For years, the idea of taxing property owners of second homes, vacation rentals and otherwise vacant living spaces has been floated around, according to experts and politicians around La Plata County.
Now, as the county, Durango and other municipalities grapple with a housing crisis, the Colorado Association of Ski Towns is pushing for legislation that would allow towns and cities to tax owners of “vacant” and second homes.
Durango city officials and representatives of other ski towns attended a CAST meeting Aug. 22 hosted at the Strater Hotel where a proposed Empty Home Tax was discussed. Many questions are still unanswered.
What exactly constitutes a vacant home is just one of several questions officials are contemplating.
Another question is who would be tasked with identifying applicable homes and how that process would be carried out.
Yet another question is which municipalities would really benefit from such a tax.
Durango Mayor Jessika Buell and Councilor Gilda Yazzie said they don’t think Durango is the type of city CAST is targeting in its proposed legislation. Councilor Dave Woodruff said he remains undecided.
Bayfield Community Development Director Nicol Killian said she likes the idea of a vacancy tax – not because the town of Bayfield is presently overrun by vacant homes or vacation rentals, but because of the potential that one day it could be. Rising home prices and costs in Durango are making relatively less expensive housing markets such as Bayfield more tantalizing, she said.
The vacancy tax rate is also up in the air. Presumably, it would be set in state legislation or left to towns and cities.
CAST’s proposed legislation, as reported in The Colorado Sun, leaves the decision to implement a vacancy tax up to municipalities.
According to its Empty Home Tax policy paper supporting a vacancy tax, the tax is intended to disincentivize vacancies while incentivizing workforce housing. Collected tax revenues would encourage renting otherwise empty homes to local workforces.
The organization suggests legislation should “define vacant homes as those not used as homes for most of the year”; clarify vacant homes as vacant or commercial properties for county assessors, which would allow higher tax rates than for residential properties; and allow local voters to approve or reject vacancy taxes.
CAST Executive Director Margaret Bowes said the organization is just beginning conversations with Colorado legislators and many specific details must be sorted out, but its policy paper communicates the main idea.
Killian said her enthusiasm for a vacancy tax is motivated by a proactive urge to protect Bayfield from second homeowners. Bayfield received four vacation rental applications over the summer, with seven legal vacation rentals permitted and one still under review.
On Aug. 20, the Bayfield Board of Trustees reduced the number of vacation rentals allowed from 30 to 15, she said.
“We worry about our housing stock for our community, because we want to be a community that people live in and not have second homes or vacation rentals that sit empty a lot,” she said. “We want to be livable.”
It is up to the Colorado Legislature to create a legal way for towns such as Bayfield to tax owners of homes that go unused most of the time, she said.
She added that she isn’t totally opposed to vacation rentals. The town lacks hotels, so a place for visitors to stay is welcome and needed. But vacation rentals also need to be moderated.
That can be difficult. Illegal vacation rentals crop up now and again, she said. In a small town like Bayfield, it’s easy to find those.
But that’s not the case across the rest of La Plata County.
Woodson, the county assessor, said her office has no process in place to identify vacation rentals let alone so-called vacant homes.
“How do we discover those? We can’t knock on 40,000 doors,” she said. “Maybe it’s vacant because they’re on vacation for two weeks. How do we know?”
The county attempted to track vacation rentals years ago, but that proved unfruitful.
“Years ago, the county worked with a contractor that was supposed to develop a list of all those,” Woodson said. “And we never received that list. I think that we got a partial list that didn’t have enough identifying factors on it for us to use.”
If the assessor’s office was tasked with identifying vacation rentals or otherwise empty homes, it would need to hire additional staff members, she said.
In summary, Woodson said her main questions are how the assessor’s office would go about discovery and what constitutes a vacancy – how many months or days per year must a home be empty to constitute a vacancy?
John Wells, owner-broker of Wells Group Real Estate, said Durango is not as saturated with second homes, vacation rentals and empty homes as ski towns such as Telluride, which he calls real “resort towns.” Given that, he doesn’t think a vacancy tax would grow legs in Durango.
He said oftentimes in Colorado, the more expensive the home, the fewer number of days it is occupied.
“We do have some second homes that are occupied very little – very little to me would be a couple months of the year or less. But that’s not the majority,” he said.
There’s a difference between second homeowners and vacation homeowners, he said.
“A vacation homeowner is you win the lottery and you buy a ski condo, and when you block it out for you and your family’s personal use, you enjoy that, but you rent it out … the rest of the time to help pay for the ownership costs,” he said.
Conversely, he defined a second home as a home where someone is living in it for the majority of the year, although he acknowledged there’s at least some second homeowners who occupy their second homes for a month or two or less out of the year.
Mayor Buell said the county would have to take up any vacancy tax cause, as far as she is concerned. The city has been presented with similar initiatives in the past, but it just doesn’t have enough short-term rentals to justify such a thing, she said.
Councilor Yazzie said the city has a “vibrant” rental market, and while there are some vacancies, there aren’t many.
“I don’t think I would prefer taxing vacancies, somebody’s property, like that, because they work their whole lives to probably get an extra unit to rent out, or whatever they’re going to do with it, or it may be their vacation home,” she said. “And I would prefer to continue working with the Regional Housing Alliance.”
Councilor Woodruff said he would be interested in a vacancy tax if it bolstered workforce housing in the city. But there are too many questions unanswered at this time for him to know if such a tax is the right fit for Durango.
According to the city of Durango, 125 vacation rentals are active across the city. Although Established Neighborhood zones 1 and 2 permit a maximum of 22 and 17 vacation rentals respectively, there is no citywide limit on the number of vacation rentals allowed.
Rentals are also permitted in the Central Business zone, Mixed-Use zones and some Planned Development zones. Currently, 37 vacation rentals are on a waitlist and four more are pending approval.
cburney@durangoherald.com
