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AGENDA
CITY COUNCIL SPECIAL MEETING
August 29, 2022
4:00 PM, City Council Chambers
427 Rio Grande Place
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I.CALL TO ORDER
II.ROLL CALL
III.ACTION ITEM
Resolution #106, Series of 2022 - A resolution of the City Council of the City of Aspen,
Colorado, submitting to the electorate of the City of Aspen at the November 8, 2022,
coordinated election a certain question imposing a short-term rental tax for the purposes
described in the ballot question.
IV.ADJOURN
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MEMORANDUM
TO: Mayor and City Council
FROM: Sara Ott, City Manager
Phillip Supino, Community Development Director
Pete Strecker, Finance Director
MEETING DATE: August 29, 2022
RE: Short-Term Rental – Tax Question
REQUEST OF COUNCIL:
Staff is seeking direction from Council on a proposed new short-term rental excise tax and ultimate
adoption of a resolution to that would place a question on the November ballot for voters to weigh in
on whether a tax was favored or not.
SUMMARY / BACKGROUND:
The City of Aspen depends on a lived-in community of year-round locals to support community
culture, provide labor and capital to support the local economy, ensure public safety and peace.
Without these community members, the long-term viability of the community and robust tourist
economy could not survive. Paramount to the local workforce is housing – this is something that has
been the focus of nearly every mountain resort community and Aspen is no different. The availability
of housing for local workers and residents including first responders, health care workers, and other
essential service workers is diminishing, the system for delivering affordable housing is not keeping
pace with need, and the housing market in the region and state of Colorado are in crisis.
While tourism is an integral part the Community and contributes to the vibrancy so many have
come to enjoy, in keeping with the goal of the City’s Comprehensive Plan to preserve small town
character while maintaining livability, Aspen City Council responded to the broader Community
voice and its concerns around the negative impacts of short-term rentals on Aspen’s neighborhoods,
environment and affordable housing supply.
The Aspen Area Community Plan includes policies directing the City of Aspen to address affordable
housing in the community, including:
• VIII.1. Restore public confidence in the development process. (pg 27)
• VIII.2. Create certainty in zoning and the land use process. (pg 27)
• VIII.3. Ensure that the Planned Development process results in tangible, long-term community befits
and does not degrade the built or natural environment through mass and scale that exceeds the Land
Use Code standards. (pg 27)
• II.1. The housing inventory should bolster our socioeconomic diversity. (pg 41)
• II.2. Affordable housing should be prepared for the growing number of retiring Aspenites. (pg 41)
• IV.2. All affordable housing must be located within the Urban Growth Boundary. (pg 42)
• IV.3. On-site housing mitigation is preferred. (pg 42)
• IV.5. The design of new affordable housing should optimize density while demonstrating compatibility
with the massing, scale, and character of the neighborhood; (pg 42)
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DISCUSSION:
Based on the Council discussion from the August 16th work session, staff has proceeded with drafting
preliminary ballot language and an affirming resolution for a November 2022 ballot. Some aspects of the
tax have come into greater clarity, such as:
• The effective date for a new tax would be set for May 1, 2023 to allow for some runout with
advanced bookings happening within the lodging industry as a normal course of business
• A minimum amount of revenues should always be dedicated towards affordable housing, and the
remaining amount confirmed to be for environmental initiatives and infrastructure maintenance
and repair
• A tiered tax was perhaps desired, with a differentiation based on permit type
With these general parameters, staff was requested to further assess the financial aspects of scenarios
where a tiered approach was used and to identify what resources would result for addressing the
Community concerns around affordable housing, environmental and infrastructure impacts. Staff
proceeded with estimating the cost of a “baseline” scenario outlined by Council at the end of the
August 16 work session, wherein:
• STR lodge exempt and owner-occupied permitted businesses would levy an additional 5.4% tax on
the cost of a nightly stay; and
• STR classic permitted businesses (2nd homeowners and investment properties) would levy an
additional 10.0% tax on the cost of a nightly stay; and
• A minimum of 65% of collected revenue would be dedicated to affordable housing with the remaining
collections dedicated to environmental and infrastructure maintenance and repair needs.
