Council wants STR tax to get $10 million a year for Brown Ranch

A majority said they felt the tax should be between 7% and 10%

Steamboat Springs City Council is planning on asking voters to approve a short-term rental tax that could raise the $10 million a year needed for infrastructure at Brown Ranch.
John F. Russell/Steamboat Pilot

The Steamboat Springs City Council intends to ask voters to support a short-term-rental tax that would deliver at least the $10 million a year needed for infrastructure at Brown Ranch.

In a work session on Tuesday, May 10, a majority of council members indicated they would support asking a ballot question that would impose a tax of between 7% and 10% on these rentals, if approved in November. This tax would not be imposed on commercial lodging businesses.

Revenue from the tax would be limited to supporting attainable housing by offering incentives, contributing to projects like the Brown Ranch, and building infrastructure associated with housing and transportation, according to council’s discussion.

“To me it’s very simple,” said council member Joella West. “We have a problem with short-term rentals and you know we have to get the Brown Ranch on its feet if there is going to be affordable housing in this valley.”

“Therefore, we want you to vote for this tax on STRs and it will be the amount of money that this city needs to put toward Brown Ranch for the next 20 years,” West continued.

The idea of taxing short-term rentals has been talked about since the start of the year, but in council’s most recent discussion in April, the tax was trending to be smaller, with options discussed being between 1% and 4%.

The conversation evolved last week when Yampa Valley Housing Authority Executive Director Jason Peasley told council that infrastructure needed at the Brown Ranch would require about $10 million a year to build. Over 20 years, that would garner about half of the $400 million total estimated for water, sewer, electric and roads on the undeveloped parcel west of Steamboat.

Now council is echoing sentiments talked about among some housing authority board members who believe a short-term rental tax needs to provide significant funding for Brown Ranch.

“It is unfathomable to me why (council) wouldn’t support a 10% tax, which I don’t think is enough,” said Routt County Commissioner Tim Corrigan in April, who sits on the housing authority board and has been lobbying council members for a larger tax.

Council member Heather Sloop said a tax of at least 7.14% gets the total projected revenue to about $10 million, though she said she would prefer there be a bit more of a cushion.

Council President Robin Crossan and members Gail Garey and Dakotah McGinlay each said they supported a 10% tax. Council member Michael Buccino said he felt the tax should be lower, between 5% and 7%. Still, he was clearly torn and said he could probably support a tax as high as 10%.

“I can be sold on the fact that, if we restrict it to the right things, this could be fantastic for the future,” Buccino said. “But again, I’d like to get it to pass, because what happens if it’s just too high? We get nothing.”

Crossan said they hear from owners of commercial lodging entities in town. While both pay the same lodging tax, a hotel would pay a much higher commercial property tax rate while a short-term rental would pay the residential rate.

Multiple hotels have been converted into makeshift workforce housing in the last year because short-term rentals have depleted the long-term rental market locally.

“This (tax) would not even the playing field, but it helps — I believe — owners of lodging to understand that we are trying to work in some way to somehow even the playing field a little bit,” Crossan said.

The Colorado Legislature broached the idea of property tax equity this session but that effort ultimately didn’t go anywhere. Corrigan estimates that the disparity in Routt County is large, with short-term rentals paying about $31 million less in property tax than they would at the commercial rate. That equates to about $9,000 per rental, he said.

Short-term rentals are on the agenda for a joint meeting between council and Routt County Commissioners on Monday, May 16.

A majority of council members also said they supported having the tax sunset after 20 years, which would extend through the window that the Brown Ranch is expected to be built out. Buccino disagreed, saying he felt it should be in perpetuity.

Council will next have a first reading on an ordinance that would put language on the ballot in November. City Finance Director Kim Weber said both a first and second reading of that ordinance would need to be approved in July to qualify for this year’s election.

Crossan said it was each council member’s responsibility to go out into the community and talk to neighbors and “people you don’t normally talk to” and return with a more developed idea of what level of tax would be palatable to voters.

“Get their opinions and come back with a more well-rounded idea of where we think we can land on this the next time we have the conversation,” Crossan said.

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