Council will delay administering STR tax until after election |

Council will delay administering STR tax until after election

Tax wont be assessed on short-term stays fully paid for before Jan. 1

After getting Steamboat Springs City Council approval on Tuesday, July 19, the question of whether add a tax of up to 9% on short-term rental stays is in the hands of voters.
John F. Russell/Steamboat Pilot & Today

Steamboat Springs City Council indicated in its Tuesday, Sept. 13, work session that if the proposed tax on short-term rentals is approved by voters, it wouldn’t be imposed on reservations that are paid for prior to the end of the year.

Council also decided to put off passing an ordinance that would implement the tax until after the election — delaying a decision on what the percentage tax rate these rentals will actually pay until after voters decide whether to give council the authority to tax up to 9%.

“The conversations that we continue to have here is only making this more confusing for the electorate,” said councilmember Heather Sloop, at the work session. “I really think we just need to stop talking about it, let the two sides do their jobs and let the voters decide.”

The conversation was a continuation of one started last week, where City Attorney Dan Foote laid out several details that will need to be included in an ordinance that codifies the tax, if it were to pass on Nov. 8. Having that ordinance passed before the election would have allowed it to be implemented right away if a majority of voters say yes.

But councilmembers indicated they wanted to exempt reservations made for next year from paying the tax if those reservations were paid for in full prior to Jan. 1. This gives the lodging community nearly two months to update their systems and start collecting the tax, and it lessens the need to have an ordinance ready to go before voters weigh in.

Council President Robin Crossan and council member Michael Buccino each indicated they favored exempting reservations through the end of the ski season, a move that Buccino predicted could get more buy-in from a group that has largely opposed the tax.

As this was a work session, no official votes were taken, but council did take a few “straw polls” to indicate where everyone stood.

One of those straw polls revealed that council intends to impose the tax on what Foote called “quasi-hotels,” which includes places like the Steamboat Grand where units are individually owned and rented out, but also often have more services like a 24-hour front desk. Staff is recommending that these rentals be excluded from newly created licensing rules for short-term rentals.

Also part of the discussion was how to eventually allocate the money the tax would collect, which is estimated to be around $14 million. However, Finance Director Kim Weber said the inclusion of the exemption in the ordinance would likely decrease the amount collected by more than $2 million in the first year.

Weber said money collected from the tax would go into a special revenue fund, limiting what it could be spent on to what is outlined in the ballot language. The process for how this money would be allocated to various projects is yet to be developed, but Weber said staff was working on that.

The ballot language states the revenue will be used to promote affordable and attainable housing “at locations including but not limited to Brown Ranch.”

The Yampa Valley Housing Authority’s Brown Ranch project plans to build out 2,300 affordable housing units over the next 20 years to meet Steamboat’s housing shortage, which is currently estimated to be 1,400 units.

Infrastructure needs at the Brown Ranch — estimated to rise to $400 million for work on and off the property — has been a driving force behind the STR tax as council has brought it to the ballot, though Sloop emphasized last week that this revenue is not a blank check for the Housing Authority.

One idea thrown out by Buccino was the city using some of this revenue to build its own employee housing.

“There could be other opportunities with other organizations that could meet the criteria of affordable and attainable housing,” Crossan said.

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