Steamboat’s new STR tax collects $1.3 million in first month
Steamboat Springs’ new tax on short-term rentals collected $1.3 million in January, despite City Council opting to exempt reservations through the end of the ski season that were booked prior to the end of last year.
The tax stems from a November ballot initiative approved by Steamboat voters by a wide margin, and the funding will be used for affordable and attainable housing projects including, but not limited to the Brown Ranch.
Sue Davies, the city’s Budget and Tax Manager, said they were not able to predict how much the tax would bring in the first month because of the exemption, but she thought it was a reasonable figure.
The start of the new tax has not coincided with a drop-off in occupancy in Steamboat, according to Steamboat Springs Chamber Marketing Director Laura Soard, though it is likely too early to glean any trends from the data as the tax is so new.
“Occupancy the last 60 days was very similar to the prior year, it was just down by a couple of percentage points,” Soard said. “I didn’t see any significant changes. Individual property owners may have seen changes, but from what we see in aggregate in the community, occupancy was just down a couple of points.”
Prior to the election, it was estimated the tax would raise $14 million this year, though that is expected to be lower because of council’s exemption.
A Chamber study conducted before voters approved the tax found that it would likely reduce the demand for short-term rentals by about 3.6%, or about three to four room-nights per 100. Soard said she wasn’t sure how long it would take to see what impact the new tax will have on occupancy over time, but it could potentially take years.
“I would think it would probably take a little while before we see that impact but as of right now, occupancy is pretty steady to what we have seen in past years,” Soard said.
On Thursday, March 16, the Chamber released a forward looking occupancy report as well, which is also pretty close to what it looked like this time last year, with some dates being higher for this year and others being lower.
From March 15 to May 15, the average occupancy for this year is 22.2% compared to 22.8% over the same period last year — which Soard said looked pretty “flat.” This data also includes stays in local hotels, which are not subject to the short-term rental tax.
The use of revenue from the tax is limited to affordable and attainable housing projects — including, but not limited to the Brown Ranch, which is currently going through the process of being annexed into the city.
The fiscal impacts of the Brown Ranch were discussed for the first time on Wednesday, March 15. While use of the short-term rental tax has been mentioned in annexation discussions, the Brown Ranch Annexation Committee has not yet delved deep into how the tax revenue will be used for the project.
Sales taxes in general set a new record for January, with about $4.5 million collected, according to data released by the city on Wednesday. That amounts to a 13.7% increase over the same month last year, with the biggest increases coming from sporting goods, restaurants and utilities, with the latter of those seeing a nearly 50% increase in collections.
January sales taxes generally equate to about 10% of an entire year’s sales tax revenues, according to the tax collections report released by the city. Steamboat took in more than $40 million in sales taxes in 2022, which is the most ever.
Through all of January, the city collected taxes on $113.5 million in sales across the community, which is the same 13.7% increase over January 2022. That increase is less than sales increases seen in Winter Park, which saw a 17.8% increase but more than the jump seen in Vail, which was 10.9%.
Steamboat breaks down sales tax collections into six different categories, largely based on areas in town. The steepest increases were in the “out of town” collections area that includes online purchases, the mountain area and the downtown area, with those increases being 18.9%, 17.7% and 14.1%, respectively.
Steamboat’s 1% Accommodations Tax, which has been dedicated to trail improvements and Haymaker Golf Course, saw an increase of nearly 6% in January over the prior year. The funding parameters approved a decade ago for the accommodations tax are set to end this year, and council is considering posing a question to voters in November about how it would like to see this money spent going forward.
Building Use Tax saw a significant decline of 82% this January compared to last, though it can often be sporadic from month to month. This year’s collections of nearly $60,000 were close to what was collected in January 2021.
To reach Dylan Anderson, call 970-871-4247 or email danderson@SteamboatPilot.com.
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