As part of the passage of Ordinance 9, Aspen City Council has placed question 2A on the November 2022 ballot, asking voters if they would approve of a new short-term rental tax of 10% or 5%, based on permit type.
Aspen's existing tax rate on lodging is 11.3%. The new proposed taxes -- 10% or 5% -- would be added to the 11.3% tax rate.
The proposed tax will be tiered by permit category:
- STR-Lodging Exempt and STR-Owner Occupied properties will incur an additional 5% tax , bringing the total tax to 16.3%.
- STR-Classic, which include most more condominimums and homes, will incur an additional 10% tax, bringing the total tax to 21.3%.
- Hotels and fractional properties would be exempt from any new tax increases.
History of the STR tax ballot question
In December 2021, Aspen City Council placed an emergency moratorium on the issuance of new short-term rental permits so city officials could get a handle on a fast-growing industry they say has created unmitigated growth in the community and negative impacts to neighborhoods.
Ordinance 9 was passed on June 28, 2022 and instates a new permit system, enforcement regime, and operational standards to increase accountability for owners and managers to ensure their property and guests support neighborhood character and reduce and mitigate community impacts.
Aspen City Staff originally proposed a 13.1% tax across all STRs to bring them into parity with traditional hotels that pay commercial property taxes (29%) instead of residential property taxes (approx. 7%). The 31.1% figure was arrived upon after computing affordable housing mitigation rates and other factors to "level the playing field" between hotels and STRs.
The final ballot language proposes a 5% tax on STR-LE (condotels) and STR-OO (owner-occupied homes) and a 10% tax on STR-C (all other STR properties in Aspen), bringing the total tax rate to 16.3% and 21.3% respectively. Traditional hotels and fractional properties do not incur any tax increases.
What are tax rates in comparable mountain destinations?
The City of Aspen has not presented overall tax rates for other comparable mountain destinations, so we researched what an STR guest would pay if they visited Snowmass Village, Vail, Park City, or Telluride. Our findings revealed that even the most heavily regulated mountain destinations fall below the 21.3% tax rate proposed by Aspen City Council. Here are our findings:
- Vail: 10.3%
- Snowmass Village: 12.8%
- Park City: 13.37%
- Telluride: 15.15%
Frias Properties' Position on the Proposed STR Tax
We support Aspen City Council's efforts to manage the impacts of our community's growth. However, we disagree with Council's assumption that STR properties have been the primary cause of this growth. The larger contributing factor is the exponential increase of residential occupancy by long-term tenants (part of the remote-work movement) as well as homeowners and their guests.
As one of Aspen's larger rental property management companies, we have a unique perspective on STR occupancies. Certainly, our rental occupancies have increased, but that metric has not grown nearly as much as overall community occupancy. (Our own data on owner usage shows their increased occupancy.)
The proposed 10% tax plus permit fees single out one local industry and asks STRs to carry the weight of an Aspen-wide issue. The impacts of growth in Aspen are real, but we believe they should be mitigated by all community members, property owners, and tourists. (Aspen hotels would not pay this tax.)
We contend that this proposed tax will have significant and negative unintended consequences:
- This new tax would incentivize STR owners to either avoid compliance and return to the shadow market or solicit rentals of 30 days or more and skip all tax remittance that help cover their impacts.
- This new tax will make Aspen lodging rates non-competitive with other resort destinations, including Snowmass Village, and reduce the overall visitation and associated taxable income. This additional tax will lower Aspen's appeal to travelers considering multiple mountain destinations.
- If STR owners reduce rates to account for the increased tax, it translates to a reduction in overall revenue for property owners, professional property managers, and the City of Aspen. This reduction in revenue trickles down to the workforce that would experience reduced employee wages and benefits.
Taxing STRs will not abate housing deficiencies. We ask that the City of Aspen and Aspen Pitkin County Housing Authority (APCHA) improve their enforcement of 3,000-plus deed-restricted employee units that the community has built over 40 years to ensure our workforce is effectively housed.
STRs are not the sole cause of employee shortages; private residence occupancies are higher than ever before, and these occupants hire housekeepers, maintenance teams, and other personnel to service their own needs.
Aspen's tourism industry is cyclical and occupancy reports are already showing a slow-down in visitation. With the looming threat of a recession, we recommend a wait-and-see approach to better understand if STRs actually impact Aspen as negatively as City staffers think.
How can you get involved?
The STR tax question will be on the November 2022 ballot. While Aspen second-homeowners cannot vote on this issue, we encourage you to spread the word about the negative impacts of this tax. Submit a letter to the editor in the Aspen Times or Aspen Daily News and share this information with registered Aspen voters.