Short-term rentals in Aspen showing their impacts
City: Estimated 1,000 or more units are in Aspen’s short-term rental inventory
The city of Aspen’s finance whizzes are starting to get a better understanding of the impacts short-term rentals are having on the lodging industry as well as the greater community.
With $6.5 million generated in taxable revenue in December, short-term rentals in Aspen accounted for approximately one-third of the sales tax revenue the city collected from the lodging sector in December. Traditional lodging posted $13.5 million in revenue in December, as the accommodations industry, even with short-term rental revenue factored in, was down 43.7% in Aspen during the holiday month compared with December 2019, according to a report issued last week.
This was the first December that the city included short-term rentals in its sales tax calculations, as the City Council on Oct. 13 passed legislation requiring $150 business licenses and vacation-rental permits for property owners who rent their homes or condos on a short-term basis. The city defines short-term as 30 days or fewer.
“Reviewing December accommodations by these subgroups has highlighted how less traditional lodging options made up roughly one-third of total taxable sales during the holiday month,“ wrote Anthony Lewin, the city’s senior tax auditor, in the Finance Department’s consumption tax report for December and all of 2020. The report was issued Feb. 11. ”This experience is believed to be influenced by the pandemic with tourists desiring their own space; but is also anticipated to reflect how changes within the municipal code have resulted in greater compliance in registering and tax remittance by these less traditional offerings.“
Pitkin County also was under some Red-level restrictions for part of December, a month where retailers posted a 37.3% decline in overall sales from December 2019, according to the report.
The new licensing program took effect in late October after the City Council had spent more than a year discussing legislation regulating short-term rentals. The first full-month of the program’s implementation, November, saw short-terms account for $761,059 in taxable sales, while lodges and hotels recorded $5.9 million in revenue, according to city finance records.
Requiring short-term landlords to acquire a business license and vacation-rental permit increases sales and lodging tax revenue for the city, and creates more fair competition with traditional lodges that pay higher property taxes because they have commercial designation, officials have said in support of the new legislation.
“Chalet Lisl is paying commercial property tax and the (rental) home across the street is paying residential property taxes,” said City Councilwoman Rachel Richards at a Feb. 2 joint work session with Pitkin County commissioners. “It’s unfair competition.”
During that work session, the city’s Phillip Supino and Pete Strecker, the respective heads of the Community Development and Finance departments, caught up elected officials on the program’s progress since its implementation. The impacts of short-terms aren’t limited to Aspen, and officials said they would like to see Pitkin County and Snowmass Village become part of a bigger conversation on the topic.
“We do believe that, given some of the shared impact this industry creates for the city and county, this is an issue ripe for collaboration between the city and county moving forward,” Supino said.
Pitkin County Commissioner Patti Clapper said, “Get Snowmass into the fold.”
Other impacts of the growing business of short-term rentals include their effects on government services as well as the workforce and where it is housed. As well, the short-term rental segment — which is fueled by such online companies as VRBO, Airbnb and HomeAway — is likely replacing those pillows vacated by the older Aspen mom-and-pop lodges that have closed this century, Richards said.
“How many new commercial hotels do we need when we have this much private short-term rental activity happening year-round?” she said.
An estimated 1,000 or more units are in Aspen’s short-term rental inventory since the program debuted, Strecker said, noting that figure did not include the number of beds. He estimated there is a 25% rate of noncompliance with the program where short-term rentals are not participating.
Supino and Strecker said they have been contacting property owners who aren’t participating. They said they are aiming for a soft sell before taking any enforcement.
“We want to make sure they’re all doing their part,” Strecker said.
The city had about 70 vacation-rental permits on file before the program was introduced.
“With the new system there is a total of roughly 650 vacation rental permits, which we expect to increase as owners obtain permits. This new total includes previously non‐compliant properties,” Lewin said in another tax report issued in January.
Said Supino: “This is a fast-moving industry with consequences for our community that we yet don’t fully understand and it’s going to be ongoing for us to continue to respond to the industry and how it affects our economy and our community.”
The accommodations supports municipal coffers through the city has a 2% lodging tax and a 2.4% sales tax. The combined sales and lodging tax rate in Aspen is 11.4%.
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