Staff needs to caveat that the computation of the estimated tax collection hinges on a significant
number of assumptions and is not intended to be an absolute. Without reviewing new applications to
know how various properties will align with the three permit classifications, how the cost per night
will escalate or decline, how price elasticity will materialize in collections and how the broader
economy will influence tourism generally – there are many unknowns that must be accepted in these
estimates.
OUTSTANDING ISSUES:
As noted above, staff has developed a baseline scenario based on the parameters discussed at the
August 16 work session. Affirmation of or proposed revisions to those parameters must be provided
in order to adopt the resolution. Items that were still somewhat in flux include:
QUESTION #1: Does the Council support the current taxation rates for the different permit types?
If Council wished to adjust rates up or down from the baseline, staff has provided what the collections
would look like for a 1% swing in either direction. These alternative scenarios, or any other
alternative could be proposed and inserted into the resolution and ballot question.
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QUESTION #2: Does the Council support the current dedication of proposed tax collections?
Based on Council comments from August 16th, staff developed the “baseline” language to include a
minimum obligation for 65% of all collected tax revenue to be dedicated to affordable housing. For
comparison purposes, staff has shown options to float this percentage down to 60% or up to 70%.
Note that staff is proposing that the dedication to affordable housing be a minimum threshold. In
adoption of this type of verbiage, the Council would have flexibility to push even greater resources to
the affordable housing effort in any given year.
FINANCIAL IMPACTS:
Utilizing a conservative estimation process intended to be more of an upper bound vs. an actual
collection amount, with the tax rates and dedicated allocations noted above, staff estimated $9.14
million in tax revenue for a full year’s implementation in 2024. At a 65% / 35% split, affordable
housing funding would equate to roughly $5.94 million and environmental / infrastructure
maintenance & repair would equate to $3.20M.
RECOMMENDED ACTION:
Staff recommends approving a resolution to send the short-term rental excise tax question to the voters
in November 2022.
PROPOSED MOTION:
“I move to approve Resolution No. 106 to seek voter approval regarding the implementation of a
new short-term rental tax, with proceeds of such tax to benefit affordable housing, environmental
initiatives and the maintenance and repair of infrastructure for our community.”
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RESOLUTION NO. 106
(Series of 2022)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ASPEN, COLORADO,
SUBMITTING TO THE ELECTORATE OF THE CITY OF ASPEN AT THE NOVEMBER 8,
2022, COORDINATED ELECTION A CERTAIN QUESTION IMPOSING A SHORT-TERM
RENTAL TAX FOR THE PURPOSES DESCRIBED IN THE BALLOT QUESTION.
WHEREAS, the City Council desires to place before the electorate of the City of
Aspen certain ballot questions; and,
WHEREAS, the City Council is authorized pursuant to Section 5.7 of the Aspen
City Charter to, on its own motion, submit questions to a vote of the electorate; and,
WHEREAS, the members of the City Council of the City (the “Council”) have
been duly elected and qualified; and,
WHEREAS, Article X, Section 20 of the Colorado Constitution (“TABOR”)
requires voter approval for any new tax, the creation of any debt and for spending certain
moneys above limits established by TABOR; and,
WHEREAS, TABOR requires the City to submit ballot issues (as defined in
TABOR) to the City’s electors on limited election days before action can be taken on such ballot
issues; and,
WHEREAS, November 8, 2022, is one of the dates at which ballot issues may be
submitted to the eligible electors of the City pursuant to TABOR; and,
WHEREAS, the Council hereby determines that it is necessary to submit to the
electors of the City, at the coordinated election to be held on November 8, 2022 (the “Election”),
the question of imposing an excise tax on short term rentals in order to contribute to the funding
of workforce housing and infrastructure maintenance and repair (the “ballot question”); and,
WHEREAS, pursuant to Section 2.1 of the City Charter, all elections of the City
are governed by the Colorado Municipal Election Code unless otherwise provided by ordinance;
and,
WHEREAS, Section 31-10-102, C.R.S., contained within the Municipal Election
Code, permits any municipality to elect by resolution to utilize the requirements and procedures
of the Uniform Election Code which will thereby permit the City to participate in the coordinated
election being conducted by Pitkin County (the “County”) on November 8, 2022; and,
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WHEREAS, the steadily increasing activity in the short-term rental market
throughout all zone districts within the city has increased the pressures on the community to
provide essential services and affordable housing; and,
WHEREAS, taxation is an equitable means of recovering costs to the community
incurred through the delivery of essential services to residential and lodging exempt properties
used as short-term rentals, including community policing, utilities services, transit,
