The Steamboat Springs City Council took a significant step this week toward bringing a first-of-its-kind vacancy tax before voters, directing staff to begin drafting ballot language for a measure that could go to voters in November.

The decision, reached after a lengthy and at times contentious discussion Tuesday that followed a fiscal analysis presentation by Finance Director Kim Weber, marks the most concrete move yet in the city’s search for new revenue streams to support essential services in the face of slowing sales tax growth and rising expenses.

The vacancy tax proposal, which has been under consideration since February, would levy an annual charge of $3,100 on residential properties that are occupied fewer than 183 days per year. 

“The purpose of this was to raise revenue to fund city services and offset the impact of vacant units to the general fund,” said Weber during her presentation. “The theory is, vacant homes require some basic levels of service — public safety, streets, etc. — but they don’t generate the same level of sales tax revenue as an occupied home.” 

Weber noted that the city’s heavy reliance on sales tax, a legacy of a 1970s shift away from property taxes, means that revenue is closely tied to people and purchases. With about 10,000 housing units in Steamboat and estimates suggesting 1,200 to 3,200 could meet the city’s definition of “vacant,” staff settled on an average figure of 2,250 units for their fiscal analysis.

Weber detailed the assumptions behind the analysis, including use of census data, short-term rental license records, utility information and Airbnb statistics to estimate the number of vacant units. She emphasized that vacant homes, while unoccupied much of the year, still require the city to maintain infrastructure, provide public safety and offer other services at levels similar to those needed for full-time residents. 

“Regardless of if someone is in that unit or not in that unit, we still have to provide the same level of stormwater maintenance, the same level of street maintenance,” Weber said, adding that parks and recreation costs were also included, based on data derived from artificial intelligence about actual usage.

The fiscal impact, according to Weber’s calculations, is substantial. The net cost to the general fund for servicing vacant units is estimated at $6.6 million annually, compared to $3.2 million for full-time units. 

To recover these costs, staff proposed a flat-rate tax of $3,100 per vacant unit, which could generate between $3.9 million and $10 million annually, depending on the actual number of qualifying properties and compliance rates.

“We’re not proposing this tax as a way to disincentivize second home or vacant home uses. We did discuss the affordable housing connection in that regard and elected not to go that direction,” said City Attorney Dan Foote. 

Ultimately, council directed staff to begin drafting ballot language for the vacancy tax, with the understanding that more public input and fine-tuning of the proposal would occur before a final decision is made. 

The measure, if placed on the ballot and approved by voters, would make Steamboat Springs the first community in Colorado — and one of a handful in the nation, according to Foote — to implement a vacancy tax with the explicit goal of funding general city services rather than regulating housing markets.

“Because we are addressing this as a revenue measure … we thought it was important that we be able to articulate a connection that this is a fair and equitable charge to address services,” added Foote, “and not a penalty because we’re trying to discourage the use or encourage affordable housing uses of these units.”

Council’s discussion reflected both support and skepticism regarding the potential tax. Councilors Bryan Swintek, Joella West, Steve Muntean and President Gail Garey indicated comfort with the $3,100 flat rate, acknowledging that the methodology was based on the best available data but recognizing the inherent uncertainties in estimating the number of vacant units and their actual impact on city finances. 

Others, like Councilors Michael Buccino and Dakotah McGinlay, expressed reservations about the fairness of a vacancy tax, suggesting a property tax would be a more equitable approach for funding city services. 

“I would rather do a property tax across the entire city than to pigeonhole the vacancy tax, because so many of the assumptions are just that,” Buccino said.

During the public comment period, two residents expressed opposition to the proposed vacancy tax. 

Alan Frohbieter, resident of the Shadow Run Condominiums and holder of a short-term rental license, challenged the staff’s fiscal analysis, arguing that vacant homes do not burden city services to the same extent as full-time residences and questioning the logic of assigning equal costs for services like transit to both groups. 

Another commenter, Bill Jameson, criticized the “bright-line” definition of vacancy — 182 days or less of occupancy — as arbitrary and lacking a “rational connection,” pointing out that a single day’s difference in occupancy could mean a $3,100 tax bill. 

Foote said that the tax’s validity does not depend on mathematical precision but on a reasonable connection between the tax and its purpose.

Council members also discussed how the city would verify whether a property is vacant. Foote outlined a system relying on a combination of self-certification, utility records, STR financial records and, if necessary, audits. 

Primary residents could provide documentation such as a driver’s license or voter registration, while those claiming non-vacancy through STR use would need to show rental records. The city would keep all such information confidential, and penalties for noncompliance would be included in the implementing ordinance if the tax is approved.

Questions about potential exemptions, the treatment of newly purchased homes and scenarios like extended remodeling or family use during owner absences remain unresolved. Council members agreed these details would need to be clarified in future discussions and public education efforts. 

Weber estimated the tax would require about $300,000 annually in administrative costs, including two new full-time employees, and stressed the importance of a robust outreach campaign to ensure residents understand their obligations if the tax is enacted.

Council also debated whether to include a sunset provision or tie the vacancy tax’s continuation to the possible future adoption of a property tax. Most councilors agreed that, if approved, the tax should remain in place indefinitely to provide stable funding for city services, with future councils retaining the flexibility to adjust or repeal it as circumstances change.