The problem with the SB24-003 property tax proposal is the collateral damage in inflicts to long standing condo-resort properties that have been a staple of the tourism lodging community for over fifty-years. This tax, as proposed, would have devastating effects to this lodge base and our economy.

Day one of the legislative session started with a short-term rental bill (Senate Bill 24-033, formerly Interim Committee Bill 6) which proposes to increase the property tax of Short-Term Rentals (STR) from a residential taxation rate (approximately 6.7% assessment) to a commercial rate (approximately 27.9% assessment) for any unit rented more than 90 days in a calendar year.

This legislation - if passed - will likely have negative economic impacts on our mountain communities due to a reduction in the bed base. The huge majority of STR units are in professionally managed, purpose-built condominiums (4,701 purpose-built units in Vail, Avon, and Beaver Creek alone). This isn’t rentals in neighborhoods; we’re talking about our visitor bed base – the bed base that drives our economy. Increasing the property tax rate will drive a reduction in the bed base, resulting in fewer visitors, resulting in less sales tax, resulting in reduced funding for our local towns and communities to provide essential services.

This impacts not only our lodging industry but also the small businesses that make up the community. Retailers, restaurants, and other visitor servicing industries will be negatively impacted due to a loss of visitation. The impact on communities extends to our towns as they are dependent upon sales tax to fund municipal services.

A bit of a history lesson for context on how we got here. Ski town lodging was primarily condominiums and small lodges with little to no amenities. Hotel development did not occur until after the ski industry matured and occupancy levels grew to sustainable levels. Since then, the hotel and condo resorts collectively made up the lodging base for ski towns for many, many years. Today, condo-resorts still represent at minimum, over 50% of the resort lodging bed base. We should not punish these owners with a punitive property tax measure.

SB24-033 would tax Colorado homeowners at a higher appraisal rate than national hotel corporations. This bill would subject STRs to a market appraisal method which is different from hotels which are appraised based partly on the amount of income they generate. For example, Springs Resort in Pagosa Springs sold for $42.5 million in 2018 but was appraised using a mix of factors at $12.5 million. If a STR sold for $1 million on the open market, it would be appraised at $1 million and taxed at this value. Residents should not be taxed at a higher, unfair rate than multi-national hotel corporations.

Addressing short-term rentals is better handled at a local level through regulation and taxation, with the flexibility to recognize the difference between residential neighborhoods and commercial areas through zoning. A one-size-fits-all statewide solution fails to recognize the impacts on our mountain tourism economy and is a blunt instrument.

An example would be Senate Bill 2, sponsored by Sen. Dylan Roberts, which would allow local governments to offer property-tax incentive programs to address housing and economic development issues. For example, cities and counties could offer tax credits or rebates for property owners who convert short-term rentals into long-term rentals and boost the availability of workforce housing. This is the type of market-based, incentive model that provides tools to local governments while not being punitive toward homeowners.

Commercial taxation is the wrong approach to short-term rentals. Our community – of which tourism makes up 50% of Eagle County’s industry and even higher percentages in our neighboring counties – cannot withstand the loss of bed base and visitation. We encourage our state lawmakers to oppose Senate Bill 33.

Chris Romer is president & CEO of Vail Valley Partnership, the regional chamber of commerce. Learn more at VailValleyPartnership.com