The Estes Valley Short-Term Rental Alliance (EVSTRA) has released a tax impact study that analyzes lodging tax collection in the Estes Valley.
According to the EVSTRA analysis, which is based on data provided by Visit Estes Park, short-term vacation rentals (STVR) guests generate almost 40% of all lodging taxes.
The EVSTRA report was issued as Larimer County considers imposing new regulations which could limit and potentially eliminate STVRs throughout unincorporated Estes Valley.
If adopted, the changes would not only reduce the current tax revenue generated by STVRs but would substantially reduce the funds to expand workforce housing and childcare following passage of the lodging tax ballot initiative which voters approved in November.
The county’s proposed changes have faced opposition by licensed STVR owners who have encouraged the county to focus on enforcing regulations already on the books and to penalize STVR properties that are operating without a license.
The EVSTRA analysis was done “to quantify the economic benefits and significant tax collections generated by STVR guests in the Estes Valley to enable policymakers to weigh the adverse economic effects to the Estes Valley from limiting STVRs against the perceived benefits of limiting the number of STVRs, particularly in residential zones.”
EVSTRA’s analysis breaks down the sales tax revenue generated by STRS at the state, county and town levels, and also the local lodging tax generated by STVR guests. The data used for the analysis came from a Sept. 6, 2022, report commissioned by Estes Park’s local marketing district, Visit Estes Park(VEP), that was prepared by travel industry research specialists Dean Runyan Associates.
After meeting with members of VEP to learn more about their report, Town Administrator Travis Machalek stated that he thinks the VEP study numbers to be “directionally correct.” Machalek did not want to speculate on the potential impacts that these findings may have on the town of Estes Park and or Ballot Issue 6E, however, until he is able to see what a final draft for public review from the county looks like.
The VEP report shows that STVR visitors in the Estes Valley generated more than $15 million of state, county and local sales and lodging taxes in 2021. The study estimates that the Town of Estes Park’s sales tax generated by STVR visitors represents 28.38% of the town’s 2021 audited sales tax collections of $20,930,809.
According to the VEP report, STVR overnight visitors in the Estes Valley represent 39.1% of total lodging tax collections. This translates to just under $2.4 million per year of the projected $5 to $6 million that will be generated from the increase in the lodging tax.
The EVSTRA analysis also addresses STVR in residential zones throughout the county. While the proposed regulations have yet to be finalized, some Larimer County officials have expressed a desire during recent public meetings to limit or eliminate STVRs within residential zones citing complaints by some citizens.
Additionally, the EVSTRA analysis shows that the substantial portion of Estes Valley STVRs operate within these residential zones. Approximately two-thirds of STVR licenses are for properties within residential zones. Annual tax collections from these STVRs in the Estes Valley total $8,543,515.
In a written statement provided to the Trail-Gazette just before deadline, Estes Park Finance Director Duane Hudson wrote, “It is unclear what impact any changes to short term rental (STR) licensing currently being considered by Larimer County would have on Town finances. Any change would only impact STRs outside the Town limits, impacting only a portion of the total STRs in the Estes Valley. STRs within Town limits will not be impacted and these were included in the total lodging tax number in the study.”
Hudson added, “For the Town, sale tax revenue is the only revenue source with a potential significant impact. Sales taxes may be impacted if visitors decided not to come to Estes Park but with the other hotels and lodging options available, many would just choose alternative lodging if the STR was not available. In this case, the impact could be minimal, just shifting from STR to hotel rooms, etc. This would be the same for VEP’s lodging tax, including the new increase for workforce housing and childcare.”
Hudson concluded his written remarks by adding, “Since the Town does not have details on the number of STRs outside of the Town, the occupancy rates, the actual changes being considered by the County, and other relevant information, it is not possible to estimate the fiscal impact at this time. Speculation on the amount of any resulting impact would just be a guess.”
Hudson concluded his written comment by stating, “Our sales tax estimates for 2023 were a conservative 6.13% increase. With actual sales tax collections for the year through October 2022 up by 9.72%, and considering our conservative estimate, the impact would need to be very significant before any change to our budget would become necessary.”
Larimer County has not provided data to support or counter the EVSTRA claim. Larimer Commissioner Jody Shadduck-McNally who has expressed support for limiting and imposing new restrictions on STVRs was contacted for this article but declined to to make herself available for an interview.
Larimer County Community Development Director Lesli Ellis stated in an interview that county officials are currently analyzing what the reduction in lodging taxes would be based on the county’s proposed STVR regulations.
The county’s analysis is expected to be released in the coming days. Ellis said that the county is not taking visitor impacts or the broader economic study into account with regard to new STVR restrictions.
While Ellis didn’t comment on the validity of the EVSTRA analysis, she did address the assumptions being made about how many STVRs will be reduced. “There are some big numbers being bounced around in terms of what the overall changes to the tax profile might look like, and that is a part of something we [county officials] just don’t agree with,” said Ellis.
“The notion that all short-term rentals in residential areas would go away, which would lead to quite a large hit on lodging taxes, there is nothing within the proposed regulations that says that,” said Ellis.
“Changes that wouldn’t allow new future short-term rentals in residential areas are a possibility, but those changes would take time and wouldn’t happen overnight,” Ellis said. As county officials work on producing their own tax analysis, Ellis reiterated that their main focus is on updating the list of regulations and enforcement of the ordinance.
When people discuss short term vacation rental properties in the Estes Valley, referred to by acronyms such as STVR, STR, VRBO, and Airbnb, they often don’t know just how many properties there are or which government entity, the city or the county, is the regulatory licensing agency.
Because of the way the Town of Estes Park is laid out, some properties are in the town while a property across the street may be in the unincorporated area of Larimer County, yet all are within the Estes Valley Local Marketing District known as Visit Estes Park. And within both the town and the county there are areas zoned as residential others that are zoned as accommodation.
There are currently 877 licensed short term rental properties in the Estes Valley. These properties include the following:
Town residential zones – 322 (capped)
Town accommodation zones – 193
County residential zones – 266 (capped)
County accommodation zones – 96