The city plans to poll Aspen voters on whether they would support a tax on short-term vacation rentals and how the profits should be spent.
Members of the Aspen City Council brainstormed various scenarios that could be posed on an STR tax question to voters in the November election during a business session on Tuesday.
The council’s consensus leaned towards an excise rate of around 13%, with municipal programs focused on building housing for workers, the environment and capital infrastructure as potential beneficiaries. The board, however, wants to gauge public opinion on an STR tax before reviewing and approving ballot wording. The more specific the language, 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, which has yet to be worked out. “Why do we need this and where is the money going? The five of us are not going to do the poll and we are not going to do the polling question so I think this should be as specific as possible because I don’t want a 13.1% tax to go just to the general fund.
The municipal council may use the general fund at its discretion. Voters might not like a new tax – which would only be charged to guests of STRs – which could be taken from the general fund at the pleasure of the council, council members said.
The working session came as the city council considers potential ways to regulate Aspen’s STR vacation industry, which lasts no longer than 30 days.
City Council in December imposed a moratorium on new STR permit applications for 2022, freezing new STR licenses while current licensees can continue to rent out their residences. The moratorium is due to expire on September 30. The city council is also considering an ordinance, separate from the potential tax issue, to shape how STR licensing is handled and how the city regulates the industry.
Aspen executives have argued that STR activity is impacting the character of residential neighborhoods, disproportionately using city services and drying up the rental market for local workers. In October 2020, the council created a policy requiring all landlords who rent out their condos or homes on a short-term basis to obtain a business license and vacation rental permit filed with the city. Business licenses require property owners to pay the city’s 2% lodging and 2.4% sales tax.
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.
Excise tax city leaders are considering asking voters to approve that they would only apply to STRs, with proceeds intended to help offset industry impacts.
The ballot will take place in July with results intended to inform the council’s decision on what the ballot question will look like – from identified uses for the new tax, to what the preferred tax rate is.
“What figure is the community willing to accept on an overall STR tax rate, and what are they willing to accept it for?” That’s how Councilman Skippy Mesirow summed up the purpose of the ballot.
Mesirow said his wish for how to spend the tax proceeds was “affordable housing first, environmental concerns and community infrastructure.”
Councilor Rachel Richards suggested that pollsters make clear to respondents the “shortages of affordable housing created by new demand for short-term housing,” while demonstrating to survey participants how other resort towns in the same situation tax STRs. Ouray’s excise tax on STRs, for example, is 15% while Avon’s is 2%, according to a presentation given to council by the city’s chief financial officer, Pete Strecker.
STR taxpayer money dedicated to the city’s environmental causes will have a wider impact on residents, Councilman John Doyle said.
“In my mind, the environment is the community,” Doyle said. “They’re interchangeable, and all dollars that go to the environment go to our community.”
Worker housing and infrastructure should also benefit from the tax, Doyle said.