Aspen voters will be polled on STR tax in July

The city plans to poll Aspen voters about whether they would support a tax on short-term vacation rentals and how the proceeds should be spent.

Aspen City Council members mulled over various scenarios that could be posed on a STR-tax question to voters during the November election at a work session Tuesday.

The consensus of the council leaned toward an excise rate in the neighborhood of 13%, with city programs geared toward building worker housing, the environment and capital infrastructure as the potential beneficiaries. The council wants to gauge public opinion on an STR tax, however, before reviewing and approving ballot language. The more specific the language is, the better informed voters will be, they agreed.

“I think we’re looking for a why and a what,” Councilman Ward Hauenstein said of the STR ballot question, one that has yet to be crafted. “Why do we need this and where does the money go? The five of us are not going to be doing the polling nor will we be doing the ballot question, so I think it should be as specific as possible because I don’t want a 13.1% tax just going to the general fund.”

The City Council can use the general fund at its own discretion. Voters might not be keen on a new tax — which would only would be charged to guests of STRs — that could be tapped from the general fund at the City Council’s pleasure, council members said.

The work session came when the City Council is examining potential ways to regulate Aspen’s industry of STR stays, which are for no more than 30 days.

City Council in December placed a moratorium on new STR permit applications for 2022, effectively freezing out new STR licenses while current license-holders can continue to rent out their residences. The moratorium is scheduled to expire Sept. 30. City Council also is entertaining an ordinance, which is separate from the potential tax question, aimed at shaping the management of STR licenses and how the city regulates the industry.

Aspen officeholders have argued the STR business is impacting the character of residential neighborhoods, disproportionately using city services and drying up the rental market for local workers. The council in October 2020 created policy requiring all property owners who rent their condos or homes on a short-term basis to get a business license and a vacation rental permit filed with the city. The business licenses require the property owners to pay the city’s 2% lodging and 2.4% sales taxes.

The first full year of the city’s STR regulations for business licenses and sales taxes, 2021, saw the generation of 1,319 STR licenses, according to city records.

The excise tax city leaders are considering asking voters to approve would apply to STRs only, with the proceeds intended to help offset the industry’s impacts.

The polling will take place in July with results intended to inform the council’s decision on what the ballot question will look like — from the identified uses for the new tax, to what the preferred tax rate is.

“What number is the community willing to accept on an overall STR tax rate, and for what they things are they willing to accept it for?” is how Councilman Skippy Mesirow summed up the purpose of the polling.

Mesirow said his desire on how to spend the tax proceeds is “affordable housing first, environmental concerns and community infrastructure.”

Councilwoman Rachel Richards suggested pollsters make clear to respondents the “affordable housing shortfalls created by new demand from short-term lodging,” while also demonstrating to poll participants how other similarly situated resort towns are taxing STRs. Ouray’s excise tax on STRs, for example, is 15% while Avon’s is 2%, according to a presentation given to council by city Finance Director Pete Strecker.

STR tax dollars dedicated to the city’s environmental causes will have a broader impact on residents, Councilman John Doyle said.

“In my mind, the environment is the community,” Doyle said. “They are interchangeable, and any dollars that go toward environment are going toward our community.”

Worker housing and infrastructure also should be beneficiaries of the tax, Doyle said.