Mountain Towns in Colorado Are Full of Vacant Trophy Homes and Short-Term Rentals: Some Western Slope Town Councils Want Permission to Tax Them
As Colorado lawmakers debate over how to confront rapidly increasing housing costs, more than a dozen city and town councils on the Western Slope have voted to support allowing local taxes on vacant homes and short-term rentals.
The concepts, pitched by the Colorado Association of Ski Towns, or CAST, would have to be passed by the Colorado legislature and approved by local voters before they could take effect anywhere.
“The lack of available and attainable housing for employees in Colorado mountain resort communities has reached a crisis level,” CAST wrote in the legislative policy statement approved by the towns. “The CAST Housing Task Force supports targeted legislation to provide increased financial resources for Colorado mountain communities to address housing needs.”
The legislative proposals from CAST also include an idea to allow more local governments to impose real estate transfer fees.
The proposals are the latest ideas in an ongoing debate over how the state should handle growing property taxes and a dearth of housing options. State lawmakers, who recently met for a special session on property taxes, have recently considered bills that would have taxed secondary homes and short-term rentals differently, but no bills with those concepts have been approved. The ideas have been met with significant pushback from assessors, companies like VRBO and AirBnb, and second-home owners.
Town or city councils in Avon, Basalt, Breckenridge, Crested Butte, Estes Park, Frisco, Glenwood Springs, Minturn, Mountain Village, Ouray, Silverthorne, Steamboat Springs, and Winter Park have all voted to support the latest concepts proposed by CAST.
An empty home tax could be either in the form of an excise tax based on a home’s square footage, a flat amount per home, or part of property taxes based on the home’s value. Local governments would also be able to define whether things like secondary homes or short-term rentals are included in “empty homes,” according to CAST.
Residential vacancy rates are above 40% in some Colorado mountain towns, according to CAST.
CAST hopes a vacancy tax would incentivize homeowners to rent to full-time residents and disincentivize the purchase of homes solely as investments. Revenue from such taxes would fund local affordable and workforce housing.
The advocacy organization also wants the legislature to expressly allow local governments to ask voters to approve short-term rental taxes.
While some municipalities, which have voted to be considered “home-rule,” are already able to impose short-term rental taxes, others aren’t.
Another policy idea included in CAST’s statement approved by the towns would allow municipalities and counties to adopt fees on the transfer of real estate, with the revenue to fund local affordable and workforce housing. These fees are currently disallowed under the Taxpayer Bill of Rights, or TABOR, a constitutional amendment passed by Colorado voters in 1992 that restricts government growth and requires voter approval for all tax increases.
A dozen Colorado towns imposed the fees before TABOR passed, making them exempt from the rule. The towns are Aspen, Avon, Breckenridge, Crested Butte, Frisco, Gypsum, Minturn, Ophir, Snowmass Village, Telluride, Vail, and Winter Park.
The taxes, which so far range from 1% to 3%, can produce millions of dollars in revenue per year for the towns. According to 2021 data from CAST, Aspen made nearly $32 million from its 1.5% tax on real estate transfers. Vail collected $10.4 million and Winter Park collected $2.3 million.
CAST argues that other fees, including Denver’s fee on plastic bags, have been permitted under TABOR.
The policy ideas are still in the early stages. The next legislative session will begin in January.
By: I The Aspen Times I September 4, 2024