Would Eagle County benefit from significantly increasing short-term rental taxes?
In an event hosted at the Antlers at Vail on Dec. 5, moderated by Chris Romer, Vail Valley Partnership president and chief operating officer, Sen. Dylan Roberts and Rep. Meghan Lukens took questions from a full room of interested parties about a proposed bill — known as Bill 6 — that would increase taxes on short-term rentals in Colorado.
A crowd of nearly 100 property managers, short-term rental owners, realtors and local government officials shared questions, concerns and anecdotes with Roberts and Lukens. Every speaker opposed the bill, either as it is currently written, or in general as a concept. Both Roberts and Lukens stated they were against the bill, as written, as well.
“This is not our bill, and we are not the sponsors of this bill,” Lukens said.
Roberts and Lukens planned to utilize the feedback received at the session to inform their discussions with the bill’s authors.
Arguments against
The Vail Valley Partnership board has “significant concerns” about the proposed legislation as written, Romer said. “This really is a mountain tourism industry killer,” he said.
As the bill is currently written, any property rented short-term for more than 90 nights per year would be taxed at a lodging rate, rather than a residential rate.
According to Romer, after speaking to property and general managers of short-term rental properties, most said that between 20% to 70% (and an average of 30% to 40%) of owners who currently rent their properties throughout the year would reduce the number of nights they rented their properties to under 90 days.
The fear is that because the winter ski season is the most profitable time to rent, all short-term rental owners would select the period from Christmas to spring break to rent their properties to tourists. That would have significant impacts on efforts made to disperse tourism to the non-winter months of the year.
Another argument Romer made was that the bill was trying to implement too broad of a solution to a problem local municipalities are already handling. “There’s a lot of ways to do this that’s not one size fits all across the state through the commercial or residential, but through local zoning,” Romer said.
Romer used the town of Avon as an example. Avon has a specific tax on short-term rentals as residential properties that is designated to be used to create affordable housing opportunities. If short-term rentals were to be redesignated as commercial properties, this tax would no longer apply, and that source of funding for affordable housing would disappear.
Many Western Slope municipalities have similar specific efforts tied to short-term rentals. “These are things that our local communities know better than our friends at the capitol,” Romer said.
Many at the event expressed concern about the financial loss that would follow decreased year-round tourism, including decreased sales tax revenue, and decreased overall revenues for businesses that rely on tourist dollars.
Vail Town Council member Pete Seibert explained how Vail, a town of 5,000, would be impacted by these changes. Vail gets 2.5 million visitors per year, according to Seibert. “If we lose anything over 89, 90 days of rentals in these condos, our off-season is shot. (Property owners are) just going to rent during the ski season, and we no longer have an affordable housing problem, we have an affordability problem,” he said.
“If we lose business that we’ve been trying to build for 60 years, around what’s not the ski season, in the middle of the summer, we won’t be able to afford to stay here,” Seibert said.
The oversight of the taxation process also became a concern.
Property owners would need to write a yearly affidavit that included the number of nights the property was rented, which would go to the county assessor’s office. All nights the property was booked on a short-term rental platform would be included, even for properties with multiple owners.
Romer said that after speaking to the Eagle County assessor, his understanding was that this would require adding several staff members to the county assessor’s office to deal with the increase in paperwork.
Other concerns included: Would the property values be reevaluated? What happens when a building is forced to be zoned mixed-use because some residences within it were short-term rentals? What happens if the bill passes and there is no way to provide enough lodging for off-season tourists?
While Roberts and Lukens provided as many answers as they could, they also wrote down notes to share with their fellow senators and representatives.
To applause, Romer said, “From my perspective, the only thing that can make this (bill) better is killing it.”
Arguments for
In response to questions about the purpose of the bill, Roberts speculated that the bill’s authors were interested in protecting long-term leases, which have been accused of driving out short-term rentals, to create more affordable housing opportunities.
“One of the arguments for the bill is that short-term rentals have dried up our long-term rental stock in communities like Vail, or Eagle County, or a lot of our resort communities,” Roberts said.
“Some of them, I think, no question, used to be long-term rentals. The question is, how many of them? It’s probably a smaller percentage than the (bill) sponsors think,” Roberts said.
Another argument from the bill’s sponsors, Roberts said, was that the increased taxation was a fairness issue. Those that own and operate their property as a business should be treated like businesses.
A third reason, Roberts explained, was the need to provide increased funding to support the increased amount of public services used by short-term rental guests.
“Short-term rentals do put a larger strain on our public infrastructure than primary residences do,” due to the turnover of occupants, Roberts said. Therefore, public services should be supplemented with more tax money derived from those bringing in short-term guests.
What’s next
Bill 6 will come before the Colorado General Assembly in January, and there are many steps before it has the opportunity to become law.
Lukens stated that she believes the Colorado Association of Realtors is bringing a second bill with some alterations, including eliminating the 90-day rental limit and defining commercial short-term rental properties as not including the owner’s primary or secondary residence, to be taxed at a lodging rate. While these provisions prompted questions from the group, the bill has yet to be introduced.
As for Bill 6, Romer said the Vail Valley Partnership will be coordinating a group to go to the Capitol to testify against the bill when it comes before the Colorado General Assembly.
Roberts and Lukens also promised to communicate the sentiments of the group to the bill’s authors and others at the Capitol. “This is not our first time advocating for an issue that is specific to the Western Slope, and communicating that to our Front Range colleagues,” Lukens said.
“We do not need these state-wide, one-size-fits-all all things,” Romer said.