Voters will soon have access to dozens of vacation rental ballot measures this November
Voters will soon have access to dozens of vacation rental ballot measures this November
October 18, 2022
Local voters will be able to vote on dozens of ballot initiatives regarding short-term rental regulations, ranging from tax increases to partial bans.
California and Colorado are hot areas for STR-related referendums this year. Most initiatives seek to increase incoming revenue from STRs. A new Colorado state law allows this type of tax revenue to be used for affordable housing and child care. This has led to an explosion in STR-related Referendums in Colorado.
California cities are now targeting STRs for higher taxes that what hotels, motels and inns must pay to be able to do business in their area.
STR Bans and Caps
La Quinta, California
Measure A, a petition by citizens in La Quinta, California near Palm Springs would ban all STRs not owned by the homeowner. A “Yes” vote would ban all owner-occupied STRs in areas that were exempted from STRs by December 31, 2024.
Don Shoftstall, a La Quinta resident, wrote in support of Measure 1. He stated that STRs are disruptive to neighborhoods, and take homes from an already limited supply.
La Quinta, a 37,500-person population, was the first to adopt STR regulations in 2012. The City Council has since amended the regulations multiple time, according City Attorney William Ihrk.
The city passed a moratorium in August 2020 on new STR permits for “non-exempt” residential zones. In May 2021, code was created to ban new permits in nonexempt areas.
The ordinance reduced permits in nonexempt areas from 1,037 – 792, or 23.63%. This was the argument made by Robert Radi, Mayor Pro-Tem, and Robert Radi, Councilmember, against Measure A.
Measure A would only punish rule-abiding STR operators in exempt areas while failing to address neighbor complaints about STRs, Fitzpatrick wrote.
They noted that 66% of complaints against STRs during La Quinta’s festival season were made against unpermitted operators.
They added that the city would not have sufficient financial resources to enforce Measure A.
Ihrk wrote in his impartial analysis of Measure A that STRs make up a “significant portion” of the city’s economy.
In 2021, STR guest spend generated $170 million in sales for businesses, $21.1 million in personal earnings, 779 jobs and $9.7million in local tax revenues. These were mostly transient occupancy taxes or sales taxes.
Measure A would mean that the inventory of STRs in La Quinta would drop from approximately 1,200 to 400 units if it passes, Ihrk wrote. According to him, the city would experience a loss of $100 million in business sales, 445 job losses, $13 million in personal income, $6.1 million to $8 million in local tax revenues, and an estimated $100 million in lost business sales.
Vacation Rental Owners and Neighbors in La Quinta (VRONLQ) have launched a “Vote No!” campaign against the measure. They have raised approximately $74,180, but they continue to seek donations until they reach $250,000.
Olivier Chaine, president of VRONLQ, wrote in a letter to The Desert Sun that the group believes that residents and tourists can coexist by implementing smart policies and best practice. Effective policies can be created through research, open data, community participation, collaboration, transparency and ethics. This will create a win-win situation for neighbors, renters and property owners as well as the community.
Big Bear Lake, California
Two referendums are being considered by California voters in Big Bear Lake to address STRs.
Measure P would raise the transient occupancy tax on hotel guests and vacation rental guests by 8% to 9.9% in January 2024, and then from 9.9% to 10% in January 2025.
Measure O, which places a limit on the number STRs in the small tourist community of 5,000 residents in San Bernardino County, is in effect. The cap would limit the number STRs to 1,500, and limit the number per year of vacation rental contracts to 30, excluding home-sharing agreements.
AirDNA says that Big Bear Lake has more than 3,300 vacation rental properties. The cap would reduce the number by more than half.
Residents for a Better Big Bear funded the Vote No campaign on Measure O. It focused on the economic hardship the cap would cause to small towns and local businesses. Their website claims that the measure will reduce tourism spending by 40%.
Prominent Big Bear Lake residents signed a protest against the measure, including Liz Harris, former Mayor, Debby Sevick, who owns Bear Skins gift shop, which is a 30-year-old company; and Maria Rojas owner of Sonora Cantina. They claimed that the measure would make vacation rentals unoccupied for 10 months of the year, and would be a devastating blow to small businesses like restaurants, retail stores, and rental ski and bicycle shops.
Volunteers can sign up to help with yard signs, canvassing neighborhoods, hosting community coffees, making phone calls, and writing letters to the editor.
The most extreme of these ballot initiatives comes out of a petition filed by the Democratic Socialists of America in Portland, Maine. Question B, which is on the ballot, would limit STRs to owner or tenant-occupied properties. This includes duplexes where the owner lives in one of these units.
Maine has the highest concentration of vacation homes in the country and has a long history. According to IPX 1031, about one in five Maine homes are registered as vacation houses – although they may not be STRs.
According to the DSA, Question B would convert approximately 350 STRs into Portland’s long-term rentals market. This represents nearly 40% of the more than 900 short-term rentals in Portland.
