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CB vacation rental tax hasn’t pushed tourists out of town

But it has improved neighborhood communication

By Mark Reaman

The town of Crested Butte is on line to pull in about $300,000 from the new excise tax on short-term vacation rentals that went into effect this year. Despite some raised eyebrows at the total fee people pay for a short-term rental in Crested Butte, town officials say they see no indication that the additional tax has been a deterrent on visitors wanting to stay in town.

The somewhat controversial tax that was added January 1 of this year has brought in revenues of $111,000 for the first six months of the year. “We are on budget,” said town finance director Rob Zillioux. “I’ve not seen or heard any indication that the excise tax is dampening demand for vacation rentals in town. There is more demand than ever. I believe this has been a success and will certainly help our important efforts with affordable housing in town.”

The money raised through the tax is earmarked for the town’s affordable housing fund.

Crested Butte has two categories of vacation rental licenses. The first is an unlimited license by which approved properties can be rented as many nights as the owners wish throughout the year. Those licenses cost $750 annually. The town allows no more than 30 percent of the dwellings in Crested Butte to be licensed in that category. They currently have issued 212 such permits, which is exactly the cap for 2018.

The second category is meant for locals who want to occasionally rent their property. There is no cap on the number of qualified locals who can obtain such a license but those licenses limit the number of rental nights to 60 per year.

Crested Butte community development director Michael Yerman said as more homes are built in town, the number falling in the 30 percent limit will increase by one or two a year.

Lucky and smart

“Sometimes it is better to be lucky than smart, and with the 212 licenses in the unlimited category we are right where we thought we would be,” Yerman said. “That’s lucky. But looking at the history of the vacation rental market we had a pretty good idea of what to expect and it worked.”

Licenses are not automatically transferred with the sale of a property. If there is a waiting list, a new property owner has to go to the end of the line.

This has worked to the point at which there is no waiting list for licenses to turn over in property and licenses take care of themselves.

Crested Butte rental inspector Eric Treadwell said as part of the licensing protocol, each property must undergo an inspection every two years. Neighbors are also given the opportunity to comment on the potential short-term vacation rental property being licensed. Treadwell said that has led to better communications.

“The biggest complaints we hear from neighbors concern parking, noise, trash and lighting,” he said. “We talk to the property owners at the inspection and bring the BOZAR [Board of Zoning and Architectural Review] approved plans that show the number of parking spaces they are required to have. We then give them several months to get them in order if they are not in compliance. Parking is probably the biggest expense for some people. Many properties have planted trees where the parking is located so they have to remove and replace the trees and then install real parking areas.”

Treadwell said there are common, easy fixes on the rental properties such as installing the required smoke and carbon monoxide detectors. There have been shaky handrail issues on stairs and decks, the need to replace working wildlife-resistant trashcans, and the need for adequate fire extinguishers. “Most things are easy fixes and people are pretty easy with it all,” said Treadwell.

When it comes to the more difficult issues like noise complaints and overuse of public parking in a neighborhood, again Treadwell said communication is key. “We let the neighbors know who the required local contact is for each property. So when the noise gets out of hand late at night they have someone to call,” he explained. “People complain about parking but I explain that after the onsite spaces are taken, the people have as much right as anyone to utilize parking spots on the streets. It would be like if the locals were having a potluck that drew five or six cars. People are going to park along the street in public spaces.”

“This has been a really successful program,” added Yerman. “It’s not surprising but we have been able to tackle the neighborhood nuisances really well.”

“It has done more than expected in helping to address neighborhood nuisances,” added Treadwell. “The neighbors across town have been involved and we try to address the concerns. The owners have been very responsive for the most part. People want to be good neighbors.

“There haven’t been any problem properties thus far,” Treadwell continued. “It is more the occasional tenant that doesn’t understand the Crested Butte rules.”

From the trenches

Peak Property director of vacation rental management Kat Hassebroek said the new tax and new system have had both positive and negative consequences. She said the overall costs with the new tax have raised some eyebrows from people using Peak to rent a vacation home. “Some return visitors to Crested Butte really noticed the price difference and chose to rent outside of town,” she said. “The extra 5 percent really adds up on larger rentals. New visitors are floored by the almost 20 percent total tax and many find it excessive.”

Hassebroek said the inspections and new protocol have positive impacts but also have brought a few surprises to some homeowners. “I was on the original committee to make recommendations to the council on STR [short-term rental] regulations. Safety was our number one concern, so I feel that the safety inspections and protocols set forth are definitely necessary and helpful,” she said. “But there have been issues brought to light through these inspections that should have been brought to the attention of owners upon inspection of the property when they purchased it. Owners are being asked to make alterations to their homes/land at their cost, sometimes significant cost, due to the new STR inspections when these ‘deficits’ were never caught or needed correction upon inspection and purchase of the property. Owners are certainly raising eyebrows at that.”

In the big picture, Hassebroek said while some kinks are still part of the town’s new vacation rental system, overall it has been good. “I feel that it can work,” she wrote in an email. “I feel there is a need for regulations. I’m not sure if I feel that all of the regulations are fair and necessary. I think protecting neighbors from nuisance renters by requiring local contact information for each rental is very important. I think limiting the number of rentals is important, although it is clearly not helping with the long-term rental situation. The safety regulations speak for themselves and are clearly necessary. So for the most part, I would say, yes they are working.”

Hassebroek also said Treadwell deserves kudos for handling what can be a difficult job with calm professionalism. “Eric has done an amazing job, given the hefty job he had to tackle. He has been responsive and patient with explanations to not only me, but my homeowners as well. He stepped in to an enormous job that was not enviable at all and has done a great job.”

Treadwell said no major issues have been discovered through the property inspections. He has finished 104 of the 228 total inspections. Yerman said the license fees are paying for the costs of the program, including Treadwell’s salary and the monitoring software. That software has alerted town officials to a couple of property owners trying to short-term rent their property on the sly. Both were caught and had to pay back taxes plus licensing fees. “Most people really do want to follow the rules,” said Yerman.

Yerman agreed with town finance director Zillioux that the additional tax has not deterred tourists from renting Crested Butte homes, noting too that with the 30 percent cap they essentially put a ceiling on the amount of revenue they could collect from the tax.

“The amount coming in this year essentially would pay for the cost of about one unit at $300,000,” he said. “But it is a revenue source we can count on and we can leverage it to get more housing.”

“This tax hasn’t stopped anything,” concluded Treadwell. “There is still a high demand for in-town rentals.”

“The ultimate goal,” added Yerman, “is to continue the public outreach regarding things like parking, trash and noise so that owners help the tenants respect the neighborhood they are staying in.”

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