transportation, and pedestrian infrastructure, and affordable housing; and,
WHEREAS, affordable housing, community infrastructure, and a clean and
resilient environment are essential to maintaining a world-class, competitive, economically
sustainable tourist economy; and,
WHEREAS, a tax on short-term rentals within the City will generate revenue for
local government to fund affordable housing, community infrastructure, and environmental
initiatives for the benefit of the public and a sustainable community; and,
WHEREAS, in keeping with the goal of the City’s Comprehensive Plan to
preserve small town character while maintaining livability, the City desires to mitigate the
negative impacts of short-term rentals on Aspen’s neighborhoods, affordable housing supply,
economy, and environment; and,
WHEREAS, the City of Aspen depends on a lived-in community of year-round
locals to support community culture, provide labor and capital to support the local economy,
ensure public safety and peace through the presence of first responders, health care and essential
service workers in the community, and ensure the long-term viability of the community and
tourist economy; and,
WHEREAS, the availability of housing for local workers and residents including
first responders, health care workers, and other essential service workers is diminishing, the
system for delivering affordable housing is not keeping pace with need, and the housing market
in the region and state of Colorado are in crisis; and,
WHEREAS, the Aspen Area Community Plan includes policies directing the City
of Aspen to address affordable housing in the community; and,
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WHEREAS, a functional residential housing sector is essential to sheltering
Aspen’s populations, supporting a stable economy, maintaining the health, peace and safety of
the City of Aspen for its residents and visitors; and,
WHEREAS, Aspen is a tourists destination, attracting tens of thousands of
visitors a year in all seasons, visitors which require transient tourist accommodations and
participate in and support Aspen’s tourist economy; and,
WHEREAS, a tourist-based economy such as the City’s requires a sufficient
number of employees to provide the services required to serve such an economy. Without
adequate workforce housing, a tourist-based economy cannot thrive; and,
WHEREAS, to allow for a sufficient number of employees to be hired to provide
the services necessary to sustain a tourist-based economy there must be an adequate supply of
workforce housing; and,
WHEREAS, historically, the long-term rental of residential property, or at least
the long-term rental of space within a residential property, has been an important means for
providing workforce housing within the City; and,
WHEREAS, short-term rentals are extremely valuable to the City’s economy and
exist in various locations throughout the City; and,
WHEREAS, the operation of a short-term rental in the City is the operation of a
business; and,
WHEREAS, tourist visitation, the operation of tourist accommodations, the goods
and services demanded by tourists, and the transportation systems required to move tourist to and
throughout the community have environmental impacts, measured as Greenhouse Gas
Emissions; and,
WHEREAS, the difference in property tax rates for commercial and residential
properties contributes to gaps in funding for affordable housing, essential government services,
infrastructure, and a healthy environment capable of supporting a sustainable economy; and,
WHEREAS, the Council now determines it is necessary to submit to the electors
of the City, at the Election which will be held as a coordinated election with the County on
November 8, 2022, the election questions; and
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WHEREAS, it is necessary to set forth certain procedures concerning the conduct
of the Election; and,
WHEREAS, the Council finds that the adoption of this Resolution is necessary
for the preservation of the public health, safety and welfare.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
ASPEN, COLORADO, THAT:
Section 1. All action heretofore taken (not inconsistent with the provisions of this
resolution) by the City and the officers thereof, directed towards the Election and the objects and
purposes herein stated, is hereby ratified, approved and confirmed.
Section 2. Unless otherwise defined herein, all terms used herein shall have the
meanings defined in the Uniform Election Code of 1992, Title 1, Articles 1 through 13, C.R.S.,
as amended (the “Uniform Election Code”).
Section 3. Pursuant to TABOR and the Uniform Election Code, and all laws
amendatory thereof and supplemental thereto, the City hereby determines that a special Election
shall be held within the City on November 8, 2022, and that there shall be submitted to the
eligible electors of the City the election questions set forth herein. Because the Election will be
held as part of the coordinated election, the County Clerk and Recorder (the “Clerk”) shall
conduct the election on behalf of the City and officers of the City have been previously
authorized to enter into one or more intergovernmental agreements with the County for the
conduct of the Election pursuant to Section 1-7-116, C.R.S. Any such intergovernmental
agreement heretofore entered into in connection with the Election is hereby ratified, approved
and confirmed.