Many of these owners would not rent their properties long-term under an STR ban. In an interview with Fox 23 Maine, Chuck Radis, a vacation home owner, stated that the properties would be left empty if their owners weren’t using them.
Because of the high concentration of Maine vacation rental properties, STR bans could have a significant impact on the state.
Voters will be considering general and STR-specific lodging tax in many cities and counties throughout Colorado, from Aspen through Steamboat Springs. Many of these taxes are intended to generate income for affordable housing.
Colorado’s STR tax referendums have exploded this year due to a new state law, HB22-1117. This allows lodging tax revenue for affordable housing and child care.
Steamboat Springs, Colorado
Steamboat Springs voters will consider 2A, which is a 9% tax for STRs, to raise funds for affordable housing construction. The STR tax is the last part of a plan that was created by the City Council to limit the areas where STRs can be allowed in the city.
If Steamboat Springs voters approve, the total taxes on STRs would be 20.4%. This is one of the highest taxes on STRs, according to Sotheby’s International Realty.
According to the Steamboat Pilot, the tax would not apply for hotels and would expire in 20 years.
Steamboat Springs Community Preservation Alliance (SSCPA), is running a campaign called No Way on 2A against the tax, which they claim is too high.
Robin Craigen, vice-president of the SSCPA, stated that Steamboat Springs would be less competitive with resort towns like Vail who have lower taxes on STRs.
Craigen stated that the tax would be more than twice that of Vail, who is our competitor.
Steamboat Springs is heavily dependent upon tourism. It generates approximately $250 million annually in visitor spending and about 50% of Steamboat Springs’ economy is based on it. The lodging community proposed a moderate tax of 2%.
Aspen voters will consider a STR tax that is 5% to 10% depending upon ownership. Guests staying in owner-occupied STR properties will be charged 5%, while investors or second homeowners will have to pay 10%.
According to the Aspen Times, the tax would take effect on May 1, 2023 and generate an estimated $9.14million in the first year. According to the newspaper, the City Council stated that at least 70% of the tax revenue would be directed to the city’s housing program. The remaining 30% could be used for other purposes, such as city infrastructure improvements.
Gordon Ledingham, Aspen Pitkin County Short-Term Rental Alliance, stated that there is no official opposition to the tax. However, there have been letters addressed to the editor opposing any new taxes.
Summit County, Colorado
Summit County will consider imposing a 2% STR Excise Tax on all guest stays starting January 1, 2023.
The Summit Alliance of Vacation Rental Managers is supporting the tax. Ashley Kubiszyn (founder of SAVRM) stated that 2% is a reasonable amount and that if the county is receiving financial benefits from us, they will be more inclined to work with us.”
Summit County has a limit on how many nights vacation rentals can accommodate guests. Kubiszyn stated that SAVRM hopes that the excise tax will allow for the removal of this limit on nights.
Around the State
The following cities in Colorado are subject to STR taxes:
Carbondale, CO – 6% Excise Tax on STR Stays to Support Affordable Housing Projects, Effective
Centennial, CO – 3.5% tax on short term lodging, including hotels, STRs, and motels
Dillon, CO – 5% Excise Tax on STR Stays and Tripling Lodging Tax from 2% to 66%
Dolores County CO – 2% lodging taxes on hotels, STRs and other transient lodging providers in order to fund tourism marketing, childcare, and affordable housing
Eagle County, CO – A 2% lodging tax in towns or unincorporated areas where there is no lodging tax. The tax would be applicable to Gypsum and unincorporated areas in Eagle County, Beaver Creek and Bachelor Gulch. According to Vail Daily, Vail and other Eagle County cities already have lodging taxes in effect and would not be subject the county tax.
Estes Park, Larimer County CO – A 3.5% lodging tax on STRs or other transient lodging providers will go towards solving workforce shortage problems such as child care and housing.
Georgetown, CO – Measure 2A proposes to replace the 2% county lodging taxes with a 2% town lodging sales tax to fund “Tourism, Tourism, and Events” in addition to funding workforce housing programs and childcare for residents who work in tourism-support businesses.
Gilpin County, CO – 2% lodging taxes on STRs, hotels and other short-term lodging
Littleton, CO – 5% lodging taxes on guests who stay in STRs, hotels and other transient lodging providers
Salida City (CO) – Flat rate STR Tax, which includes a $1,000 annual fee for STR license holders and an occupational accommodation tax of up to $15 per bedroom per night. Both revenue streams would be used to fund affordable housing.
California’s transient occupancy taxes will rise in Santa Monica, Santa Cruz and Yucca Valley. Santa Cruz and Santa Monica have both proposed higher TOT taxes for STR guests. A lower rate would be charged to guests staying at hotels, motels, and inns.
Santa Monica’s TOT rate would rise from 14% – 15% for hotels to 14% – 17% for short-term rentals.
Santa Cruz’s TOT would rise from 11% to 12% for hotels, motels and inns, and to 14% for the STRs.
Measure Q in Inyo County would increase its hotel tax to include STRs at a rate equal to 12% of the rate charged.
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