Short term rental tax on the table for Steamboat

money sb

After failing to impose a property tax on voters in 2020, Steamboat Springs City Council is reconsidering a list of potential taxes to help the city maintain better fiscal sustainability.

The Council discussed several options on Tuesday, February 8, including a lift ticket tax on Steamboat Resort and Howelsen Hill, the reallocation of accommodation tax, an accommodation tax on all forms of accommodation, a short-term rental tax on overnight rentals excluding hotels, and a vacancy tax on accommodation unoccupied less than a certain number of days per year.

Tuesday was the first time the new council discussed the topic, but members initially agreed to look at a short-term rental tax and redirect the lodging tax, also known as the ‘2A’ tax. because of his placement on the ballot in 1986, the year he was successful.

Any tax that receives two votes in favor of the council will have to be submitted to the voters for final approval. An impact levy, which is similar to a tax, does not require voter approval but does require a study showing that the taxable item has some sort of negative impact on the city and that the damage can be offset by a royalty fee.

City Chief Financial Officer Kim Weber said about 30% of the city’s housing stock is used for short-term rentals, with 3,020 units currently rented by the night, according to data collected by Granicus. , the short-term rental licensing and enforcement group the city has contracted with.

It’s hard to gauge how much of that 30% could be used for affordable housing or long-term rentals, but council members were in favor of exploring the idea and opting for an impact fee instead. just a new tax.

City Attorney Dan Foote said no other community in the United States has imposed an Affordable Housing Impact Fee on short-term rentals, although the City of Frisco is exploring the concept. Because Steamboat could lead the way, Foote expected a potential court battle if the city chose to move forward.

“The fact that this is uncharted territory means that if someone was not happy with theirs, they could find a reason or a legal theory that they believed in and bring us to justice” , Foote said.

Although all supported the idea, council members suggested that property managers and second home owners would likely fight.

“If we decide to go ahead with this, there’s a significant portion of our full-time and part-time residents and the people who make their living in this business who are going to be very upset about it,” said Joella West, Board Member. “If we go ahead with this, I think we need to immediately understand how we present this in a favorable light.”

Short-term rental units currently pay property, sales and lodging taxes. The board could choose to increase sales or lodging taxes, impose an entirely new tax, or add an impact fee.

The lodging industry currently pays the 1% lodging tax, which went towards trails and Yampa Street improvements. Lodging and Lodging taxes are currently the same, but the council may choose to separate them.

“I’m not saying something is popular, but it would be the best for us,” council chairman Robin Crossan said of the rental and short-term lodging taxes.

The previous city council began discussions about another tax several years ago because council and city staff felt the city’s heavy reliance on sales tax was unsustainable. Although the city is able to fund itself primarily through sales tax, city staff felt that sales tax collections were too unpredictable and dependent on external factors, such as the pandemic, forest, low snowfall and economic recessions.

Although board members did not rank a lift ticket tax as their top priority, Steamboat Ski & Resort Corp. previously said the resort would support a lift tax if it went directly to funding transportation, which the resort relies on.

If the city were to impose a tax on lift tickets, Weber said Ski Corp. would likely stop paying its voluntary dues — about $350,000 the station currently pays the city for its restaurants outside the city limits. The resort pays sales taxes on its retail businesses, restaurants, and accommodations within the city limits.

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