Section 4. The Council hereby authorizes and directs the officers of the City to
certify on or before September 9, 2022, the following election question in substantially the form
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hereinafter set forth to the Clerk, which such question shall be submitted to the eligible electors
of the City at the Election:
CITY OF ASPEN – SHORT TERM RENTAL TAX.
SHALL CITY OF ASPEN TAXES BE INCREASED NOT MORE THAN $9,140,000
COMMENCING MAY 1, 2023, AND BY WHATEVER AMOUNTS ARE GENERATED
ANNUALLY THEREAFTER BY THE IMPOSITION OF AN EXCISE TAX OF NOT MORE
THAN 10% ON THE AMOUNT CHARGED ON A NIGHTLY ROOM RATE AT ANY
ACCOMMODATION OR BUSINESS THAT IS REQUIRED TO OBTAIN A SHORT-TERM
RENTAL PERMIT FROM THE CITY; PROVIDED HOWEVER THAT:
• SUCH TAX SHALL BE APPLIED TO “LODGE EXEMPT PERMIT PROPERTIES”
AS HEREAFTER DEFINED IN AN ORDINANCE OF THE CITY COUNCIL, WITH
A SHORT-TERM RENTAL PERMIT STR-LE, AT 5.4%;
• SUCH TAX SHALL BE APPLIED TO “OWNER OCCUPIED UNITS” AS
HEREAFTER DEFINED IN AN ORDINANCE OF THE CITY COUNCIL, WITH A
SHORT-TERM RENTAL OWNER OCCUPIED PERMIT STR-OO AT 5.4%;
• AND 2ND HOMEOWNER, INVESTMENT PROPERTY UNITS AS HEREAFTER
DEFINED IN AN ORDINANCE OF THE CITY COUNCIL, WITH A SHORT-TERM
RENTAL PERMIT STR-CLASSIC AT 10%;
AND SHALL AT LEAST 65% OF THE REVENUE GENERATED FROM SUCH TAX BE
UTILIZED FOR THE PURPOSE FUNDING AFFORDABLE HOUSING AND SHALL THE
REMAINDER OF THE REVENUE GENERATED FROM SUCH TAX NOT UTILIZED FOR
AFFORDABLE HOUSING BE UTILIZED FOR INFRASTRUCTURE MAINTENANCE AND
REPAIR AND FOR ENVIRONMENTAL INITIATIVES; AND SHALL THE CITY BE
AUTHORIZED TO COLLECT, KEEP AND SPEND THE REVENUES FROM SUCH TAX
AND ANY INVESTMENT INCOME THEREFROM NOTWITHSTANDING THE LIMITS
OF ARTICLE X, SECTION 20 OF THE COLORADO CONSTITUTION?
Section 5. Pursuant to the intergovernmental agreement entered by the City to participate
in the Pitkin County coordinated election, the City Clerk of the City of Aspen (the “City Clerk”)
has been appointed as the designated election official of the City for purposes of performing acts
required or permitted by law in connection with the Election.
Section 6. Pursuant to Section 1-11-203.5, C.R.S., any election contest arising out of a
ballot issue or ballot question election concerning the order of the ballot or the form or content of
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the ballot title shall be commenced by petition filed with the proper court within five days after
the title of the ballot issue or ballot question is set.
Section 7. The officers of the City are hereby authorized and directed to take all action
necessary and appropriate to effectuate the provisions of this resolution.
Section 8. If any section, paragraph, clause or provision of this resolution shall for any
reason be held to be invalid or unenforceable, the invalidity or unenforceability of such section,
paragraph, clause or provision shall in no manner affect any remaining provisions of this
resolution.
Section 9. All resolutions or parts of resolutions inconsistent herewith are hereby
repealed to the extent only of such inconsistency. This repealer shall not be construed to revive
any resolution or part of any resolution heretofore repealed.
Section 10. The effective date of this resolution shall be immediately upon adoption.
INTRODUCED, READ AND ADOPTED by the City Council of the City of Aspen on the
day of 2022.
___________________________
Torre, Mayor
I, Nicole Henning, duly appointed and acting City Clerk do certify that the foregoing is a
true and accurate copy of that resolution adopted by the City Council of the City of Aspen,
Colorado, at a meeting held on the day hereinabove stated.
