
Has the Hot Sulphur Springs building moratorium been lifted?
The town adopted an ordinance lifting the moratorium in April 2026. However, buyers should still verify utility availability, fire-flow requirements, zoning, and parcel-specific restrictions before assuming a lot is ready for construction.
What happens if Ballot Question 2A fails?
The proposed use tax under Ordinance No. 2026-08-20-430 would not take effect without the required voter approval.
What This Means for Hot Sulphur Springs Real Estate
Hot Sulphur Springs is entering a different chapter for property owners and prospective buyers.
After years of development restrictions, the town has reopened the possibility of new construction while continuing to address infrastructure needs and update its land use regulations.
Ballot Question 2A introduces another potential change.
For voters, the decision concerns whether an additional source of municipal revenue should come from construction materials.
For buyers and property owners, the practical question is how the proposed tax would affect development costs, cash requirements, and project timelines.
Neither question can be answered by looking at the 4% rate alone.
The more complete picture includes the town's deposit formula, available exemptions, existing infrastructure, zoning regulations, and the specific characteristics of the property.
And in a market as local and property-specific as Grand County, those details matter.
Considering buying land, building a home, or investing in Hot Sulphur Springs?
The local team at REMAX Peak to Peak can help you evaluate property opportunities, understand current market conditions, and identify the questions to ask before moving forward.
Connect with RE/MAX Peak to Peak to explore available properties and discuss your real estate goals.
Disclaimer: This article is for general informational purposes only and does not constitute legal, tax, construction, or financial advice. Ballot Question 2A had not been decided as of publication. Property owners and buyers should verify current regulations, tax requirements, utility availability, and permit procedures directly with the Town of Hot Sulphur Springs and qualified professionals.
