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STR tax proposal inching closer to Aspen voters

The new City Hall building in Aspen on Friday, Nov. 12, 2021.
Kelsey Brunner/The Aspen Times

A question asking whether a tax should be placed on vacation rentals of 30 days or less will go to voters in November if the Aspen City Council can agree on the ballot language.

The four council members at Tuesday’s work session also did not rule out putting the question to voters in the March 2023 municipal elections.

They couldn’t reach a consensus on the tax’s particulars. There was disagreement over whether condo-lodges should be exempt from the tax. They also weren’t in total agreement over the tax rate or whether short-term rental properties should be grouped into separate tax tiers.



But they all agreed the issue must go to voters.

“This is going to be a very contentious ballot question no matter what is worded and no matter who’s included and excluded,” said council member Rachel Richards.




Several property and lodge managers said the tax would hurt winter bookings, and they also would have to absorb the extra cost levied on guests who have already booked their vacations. The council understood and agreed the tax — if approved — could take effect May 1.

“I could support extending the effective date,” Mayor Torre said. “Hearing the comments I heard tonight, I can see some of the shock that comes. For me, a lot of this is shocking. When I hear about room rates alone and home rates alone and on top of the fees and taxation, I can’t even afford the fees. I can see how that does impact folks with plans they’ve already made.”

Next for City Council is a special meeting Aug. 29 to review the ballot language. Another special meeting Sept. 6 would be held to finalize the question ahead of the Sept. 8 ballot submission deadline.

In the meantime, City Manager Sara Ott said she and her staff will work on crafting ballot language with different scenarios. The council can then make tweaks and changes at the late August meeting.

Survey says

The council also heard a detailed breakdown of the STR tax survey done in July. Keith Frederick of Salt Lake City-based Frederick Polls, which surveyed 322 Aspen voters about taxing vacation rentals, said respondents were well informed and educated about the issue of STR’s.

Overall, nearly two-thirds of those surveyed favored an STR tax. Democrats were 77% supportive. Republicans were 63% against. Independents were 60% supportive.

Some of the main talking points of people supporting tighter STR regulations include claims they have depleted long-term rental opportunities in a tight housing market, affected the fabric of residential neighborhoods, strained services and owners of STR units pay residential tax rates but traditional lodges pay the four-times-higher commercial tax rate of 29.1%.

Opponents of the tax have argued that the short-term rental sector is being singled out while other industries in Aspen also have changed the town’s fabric, and that STRs are an affordable option for people who can’t afford to stay in traditional lodging. Aspen’s average daily rate of  $701.09 was the most expensive in Colorado in June, according to the Rocky Mountain Lodging Report, which is commissioned by the Colorado Hotel & Lodging Association.

“Both sides are very well informed and highly articulate about why they feel like they do,” said Frederick. “And on the ‘yes’ side, it has a lot to do with affordable housing. And on the ‘no’ side, it has a lot to do with no taxation and otherwise perceived abuses of government.”

The tax rate was batted around the council with no decisions reached. council member Skippy Mesirow remained supportive of a 13.1% tax rate.

“My feeling is what is right to meet the community’s needs is a 13.1% rate,” he said, noting there will be negative consequences no matter what the rate. At 13.1%, the city would collect up to $10.7 million annually in STR tax proceeds, according to previous city estimates.

STR guests subject to the 13.1% rate would end up paying between 22.4% and 24.4% in taxes on their bill. The sales tax amounts to 9.3% in the city, and lodge guests pay a 2% bed tax on top of that.

Richards, Torre and council member Ward Hauenstein questioned whether voters would support a double-digit rate.

Torre suggested that a two-tier tax — with rates of 5.4% and 10% — be proposed to voters. Owner-occupied units would be subject to the lower rate, while residences under corporate ownership would be held to the higher rate.

“I could see us doing a two-tiered level variable,” the mayor said. “My thing is whatever we put on the ballot, we support. And No. 2, something that is palatable and equitable for our community.”

Richards stressed that because condo-hotels pay lower residential property taxes than the commercial rates levied on their traditional lodging competitors, they should be held to an STR tax.

Hauenstein wasn’t convinced, arguing that some of the condo-lodges like The Gant and Aspen Alps have been supportive community members for decades and aren’t part of the STR problem.

Taking a tax to voters will be the latest way the council has addressed short-term rentals. In June it created a vacation-rental permit program that takes effect Oct. 1.

Under the program, traditional condo-lodges have no restriction on guest nights, and one permit can cover the entire lodge. Condo-lodges also will need lodge-exempt permits, which are $148.

Two types of STR permits are available for owner-occupied units.

One permit limits owner-occupied units to 120 rental-nights annually. Another permit, for both nonowner-occupied and owner-occupied residential properties, has no limitations on guest nights per year. Properties under the deeded ownership of limited-liability companies will not be eligible for the permit. The owner-occupied permits come at a cost of $394.

rcarroll@aspentimes.com


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