_______________________________
Nicole Henning, City Clerk
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Short Term Rental Tax Discussion
Sara Ott, Pete Strecker, Phillip Supino August 29, 2022
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Council Direction from August 16th
•Begin ballot language development
•for placement on Nov. 2022 ballot
•Delay effective date
•to May 1, 2023
•Explore tiered rate structure
•group STR-OO and STR-LE at lower rate
•assess higher rate on STR-C
•Develop financial analysis
•present revenue scenarios to Council
•Prioritize revenue to affordable housing
•Set a minimum level of revenue for affordable housing
•Remainder to support infrastructure and environmental programs
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Questions from August 16th
•What rates for what permit types?
•STR-LE: 5.4%
•STR-OO: 5.4% to 10%
•STR-C: 10% or higher
•What amount should be prioritized for affordable housing
funding?
•Set an absolute or provide Council discretion?
•Should remainder of revenue use be further prescribed?
•flexibility to make annual budget decisions based on need? general ballot language?
•predictability for availability and use of funds? specific ballot language?
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Tax and Financial Comparison
•Impacts of STRs needed analysis – Nov. 2021
•Fee to cover administration of STR compliance program (May 2022);
Tax to cover impacts from tourism
•Stakeholder discussions supported some level of tax; support for tax
was also mirrored in polling results
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Taxation Estimation
Assumptions must be made
•What will the average nightly rate be in 2024 (1st full
year)
•How many will truly qualify for lodge exempt permit
•What is the number of owner-occupied units
•How will # of rental nights cap impact owner-occupied
stays
•How will the pace of attrition play out in some zones
•How many more permits will be issued in unrestricted
zones
•What is price elasticity impact going to look like
•What economic conditions will exist in 2024
402 Lodge
Exempt
133Owner
Occupied
530 Classic
Units
Estimated Counts Based on
’22
Estimated Counts Based on
Data Sample May ’21 – Apr
’22
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Taxation Estimation
Rate Taxes
Lodge Exempt 1.00%$450,000
Owner Occupied 1.00%$150,000
Classic 1.00%$590,000
Total Tax Estimate $1,190,000
Affordable Housing 60%$714,000
Env. & Infrastructure 40%$476,000
Affordable Housing 65%$773,500
Env. & Infrastructure 35%$416,500
Affordable Housing 70%$833,000
Env. & Infrastructure 30%$357,000Option AOption BOption CEvery 1% Estimated to Generate
$1,190,000
•Initial Modeling at 10.0% for Classic and
5.4% for Other Permit Types
Every 5% Shift Between Affordable
Housing & Environmental /
Infrastructure is $59.5K
•Initial Split of 65% to Affordable Housing
Was Modeled as Starting Point
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Taxation Estimation
Rate Collection
s Rate Collection
s Rate Collection
s
Lodge Exempt 4.40%$1,980,000 5.40%$2,430,000 6.40%$2,880,000
Owner Occupied 4.40%$660,000 5.40%$810,000 6.40%$960,000
Classic 11.00%$6,490,000 10.00%$5,900,000 9.00%$5,310,000
Total Tax Estimate $9,130,000 $9,140,000 $9,150,000
Affordable Housing 60%$5,478,000 $5,484,000 $5,490,000
Env. & Infrastructure 40%$3,652,000 $3,656,000 $3,660,000
Affordable Housing 65%$5,934,500 $5,941,000 $5,947,500
Env. & Infrastructure 35%$3,195,500 $3,199,000 $3,202,500
Affordable Housing 70%$6,391,000 $6,398,000 $6,405,000
Env. & Infrastructure 30%$2,739,000 $2,742,000 $2,745,000Option AOption BOption CFlat Rate for All
~7.70%
Flat Rate for All
Equivalent
would be
~7.70%
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Questions for Council
•What rates for what permit types?
•STR-LE: __%
•STR-OO: __%
•STR-C: __%
•How prescriptive should the ballot language be?
•Should the amount specified for affordable housing be explicitly set (at X%) or
should the ballot question mandate a minimum (at least X%)?
•Is it acceptable to denote the application of remaining tax collections after affordable
housing be collectively for infrastructure maintenance and repair and environmental
initiatives or
does there need to be greater specificity to allocate to these purposes?
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