If Steamboat Springs voters approve a new tax on short-term rental stays in November, that doesn’t actually put a tax in place.

If passed, City Council has the authority to impose up to a 9% tax, but another ordinance is needed to actually do it. Before that can happen, City Attorney Dan Foote said there are a few details to iron out.

“(The ordinance) will need to address a number of details about how the tax applies,” Foote said. “Not just the broad strokes that are in the ballot question.”

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Those details include when the tax will take effect, whether quasi-hotel properties like the Steamboat Grand would be subject to it and what the actual tax rate will be if it passes, as council has some discretion, Foote said.

Councilmember Michael Buccino, the lone holdout to approve asking voters for the tax, said he also wanted to further discuss how the money could be used, a conversation several council members said they too wanted to further explore.

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The ordinance will likely be approved prior to voters weighing in on the tax and would only go into effect if the tax passed. Council did not make any decisions on Tuesday, Sept. 7, and plans to discuss the ordinance again next week.

When will the tax go into effect?

So far, council has indicated they want the tax to go into effect on Jan. 1, if voters approve it, but some have also expressed willingness to waive the tax on stays booked and paid for before voters decided.

“We know for a fact that there are going to be reservations that have been prepaid at the existing tax rate for stays in 2023,” Foote said. “What do we do about that?”

Council President Robin Crossan said she would support an exemption for reservations and wanted to discuss it further at an upcoming work session. Councilmember Joella West said postponing the tax isn’t “an unreasonable ask” from the lodging community.

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“I would support that for anything prepaid,” said Councilmember Gail Garey.

Who will pay the tax?

Foote said the short answer to who the tax would apply to is short-term rentals, but the definition — “short term use of a dwelling unit”— has some overlap with what Foote referred to as a “quasi-hotel.”

By this, he said he means a building that operates like a hotel, with on-site staff and security, but where each unit is owned individually and owners pay residential property taxes. Traditional hotels will not be subject to the tax.

“The (Steamboat) Grand would be an example,” Foote said. “If it fits those two definitions, even if the property is otherwise managed like a hotel, it’s still going to be a short term rental.”

Foote said owners of rentals that would be subject to the tax have expressed concern about being able to compete, if some properties were not subject to it.

Rebecca Bessey, the city’s planning and community development director, said she thought this could be clarified in recently passed licensing regulations. This would exempt some of these properties from needing a short-term rental license, but still subject them to the tax.

“I’m still working this out,” Bessey said. “My plan was to bring that back (to Council) in pretty short order.”

How much will the tax be?

While the tax question voters will see in November doesn’t include the words “up to,” Councilmembers have repeatedly indicated they may not want to impose the full 9%, should the tax pass.

“Although we couldn’t say it is an ‘up to’, it is an ‘up to,’” Crossan said. “It can be 0%, it can be 2%, it can be 5%, it can be 9%.”

Crossan said the rate would be an ongoing conversation leading up to the vote and could be changed by this, or another, council in the future. She hoped that waiting would not only give more time to understand what is happening with short-term stays locally, but across the country.

What for?

As presented Tuesday, the tax could be used for incentives to short-term-rental owners to change their property back to affordable long-term rentals, contributions to landowners and developers to facilitate development of affordable housing and to build infrastructure that new housing projects will require. These were respectively numbered, one, two and three.

“I don’t think that one and two should be in this,” Buccino said. “There’s a couple of things that we really need to hone in on and say, ‘Is that the right language we need in this ordinance?’”

Several other councilmembers indicated they wanted to have that conversation as well.

The words incentives and contributions do appear in the ballot language, and Foote said he included the first two provisions to explain to whom those incentives and contributions would be going.

“If this is not the language that’s fine, but I think it would be good to have that discussion,” Foote said.

“Next week,” Buccino replied.

To reach Dylan Anderson, call 970-871-4247 or email danderson@SteamboatPilot.com.