Aspen City Council on Tuesday put the brakes on a new law that would require all property owners who rent their condos or homes on a short-term basis to have a business license and a vacation rental permit filed with the municipal government.
Council was poised to pass an ordinance requiring those regulations, but the exemption for “condo-hotels” to have a business license on file for each owner on the property was viewed as unfair by a majority of council members, as well as vacation rental and property management companies who made public comment during Tuesday’s meeting.
“We want a fair playing field,” said Tricia McIntyre, owner of Aspen Luxury Vacation Rentals, adding that if she has to ask her clients to individually apply for and pay for an annual business license, so should other properties that have multiple owners.
The exemption was included in the ordinance at the direction of council when it took up the matter in February and again earlier this month, but feedback from the property management and rental companies has changed some officials’ viewpoints.
Council agreed to an amendment to the ordinance that strikes the wording that allows condo-hotels to obtain one vacation rental permit and one business license for the total number of managed condominium units located on the property and made available as vacation rentals.
Council will revisit an amended ordinance Oct. 13, which gives representatives of those types of properties a chance to weigh in.
“I would consider that a substantial change that impacts or potentially impacts a number of different individuals,” City Attorney Jim True said. “So given the circumstances of the change and the impact of it, it would seem to me that a continuance of this item … would be prudent.”
The city is attempting through new legislation to begin collecting lodging and sales taxes on rogue properties, and better monitor the industry locally.
If council passes new regulations, it will join dozens of mountain and resort towns that already have short-term rental property ordinances.
“The city has been behind on this and we are trying to get back into the game on and get caught up,” Mayor Torre said.
The move is aimed at capturing what could be millions of dollars in uncollected sales and lodging tax revenue on short-term rentals flying under the city’s radar.
By requiring the unit owners, many of whom rent their properties on sites including VRBO and Airbnb, to have business licenses enables the municipal government to collect the city’s 2% lodging and 2.4% sales taxes.
Beyond the sales tax collection, a short-term rental property ordinance allows the city to have a better understanding of what type of lodging inventory the resort has and what kind of carrying capacity the government has to support in terms of services, City Finance Director Pete Strecker said.
Under the proposed ordinance, each property also would have to apply for and receive a short-term rental permit that has the owner acknowledge local rules, including noise and trash ordinances, as well as providing contact information for the fire department and other emergency response entities.
The city finance department has software that scrubs the internet to identify properties in the rental pool.
About 50 business licenses include remittance of sales and lodging tax on short-term rental units out of the 1,000 or more properties in the short-term market, Strecker told council in February when direction was given by council to pursue an ordinance but was put on hold due to the pandemic.
Property management and rental companies can use batch reporting, whereby they upload one aggregate file including the tax data for multiple taxable vacation rentals and the associated business license for each address, according to Strecker.
He said the finance department can effectively use the new compliance software systems to collect the required taxes from all vacation rental businesses in town.
It also would provide staff with needed data about the nature and extent of the vacation rental market to better inform future policymaking.
“We really need information about the bed base in town and what is going on in town so we can start tracking it,” Councilwoman Ann Mullins said.