On Tuesday, Dec. 6, Steamboat Springs City Council passed an ordinance on second reading to impose a new tax on short-term rentals, making way for the city to start collecting the tax on reservations made after Jan. 1.

Reservations for this season made before Jan. 1 will not be subject to the tax, regardless of whether the stay has been paid for.

City Attorney Dan Foote clarified that only stays for this ski season are exempt. If a reservation is scheduled for April 16 or later, it would be subject to the tax even if the reservation is booked before Jan. 1.

Council voted 5-2 to approve the ordinance with council members Michael Buccino and Dakotah McGinlay opposed. Favoring delaying the tax until the end of ski season, Buccino also voted against the first reading of the ordinance.

McGinlay had voted in favor of the ordinance on first reading but said she changed her vote Tuesday because she felt council shouldn’t have exempted reservations made before Jan. 1 unless they had been paid for in full. This was city staff’s initial recommendation, but council later voted to extend what reservations could initially avoid the tax. 

“I think we could have started it Jan. 1 and had an exemption for prepaid reservations,” McGinlay said.

Larry Mashaw, vice president of short-term rental operator Resort Group, urged council to pass the ordinance on second reading as written, so the company can start adjusting its internal systems to begin assessing the new tax.

“We’ve used the past three weeks to work with software programmers to define the scope of the work and to get the quotes on the costs,” Mashaw said. “Upon passage tonight, we can execute contracts with those programmers to be ready to collect and remit (the tax) properly on time.”

More than 62% of Steamboat Springs voters supported giving council the authority to levy up to a 9% tax on stays in short-term rentals like an Airbnb. City Council members opted to impose the tax at the full 9%, though council could lower it in the future.

The money will be used to support affordable and attainable housing projects including but not limited to the Yampa Valley Housing Authority’s Brown Ranch project. The tax question voters saw on their ballot said the tax could earn as much as $14 million in the first year, though that will be lower for 2023 because of council’s added exemption.