In 2021, the Northwest Colorado Council of Governments issued the Mountain Migration Report to identify trends and assess needs within the mountain communities of Eagle, Grand, Pitkin, Routt, San Miguel and Summit Counties. In partnership with the Colorado Association of Ski Towns, the study focused on major areas of concern including workforce retention, affordable housing and rental stock. Each community is facing similar struggles and one heated common topic is short-term rentals.

Property Values Have Increased

Since the outbreak of COVID-19, property values in mountain towns have increased by an average of 40%, and many of the homes are not primary residences. As the argument goes, local workforces are being priced out of their local housing market and struggle to find an affordable place to stay. Across the board rents have increased 20-40%, and the availability of homes for rent or purchase have dwindled. Many ski areas house workers in converted hotel rooms to provide workforce housing.

Investors, many of whom reside in urban areas, saw the attraction of purchasing property in mountain towns to be used part of the year for personal use, with the ability to generate revenues the rest of the year. As a result, communities such as Summit reported neighborhoods lying empty for large chunks of time. As more people chose to vacation in rural settings, the short-term rental market exploded.

Ballot Proposals

In the 2021 and 2022 November elections, local ballots in many mountain communities included proposals for new rules and tax increases on short-term rentals, often proving contentious. Telluride made local headlines when it tried to cap short-term rental licenses at 400 from 790, a motion that failed. Crested Butte tried to pass a $2,500 annual fee on homes not being occupied half the year by owners or locals, which also failed.

Almost all Colorado ski towns have enforced nightly rental regulations. Steamboat Springs initiated a short-term rental zoning map, with some areas off limits to short-term licenses. Property owners had until April 30, 2023, to obtain a license. On November 8, 2022, city residents in Steamboat voted overwhelmingly in favor of Ballot 2A, to implement an additional 9% tax on short-term rentals, which will sunset in 20 years. It took the total tax on short-term rentals to 20.4% but does not apply to other lodging outlets such as hotels.

Steamboat Springs Not Alone

Crested Butte increased lodging taxes on short-term rental units by 2.5% to help pay for affordable housing. The town collects a 7.5% excise tax on short-term rentals, which is part of a 20.9% total tax on lodging. Short-term licenses in town are also capped. Aspen, Carbondale, Dillon, Silverthorne, Frisco, Avon, Winter Park, and Telluride all enforce a higher tax on properties in the short-term rental pool.

Summit County implemented a 2% tax on short-term lodging properties, applicable to all lodging stays of less than 30 days. In a bid to create more housing for the local workforce and fill empty neighborhoods, the county recently engaged in a lease-to-locals’ program. Owners of short-term rental homes can earn up to $24,000 by switching to year-long leases. The same model is being used in other tourist-driven locales including Truckee, CA, Ketchum, ID and South Lake Tahoe, CA.

As mountain towns continue to wrestle with housing shortages, property management firms and second homeowners fight initiatives such as commercial property tax rates for second homes in rental pools. They argue homes might stay vacant altogether, which will impact tourism, an industry all mountain towns currently rely upon.

Unless local economies significantly diversify, without tourists, jobs will dwindle; but without housing for locals, there will not be a workforce. Striking a balance is key to a sustainable future for all mountain towns.