A software upgrade in the city’s finance department should help Aspen better evaluate the local short-term rental market.
The city’s current server-based business licensing and tax-collection software has become increasingly unreliable, according to Finance Director Pete Strecker. Instead, staff has found a pair of cloud-based software solutions from a developer out of Durango.
Together, the products MuniRevs and LodgingRevs will be used as online portals for businesses to obtain operating licenses, starting on Sept. 1. They can also use the portals to apply for lodging licenses and remit the city sales and lodging taxes they owe.
Anyone who is listing a property on short-term rental sites like Airbnb, VRBO and HomeAway is required to obtain a business license. But in a memo to city council, Strecker pointed out there is a discrepancy between the number of licenses the city has issued and the number of postings present on short-term rental websites.
“Reports have shown there are over 2,000 possible short-term rentals within Aspen — many are not licensed or remitting tax at this time,” the memo states.
Hotels and lodges all remit a 2.0% lodging tax and a 2.4% sales tax to the city, but unlicensed individuals who are renting private property are getting away with skirting those payments. The new software is able to check rental websites against the city’s business license data and identify noncompliant listings.
“It’s a fairness issue in terms of the large lodges, or even the smaller mom and pop lodges that we have, versus someone renting out their own home,” Strecker said.
While the new software has an additional annual cost of about $38,000, the increased compliance is anticipated to increase overall revenue. Strecker added that he is making other efficiencies within the department that will balance out the higher price.
The system will integrate the needs of the finance department with the clerk’s office, the community development and environmental health departments and has the potential to be used by the Aspen Fire District for its inspections as well.
“Right now when we have a business license come in there are different departments that have to touch that application and make sure it gets checked off for various things,” Strecker said.
The new portal will create efficiencies by allowing all the separate departments to sign off on a new business license digitally.
“The current process, we have to walk the piece around or email it around to get all those sign-offs. This new software is going to automate all of that so hopefully it will be quicker and complete,” Strecker said.
Snowmass Village uses the same lodging software, which Strecker said is a benefit to vendors who are already familiar with the interface.
“So local operations around here, people that deal with the software, ought to be really well versed in the interactions of how to use it. So it will be a value added from that perspective.” he said.
The MuniRevs software was developed by Erin Neer, who was formerly the finance director of the town of Mountain Village, outside of Telluride. According to the software’s website, she became frustrated with clunky paper-based remittance systems.
“She realized that the way sales taxes were collected was archaic. She was incredulous that businesses were still sending in manually calculated paper coupons to remit their taxes — and, even worse, that the city staff then had to handle that mail, key in the data and make a deposit to the bank.”
In his memo to council, Strecker notes the software’s online payment options as another cost-saving measure. It is anticipated that the city will save $15,000 annually toward fees for a lockbox in Denver that is currently used to securely collect paper checks.
Bringing vacation rentals into compliance is the first step in a bigger city initiative to get an understanding of the impact of the short-term rental market on Aspen’s economy and local housing crunch. The lodging tax collections can be used as a data point, once the majority of rentals are operating legally.
“It gives us better information about the volume of tourists that might be coming,” Strecker said.