City expects ‘influx’ of interest in STR permits when moratorium ends

The city’s moratorium on new short-term rental permits reaching its expiration date; now another date looms large

Aspen City Council took a significant step Tuesday toward regulating vacation rental properties and containing an industry they claim has exacerbated the housing crisis.

With the city’s moratorium on new short-term rental permits getting closer to its Sept. 30 expiration date, another date looms large: Oct. 1. That’s when the city will begin accepting applications for new short-term rental permits, but under a restructured system of guidelines and rules the council approved during the period of the moratorium.

That’s also “when we expect an influx of new applicants” seeking STR permits because of the pent-up demand since the moratorium took effect, said Haley Hart, long-range planner with the city.

The guidelines are based on an ordinance City Council adopted in June breaking STR permits into three types and creating more rules to better regulate the industry.

The particulars of those new rules, regulations and eligibility requirements are plainly spelled out in the “Short-term Rental Program Guidelines,” which the four City Council members unanimously approved through a resolution. Councilman Ward Hauenstein was not in attendance.

“This was as close to sausage making as stuff gets,” said Councilman Skippy Mesirow. “It was big, it was complicated, and it took a lot of compromise and hard work, and I think we came up something really great.”

STRs, which are rented within a period of 30 days, are an affordable option to Aspen’s lodges and hotels that consistently average the highest room rates in the state, industry defenders have argued. They also have been a dependable source of extra income for locals who also live in the units they rent out.

One statistic, however, caught Mayor Torre’s eye during the Community Development Department’s presentation of the new guidelines. As of Dec. 8, when the moratorium took effect, the existing 1,319 STR permits comprised 18% of all residential units in the city, according to Community Development. Adjusting that number to reflect only free-market residences would be roughly 28%, said Hart and Phillip Supino, director of Community Development.

The mayor noted the “large percentage of our available residential housing that is not available for locals residents if it is not lived in and is primarily used for short-term rentals.”

STRs’ impact on housing availability hasn’t been the only issue driving the council’s mission to regulate the industry more heavily. Aspen officeholders also have said STRs are impacting the character of residential neighborhoods, are disproportionately using city services, and are paying the lower residential property tax rate while traditional lodges pay the higher commercial rate.

Holders of existing STR permits that were in effect before Dec. 8 have been held to the new rules since they took effect in June. They will be able to renew their permits in November and December, Hart said.

STR permits are now offered in three categories and are described by the city’s new guidelines as the following:

• Owner-occupied short-term rental permit — “The Owner-occupied STR (STR-OO) permit is available only to City of Aspen residents who own and can prove that the property is their primary residence. STR-OO permits are issued to full-time Aspen residents and are limited to 120 rental nights per calendar year from the date of permit issuance. If an applicant wishes to short-term their property for more than 120 nights per year, they may apply for an STR-C permit.”

Short-term rental classic permit — “The STR Classic (STR-C) permit may be issued to any natural person who owns a residence in the City of Aspen. Unlike the STR-OO permit, STR-C permits are available to non-owner-occupied residential properties in the City of Aspen, and proof of primary residence is not required. STR-C permits are also available to owner-occupied residences where the permittee wishes to short-term rent the property for more than 120 nights per year.”

• Lodging exempt short-term rental permit — “The Lodging Exempt STR (STR-LE) permit is available solely to lodging and condo-hotel properties which meet the definition of Lodge or Condo-hotel per (city code), Use Categories. Some characteristics of Lodges and Condo-hotels include, but are not limited to, common reservation and cleaning services, combined utilities, and on-site, in-person management and reception services during normal business hours. Properties eligible for STR-LE permits are required to be marketed under a unified brand and marketing model where the individual ownership of units is secondary to the central brand of the property. There is no limit to the number of rental nights allowed under the STR-LE permit. “

The council’s first action on STRs came in October 2020 when it adopted legislation requiring property owners who rent out their places on a short-term basis to have a business license and a STR 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 rental permits are acquired after the property owners acknowledge an understanding of city laws pertaining to noise, nuisance and wildlife, for instance, as well as their own HOA rules as they pertain to renters.

Another tax could be placed on STRs.

Aspen voters will have a say in the November elections about the creation of an STR tax. The proposed excise tax would come in two versions — a 5% tax on nightly stays at owner-occupied units and lodge- and condo-hotels, and a 10% tax on properties that are not primary residences for the owners or are for used investment purposes.

Revenue from the STR tax, if approved, would go toward the city’s affordable-housing efforts and the remaining funds would be used for environmental initiatives and maintaining and repairing infrastructure.

Read our previous coverage on short-term rentals:

Tax on Aspen vacation rentals will go to the voters in November

Snowmass lawmakers mull regulations for vacation rentals

Majority in tax survey favors new tax on short-term rentals

Elizabeth Key: Aspen’s housing noose tightens