Aspen electeds pass short-term rental laws requiring business license, rental permit
After more than a year of discussion, Aspen City Council on Tuesday passed new legislation that requires all property owners who rent their condos or homes on a short-term basis to have a business license and a vacation rental permit filed with the municipal government.
Aspen joins dozens of resort communities around the country who have such systems in place, which allow the government to collect sales and lodging taxes, better track units in the overall inventory and place restrictions on them to protect quality of life for nearby residents.
Council voted earlier this month on first reading of the ordinance, but amended it to include what are called “condo-hotels,” which have individually owned condominium residential units governed by an association, as well as have common reservation systems, on-site, in-person management and amenities such as a pool, restaurant or ground transportation services.
The original ordinance had exempted those types of properties based on direction from council in February, but after receiving feedback from those in the industry that everyone in Aspen’s lodging business should be playing on a level field, council decided to include condo-hotels.
Since council discussed the matter Sept. 22, those who represent condo-hotels have weighed in and said it is burdensome for their owners to have to pay $150 per business license, or have to absorb it themselves as property management companies.
For Michael Brown, who owns all of the units in his properties, but are condominiumized like at the Hotel Aspen, it means several thousands of dollars more in expenses that he said he will pass on to his employees.
He characterized comments made by Councilwoman Rachel Richards earlier that she was trivializing the added costs of doing business as a result of the legislation.
“We have employees, you can’t just pass it on in revenue,” Brown said. “I’ll let my employees know when their deductibles go up for the 2021 calendar year that that was where it had to get made up.”
Richards shot back, arguing that when looking at expensive average daily rates continuing, $150 a year for a business license appears trivial and without the legislation, the city is burdened with less tax revenue to pay for parks and open space or police officers.
She also noted that as a developer in the new Lift One project at the base of Aspen Mountain’s west side that the city is putting $4.36 million in, Brown should know better.
“That’s really the type of partner we want on Lift 1A, boy I can tell you that,” she said.
Councilman Ward Hauenstein said he was offended by Brown’s position.
“I think for somebody that owns 45 units, you are going to pay $6,750 for a business license and say they are going to pass it along to their employees in increased deductibles is reprehensible.
“I think that’s just beyond the pale.”
After those remarks, Councilwoman Ann Mullins swiftly made a motion to approve the ordinance, which was passed 4-1. Richards dissented after unsuccessfully suggesting lowering the business license fee for lodging properties to $100 and previously intimating that she would have supported exempting condo-hotels from the ordinance.
The new law, which will take effect in 30 days, is aimed at capturing what could be millions of dollars in uncollected sales and lodging tax revenue on short-term rentals flying under the city’s radar.
By requiring the unit owners, many of whom rent their properties on sites including VRBO and Airbnb, to have business licenses enables the municipal government to collect the city’s 2% lodging and 2.4% sales taxes.
Beyond the sales tax collection, a short-term rental property ordinance allows the city to have a better understanding of what type of lodging inventory the resort has and what kind of carrying capacity the government has to support in terms of services.
Under the proposed ordinance, each property also would have to apply for and receive a short-term rental permit that has the owner acknowledge local rules, including noise and trash ordinances, as well as providing contact information for the fire department and other emergency response entities.
Richards said she’s received complaints from residents about loud parties at short-term rentals, dogs barking and even lack of safety measures in which people have died in rental properties because there were no carbon monoxide detectors.
“It’s the Wild West out there,” she said. “This is a health and safety issue far beyond just the revenue. We are not offering our guests a safe experience when they come to our town.”
The city finance department has software that scrubs the internet to identify properties in the rental pool.
Property management and rental companies can use batch reporting, whereby they upload one aggregate file including the tax data for multiple taxable vacation rentals and the associated business license for each address.
The finance department can effectively use the new compliance software systems to collect the required taxes from all vacation rental businesses in town.
Fractional properties, in which multiple entities co-own portions of one residential unit, will be required to obtain one vacation rental permit and one business license for each individually address property in a fractional development.