A proposal to allow local governments in Colorado to ask voters to approve a tax on vacant homes will not apply to short-term rentals should it be introduced in the upcoming legislative session. 

As recently as last week, the Colorado Association of Ski Towns — which is pursuing the vacancy tax idea — suggested the proposal could affect short-term rentals. On Tuesday, Executive Director Margaret Bowes said the group has decided to exempt those properties from any potential legislation. 

“It’s a realization that home-rule municipalities already have quite a few tools at their disposal to manage the impacts of short-term rentals locally,” Bowes said. “Some communities have recently implemented new (short-term rental) ordinances or regulations, so those communities want some time to see how effective they are.”

Lodging industry groups were told about the changes Tuesday during a virtual meeting hosted by the Summit Alliance of Vacation Rental Managers. 

“We are going to keep a close eye on how we remain to be excluded from that, but this is huge news,” said Jaclyn Terwey, a government and corporate affairs regional manager for Expedia Group, the parent company of Vrbo. 

Under the ski town association’s proposal, municipalities would — for the first time — be able to pass taxes on homes that are unoccupied for a certain number of days a year. In some ski resort areas, over 40% of homes sit vacant throughout the year, according to U.S. Census Bureau data, and as many as 1-in-3 are used as short-term rentals. 

The aim of a vacancy tax would be to incentivize homeowners to rent long-term to working residents in areas where the availability of affordable housing is scarce. For properties that incur the fee, local governments could use the revenue to support community initiatives, like workforce housing. 

The legislation would be written in a way that affords wide latitude to local communities to decide what constitutes a vacant home, Bowes said. The prospect raised concerns from lodging industry leaders who said it would open the door to new taxes on short-term rental properties. 

“A huge portion of the vacation rentals in Colorado would end up being subject to a vacant home tax,” said Julie Koster, executive director for the Colorado Lodging and Resort Alliance, in an interview last week. 

Bowes said she remains in favor of legislation that allows “flexibility for communities to include a vacancy tax to meet their needs,” but added there will be conversations around whether the proposal should stipulate a certain number of days. 

The ski town association, along with the Colorado Municipal League, is seeking a lawmaker willing to introduce the legislation next year. 

The vacancy tax proposal is among a handful of potential bills that gained the ire of short-term rental advocates heading into the next legislative session. 

Policymakers are also eyeing proposals to raise the lodging tax limit for counties and allow voters in counties and statutory towns to levy additional taxes on specific industries and services.