On November 8, 2022, residents in the City of Steamboat Springs voted overwhelmingly in favor of Ballot 2A, to implement up to an additional 9% tax on short term rentals, which will sunset in 20 years at the full 9%. It takes the total tax on short term rentals to 20.4% but does not apply to other lodging outlets such as hotels. The hard-fought measure was met with mixed emotions.

Short-Term Rental

The city states “a short-term rental is defined as a dwelling unit offered, provided, used, or operated as a lodging accommodation to guests in exchange for remuneration for a period of less than 30 consecutive days while the owner or other permanent resident does not reside in the dwelling unit. The term short-term rental shall only apply to periods of time when the owner or other permanent resident is not residing in the dwelling unit.”

Money Will Finance Affordable Housing

City staff estimate it could generate an additional $11 million of revenue per year for the next 20 years. The monies raised will be used for affordable housing, an issue haunting mountain towns since the start of the pandemic. Jason Peasley, the executive director for the Yampa Valley Housing Authority, said this significant investment in housing will open a lot of doors. The YVHA is currently working on the Brown Ranch Development, a 534-acre site west of downtown Steamboat, which aims to provide 2,264 homes by 2040.

The Steamboat Springs Community Preservation Alliance opposed Ballot 2A, and does not believe Brown Ranch is the answer to meeting Steamboat’s current housing needs. Robin Craigen, CEO of Moving Mountains and vice president of the alliance said he thought it would take too long in the short term and is not the right solution for Steamboat long-term.

An Increasing Trend

Steamboat Springs was not the only Colorado town to vote in favor of raising taxes on short term rentals. Aspen, Carbondale, Dillon and Salida joined the likes of Telluride and Crested Bute, who already enforce a higher tax on properties in the short-term rental pool.

Three Different Zones Within Steamboat

Housing shortages for the local workforce is a common problem throughout mountain towns, exacerbated in part, by the rise of second homeowners, increased home values, and the lucrative income opportunity from short term rent through companies such as Airbnb. In June 2022, the Steamboat Springs City Council voted in favor of an overlay zone to create boundaries for three different zones within city limits, to regulate short term rental units. Zone A (green) is unlimited, Zone B (Yellow) is restricted, and Zone C (red) is prohibited. Three types of licenses were put in place for each zone.

Licenses Required

Unrestricted licenses are required for all short-term rentals located within Zone A of the Short-Term Rental Overlay. Restricted licenses are required for all short-term rentals located within Zone B or Zone C of the Short-Term Rental Overlay. Hosted licenses are required for all hosted short-term rentals.

Short-tern rentals and hosted short-term rentals will need to obtain a license before April 30, 2023. If a property is located in zones B and C and has been used as a short-term rental for 12 months prior to June 15, 2022, the property owner must provide evidence of bookings, sales tax collections and remittance to apply as a legal nonconforming use.