Vacation rental proprietors and second homeowners could face a so-called vacancy tax, which came up Tuesday night during an Aspen City Council work session as a possible funding option for supporting affordable and employee housing in the local workforce.
In looking for new revenue streams to support existing sources for employee housing development, Aspen City Council this week discussed options like issuing debt, extending the 0.45% sales tax that supports the 150 Housing Fund, continuing the 1% real estate transfer tax and appropriating part of the $30 million Wheeler Opera House fund.
“There are a lot of different opportunities,” said Mayor Torre on Wednesday.
Council members contacted Wednesday said they want community input on funding and demand, as well as staff’s input, to create a funding roadmap.
Resurfacing this week was the idea of a vacancy tax that would be assessed on properties unused by their primary owner the majority of the year.
“This is something the city, as well as this council, has been considering for a while,” Torre said. “I don’t think it’s just linked to affordable housing — but I do think it’s an appropriate and good use of a vacancy tax.”
“If somebody buys a house in Aspen just to utilize for vacation rentals and they stay in it for two weeks a year for their vacation, is that a residence? No,” he continued.
Asked Wednesday what he thought about a vacancy tax as one of the discussion items that came out of two days of Aspen City Council work sessions, Andrew Ernemann, broker associate at Aspen Snowmass Sotheby’s International Realty, wrote in an email: “My reaction to reading that proposal is that our part-time residents already contribute heavily to the local economy through property taxes, significant nonprofit donations, patronizing our shops and restaurants, ski mountains, etc.”
Ernemann continued: “And the part-time residents don’t utilize all of the amenities and local infrastructure at the same intensity and level the full-time residents do… so why exactly would we tax them further? Why would we incentivize them to spend more time here to avoid paying a tax, or further disincentivize them from purchasing property here in the first place?”
Aspen City Councilwoman Rachel Richards said Wednesday she is open to having the city look at things like a vacancy tax as one of several possible revenue sources, “and not just the city renewing and extending our current taxes.”
The staff memo to councillors noted, “City of Aspen 150 Housing Development Fund has the capacity to support budgeting for the Burlingame Phase 3 project as a condominium ownership facility. But the 150 Fund needs to be planned for future uses to be best prepared for the Lumberyard, potential acquisition and land banking opportunities, and any other future housing development projects (or other initiatives related to maintaining existing housing inventory) which Council may be inclined to set up for the future of the affordable housing program.”
One option outlined in the memo was issuance of $50 million in debt prior to the Lumberyard construction in 2024.
The sale of 79 new deed-restricted units from Burlingame 3 that will be built in 2021-22 would contribute an estimated $20 million to the 150 Fund, but more money is needed to begin and complete the Lumberyard, which is planning for 300-plus units.
‘A full, lived-in community’
There has been some trepidation, of course.
“We have a lot to do to deliver the housing we need. [A vacancy tax] could be a big lever, but it could be something that doesn’t work for Aspen at all,” Councilman Skippy Mesirow said Wednesday.
“Housing instability is coming from both the physical empty structures that are displacing the community and job growth that created small structures to large homes that have large crews of people,” he said.
“If you live here, you are contributing to community by being here. If you are going to be here two weeks a year, you have a responsibility to the community here when you arrive to either pay a fee or take the empty property and house your groundskeeper, your cleaning staff,” he said.
Mesirow said council’s goal is to have “a full, lived-in community.” He added that in considering different options to fund workforce housing, it was important to “not overemphasize one element. There are a variety of ways to get at it.”
Mayor Torre said that, as a mountain resort community, “we feel the impacts of this type of home usage. We feel its direct impact to our community.
“The conversation is primed” for these discussions,” Torre said.