Wording issue pauses Steamboat’s effort to impose new tax on short-term rentals

The first reading on the slightly-revised question is planned for July 12

After getting Steamboat Springs City Council approval on Tuesday, July 19, the question of whether add a tax of up to 9% on short-term rental stays is in the hands of voters.
John F. Russell/Steamboat Pilot & Today

Just before Steamboat Springs City Council voted to send the question of whether to assess a 9% tax on short-term rentals to voters, Council President Robin Crossan said if the measure needed changes, council has an opportunity to make adjustments.

“If we have to come back and tweak this, in my opinion, I think we’ll do it sooner rather than later,” Crossan said.

The first tweak came sooner than anyone expected, though, when at the end of council’s Tuesday, July 5, meeting, council members abandoned the question passed hours earlier in an effort to change a reference to housing in the ballot language.

Around 9:30 p.m., roughly 10 minutes before adjourning, council member Joella West questioned the words “additional housing” in the ballot language that council had approved on a 6-1 vote after a long discussion to start the meeting.

The words are the third reference to housing in the ballot question, with the first and second being “affordable and attainable housing.” West said she feared opponents could use the wording variance to challenge the ballot measure. She proposed making all references to housing say “affordable and attainable.”

“That creates an ambiguity because it’s not clear that means affordable and attainable housing, and it could be read to mean that the funds raised by this tax could be applied to other kinds of housing,” West said.

But City Attorney Dan Foote said if council members wanted to make that change, they needed to start over or risk potential problems with the measure in the future. The issue is the change requires an opportunity for public comment, which couldn’t be reasonably held hours after council had approved the measure and members of the public had left the meeting, Foote said.

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As a result, council will consider new language with the change West suggested at a first reading on Tuesday, July 12, with a second reading scheduled for July 19. This language will replace what council approved, and Foote said there is still time to get the tax question to voters, even if the timeline goes beyond the next two weeks.

“If we had gone back and tried to do it (Tuesday) night, it kind of would have been like adding an additional item to the agenda and not having given proper notice,” West said on Wednesday, July 6. “It’s a do-over for a very, very minor drafting clarification, but this clarification is important enough that it’s worthwhile to do it, and we have to do it right.”

The change involves part of the nearly 200-word question about what the revenues raised from the tax can be spent on.

As approved on a 6-1 vote earlier Tuesday, the relevant section of the question read: “… and shall the increased revenues be dedicated for use to increase the stock of affordable and attainable housing by providing incentives and contributions to facilitate the development of affordable and attainable housing at locations including, but not limited to Brown Ranch and to provide funding for infrastructure associated with additional housing, including, without limitation energy, storm water, water, wastewater, and multi-modal transportation …”

The language council will consider next week will exchange the word “additional” with “affordable and attainable.” West said she believes the change makes it clear to voters what council’s intention is with the money, and aligns with what members have been saying the money would be used for during discussions about the proposed tax.

While the process has been pushed later into the summer, the question will still ask voters to approve a 9% tax on short-term rentals that will extend for the next 20 years and is estimated to earn about $14.3 million in the first year.

Representatives of Steamboat’s lodging industry have come out strongly against the tax. They say the added costs cannot simply be passed on to guests and the tax will make it harder to compete with other nearby markets like Vail. If passed, they warn the tax will have trickle-down effects across Steamboat’s economy.

“If we could have increased our rate by 9%, do you not think we would have done that already?” said Mark Walker, president of Resort Group, which manages short-term rentals locally. “By you doing this for us, our ability to increase future rates will be limited, which translates into less opportunity for increased wages and benefits for our entire Steamboat Springs lodging sector.”  

Bob Milne, senior vice president at vacation rental manager VACASA, said the measure was flawed because it was trying to derive too much revenue from one sector.

“Fundamentally, it’s just not right,” said Milne, who is also board chair for Steamboat’s Local Marketing District, which funds airport marketing with a 2% tax on lodging. “I mean, 9% is just too much.”

Lodging folks have posed an alternative 2% lodging tax and 0.75% sales tax to fund housing infrastructure, but it has only gotten support from council member Michael Buccino. Council member Eddie Briones, among others on council, has said he doesn’t believe there is any momentum to pass another sales tax with the community.

“To put the burden on the community itself with the proposed tax that the lodging community came up with, I don’t think the community will even go for that,” Briones said. “And that’s why I’m here in the first place: the community.”

In response to comments from lodging folks, Crossan challenged property management companies to ease the burden on guests by making owners of short-term rentals shoulder some of the burden they project the tax will bring.

Unlike a commercial lodging operation, like a hotel that pays about 29% property taxes, short-term rentals pay about 7% in residential property taxes.

“We’ve listened to the lodging community. We’ve also listened to members of the community who can’t afford to live here any longer,” Crossan said. “This is an opportunity for the people that come in and clean that Airbnb or that VRBO, to have an opportunity in the near future, hopefully, to be able to live in the community that they work.”

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