Carbondale vacation rentals tax for workforce housing passes easily

A question before Carbondale voters in Tuesday’s election to impose a 6% excise tax on short-term vacation rentals to bolster the town’s affordable housing funds passed easily.

Partial unofficial election results reported by the Garfield County Clerk and Recorder’s Office on Tuesday night had the measure passing with more than 72% of town voters in favor.

“This is our first dedicated source of revenue for affordable housing and was kind of our first look at some of the options to begin to really address that,” Mayor Ben Bohmfalk said. “We’re really thrilled that the community supported it.” 

The town’s Board of Trustees earlier this year heard from a group of residents that wanted the town to both regulate short-term rentals (STRs) and impose a tax on them, for fear that STRs were cutting into the available long-term housing market.

Trustees had considered both a new tax on STRs and an increase in the existing lodging tax but settled on the STR tax alone.

“STRs, because they are not classified as commercial properties like hotels, are not taxed at the higher rate,” Bohmfalk said. “This was also a way to level the playing field a little bit.”

Homeowners who rent out all or a portion of their homes for vacation stays are now required by the town to obtain a special license to do so.

Carbondale has been looking at ways to address the increasing demand for more workforce housing. The new STR tax was seen as one small step toward that effort.

The tax is only expected to bring in about $150,000 a year given the current number of licensed STRs. So, the new tax alone won’t make a huge dent, Bohmfalk said.

Instead, he said it’s extra money in the bank to leverage state and federal grant possibilities and look at programs such as buy-downs and single-home purchases to add to the town’s deed-restricted housing stock.   

The STR tax was also seen as a way to address the issue without impacting local taxpayers directly since it’s paid by the vacationers who rent the properties.

The excise tax will be on top of the town’s lodging and regular sales taxes, which are also imposed on vacation rentals.

The trustees have been having regular monthly meetings to talk about next steps in tackling the housing shortage. A big part of that is expected to be the development of the town-owned Town Center parcels along Colorado Avenue across from the Carbondale Recreation Center, a proposal for which is forthcoming.

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