Steamboat Council sets full 9% STR tax to start Jan. 1; exempts reservations made this year
In a vote that took place just before midnight on Tuesday, Nov. 15, Steamboat Springs City Council decided to assess the full 9% tax on short-term rentals that voters approved by a strong margin last week.
In a first reading of an ordinance implementing the tax, council decided it will start for all stays that are reserved on or after Jan. 1, but any reservations made before the end of the year would be exempt.
“It’s a compromise,” said council member Michael Buccino, who made the case for exempting reservations prior to Jan. 1, but then was the lone council member to vote against the ordinance. “At least we’re giving people some leeway.”
More than 62% of Steamboat voters supported the tax question, which gave council the authority to levy the tax up to 9% on short-term rentals like Airbnbs, but not on more traditional commercial lodging like hotels.
But the ballot question itself did not put the tax in place, so council needed to pass an ordinance to do that. After the 6-1 approval Tuesday, council will consider the second reading of the ordinance on Dec. 6.
A majority of council members quickly coalesced around implementing the tax at the full 9%, which is projected to earn about $14 million in the first year — though that estimate is based off of record tax numbers from 2021 and will likely be lower.
The more robust part of the discussion was about the timing of the tax and what reservations for this ski season it would apply to. City staff’s recommendation was to exempt any stays that were paid in full before the start of next year, and it seemed there was a majority of council support for that at the start of the discussion.
Council member Heather Sloop opened the discussion supporting the staff recommendation, and council members Gail Garey, Dakotah McGinlay and Eddie Briones said they were supportive of that as well.
But Buccino and Council President Robin Crossan pushed to delay for the entire ski season and not implement the tax until April. Council member Joella West also said she could get to a yes on that kind of delay, but there wasn’t a fourth council member needed to have a majority.
After recognizing she was in the minority on that, Crossan suggested implementing the tax at a lesser rate of 2% or 3% until April and then bump it up to the full 9% when Mt. Werner’s slopes are no longer packed with out-of-towners. That suggestion too failed to gain traction.
Buccino then argued for at least exempting reservations that were on the books by Dec. 31, a compromise that Larry Mashaw, vice president of short-term rental operator Resort Group, suggested during public comment. Mashaw said asking current reservations to quickly pay in full or be subject to an additional 9% cost would leave customers with a bad taste in their mouth.
“(Many guests) booked through a number of channels in booking platforms and it’s hard to reach out to them,” Mashaw said. “These aren’t just our company’s customers, they’re the customers of our entire community and we don’t want to lose them.”
Implementing the tax based on reservations and not fully paid stays would be similar to how the tax for the Local Marketing District was first put in place, according to city finance director Kim Weber. Still, Weber said the staff recommendation to go based on payment is because that is easier to track than a reservation.
“I struggle with saying a reservation … I’m going to disagree wholeheartedly and I will stay with what I had,” Sloop said, referring to her support of staff’s recommendation. “We still had four votes initially that said we would go with how it was written.”
Sloop then motioned to approve the ordinance as staff recommended, which McGinlay seconded. That effort failed by a 3 to 4 vote, with Buccino, Crossan, Briones and West against.
Sloop then made another motion that instead exempted reservations made prior to Jan. 1 — what a majority of council had showed support for. That passed 6-1, with just Buccino opposed, saying he favored delaying for all of ski season. Buccino was also the lone vote against sending the tax to voters this summer.
“Another tough one we’ve gotten through this evening,” Crossan said, at the end of what ended up being a seven-hour meeting. “Expect a lot more of these because this is how it’s going to go.”
To reach Dylan Anderson, call 970-871-4247 or email danderson@SteamboatPilot.com.
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