2A: Aspen goes for STR-tax hike

Voters approved ballot issue 2A, a hotly-contested proposal of sales-tax increases on short-term rentals in Aspen.

As of 1:50 a.m. Wednesday, Pitkin County election officials have counted nearly all ballots apart from military/overseas ballots and ballots that need to be cured.

The tax will impose a 5% tax on nightly room rates for STRs with lodge-exempt permits (STR-LE) and owner-occupied unit permits (STR-OO). For second-home owners or investment properties (STR-C), 2A will implement a 10% increase.

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Hotels and fractional properties are not affected by the tax increase. 

Proponents of 2A say the goal of ballot measure 2A and the increased tax rate on STRs is to mitigate the negative effects that STRs have had on local workforce and affordable long-term housing. The tax will make STRs more expensive for tourists and provide a new revenue stream for affordable housing projects.

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Aspen City Council member Rachel Richards has been a proponent of 2A since its introduction.

“I think it’s an exciting result for the city’s future. It’s a re-affirmation that Aspen is a community, wants to be a community, and supports the community,” she said of the apparent victory. 

She pointed specifically to issues including matching grants, water infrastructure, and supporting childcare that 2A revenue will fund. 

Aspen Mayor Torre has also supported 2A throughout the campaign period. 

“I’m really glad to see the margin that it passed by; it really seems substantial at this point. It gives us the ability to deal with some of the impacts that STRs and other factors are having on our people and community,” he said.

The city of Aspen expects $9,140,000 in revenue from 2A. The city will allocate at least 70% of that revenue to fund affordable-housing projects, and the remaining 30% will go to infrastructure maintenance and environmental-protection initiatives.

Critics of 2A say the tax unfairly punishes Aspen’s numerous “condotels” like Aspen Square, The Gant, Aspen Alps, and more, while traditional hotels escape the sales-tax hike.

Tim Clark, managing partner at Frias Properties, along with other condo general managers or owners, signed a letter published in The Aspen Times in October arguing against the passage of 2A. 

“Clearly, affordable housing is the winner, and that is a great outcome! However, the funding mechanism is flawed, and that could be vastly improved if all business sectors were taxed,” he shared in a text message Tuesday night with The Aspen Times.  

He went on: “We want the Aspen voters to know that there is a better way to fund affordable housing, one that is sustainable, one that is representative of the impacts of tourism on our community, and one that will fund greater revenue for affordable housing for the long term.”

The increase will put Aspen’s STR tax rate at 21.3% for STR-Cs and 16.3% for STR-LEs and STR-Os, among the highest in the state. 

Voters in other Colorado towns face STR tax-related ballot issues this year, including Steamboat Springs, Dillon, Grand Junction, and, just miles away, in Carbondale. 

The tax increase is meant to level the field between hotels and STRs. Hotels and traditional lodges pay a commercial property tax rate of 29%. Owners of STRs, like Airbnbs or Aspen’s condominiums, pay a residential property-tax rate of 7%. 

The tax increase will go into effect on May 1, 2023.