Pitkin County sets tiered fees for short-term rentals

Market value of residence, number of rentals nights figure into fee

The Pitkin County commissioners adopted a tiered fee structure Tuesday that will go into effect later this year on an estimated 274 short-term rental units.

Research by the Pitkin County staff indicates there are 316 residences in unincorporated areas that have been used in the past as short-term rentals. An estimated 274 will qualify for a license. | Courtesy image

The fee will be smaller for residences that have a lower market value and those that rent for fewer days during the year.

County staff members recommended that approach over a flat rate after talking to property owners, real estate agents and rental companies.

After multiple meetings, the commissioners decided in June to require licenses for short-term rentals beginning Sept. 20. The new regulations prohibit property owners for renting for less than four consecutive nights and a maximum of 120 days per year. Pitkin County’s regulations only affect units in unincorporated Pitkin County, including Woody Creek and Redstone. It doesn’t affect short-term rentals in Aspen and Snowmass Village. Those municipalities are crafting their own rules.

The fee revenues will pay for the cost of establishing the regulatory program, monitoring rentals and enforcing the regulations. The fees could be changed with time.

“We’re going to learn a lot,” Pitkin County Manager Jon Peacock said. “There’s a lot of data we don’t have.”

The county government will continue to study the need for an “impact fee” that would be assessed to begin programs to offset costs of a short-term rental industry, such as more trip generation and travel for both guests and workers to clean and keep the units running.

“This is the beginning. This is just an administration fee,” Commissioner Greg Poschman said.

He emphasized later that the county must make it clear that the fee structure could be tweaked with time.

“I’m really concerned that this is framed properly for the public and we’re really transparent about the reason we’re doing this and where it is going with fees,” Poschman said. “We don’t want to appear onerous. We want to appear that we’re trying to solve a fundamental problem that faces the community.”

The county’s system sets up three tiers. Units rented between 61 and 120 days per year are tier one. Units rented for 31 to 60 days are tier two and units rented up to 30 days are tier three.

Short-term rentals that are used 1 to 30 days per year will pay .05% of their market value. Homes that are short-termed 31 to 60 days will pay .06%. Homes that are rented 61 to 120 days will pay .07%.

So, say a house has a market value of $1 million and the owner plans to rent it out for 30 or fewer days. The owner’s fee would be $1 million multiplied by .0005 for a cost of $500.

The fee for a house with $1 million market value that rents for 31 to 60 days would be $600.

The fee for a house with $1 million market value that rents for 61 to 120 days would be $700.

The market value used in the fee calculation will be the value used by the county assessor’s office. That often lags real-time market conditions by a few months.

Owners of short-term rentals can go to the Pitkin County Community Development Department’s website and begin the process of pursuing a license by setting up an account. The software necessary for calculating the fee and applying for a license will be available starting July 15.

The county’s preliminary estimate is the program will cost more than $280,000. That includes paying the project manager and a compliance officer, providing a vehicle for the division, acquiring software to track statistics tied to rentals and studies on impacts.

An initial ballpark figure is the program will raise roughly $311,000 in fees, according to information presented to the commissioners. But the financial projections require a lot of assumptions. For example, the county estimates there are 316 properties that have been involved in short-term rentals to some degree. Not all of them are expected to qualify for a license, so the county used 274 units as a starting point.

Commissioner chairwoman Patti Clapper acknowledged that there would be adjustments to the program in coming years.

“It’s a living document and a living fee schedule,” she said.