by Leah Gallant, Garfield & Hecht, P.C.
Short-term rentals and their effects on communities has become an increasingly popular debate in Colorado in recent years. The effects of short-term rentals have been especially relevant in Colorado’s mountain resort communities where affordable housing has been impacted by the recent popularity of short-term rentals. In an effort to offset the impact that the short-term rental market has had on the local community, Aspen has implemented a permit system and several new rules, regulations and taxes with an eye toward addressing critical housing shortages for local workers.
On July 29, 2022, the City of Aspen Ordinance No. 9, Series 2022 outlining short-term rental regulations went into effect. The City began accepting new applications for short-term rental permits on October 1, 2022. The City has provided detailed guidance regarding how to apply for a permit, and how to comply with the new regulations. The bottom line of Ordinance No. 9 is that no one within the City limits may short-term rent their single-family home or condominium without first obtaining a permit from the City.
A short-term rental (or “STR”) is defined as the use or occupancy of a residential property or dwelling unit, in whole or in part, by the public for a fee, primarily for tourist accommodations, and for a period of less than 30 days.
Short-term rental permits are generally separated into three categories:
Classic Permits (STR-C) may be issued to non-owner occupied residences (the classic out-of-town owner who wishes to rent out their vacation home or investment property). This permit is also available to owner-occupied residences where the permittee wishes to rent the unit for more than 120 nights per year. This permit type does not limit the number of nights per year the unit may be rented, but each unit is designated in a particular zone district where the number of allowable permits are capped depending on the zone. It should be noted that certain residential zones allow as few as 2 permits per year.
Owner-Occupied Permits (STR-OO) are available for City of Aspen residents who own the property and who use the property as their primary residence. These permits are not capped per zone like the STR-C permits, but are limited to 120 nights per year.
Lodging Exempt Permits (STR-LE) are issued solely to lodging and condo-hotel properties which meet the definition of a Lodge or Condo-hotel pursuant to Section 26.104.110 of the Aspen Municipal Code. These permits are not capped, and do not limit the number of nights per year the unit may be rented. STR-LE permits are not issued to individuals, but to properties who intend to manage multiple units under a single permit.
Permits are issued for one year, and permittees must renew their permits each year if they wish to continue short-term renting their property. Notably, permits are not transferable, and permits will be revoked if a sale of the property occurs. In addition to obtaining a permit, permittees (or the “Qualified Owner’s Representative” – a local resident designated by the owner to maintain compliance with the regulations) must obtain and provide proof of an STR Business License.
Per Section 23.32.020 of the Municipal Code, the City of Aspen requires that any person or entity doing business within City limits obtain a Sales Tax and Business License. If a property owner chooses to designate another person to apply for the STR permit and maintain compliance with the permit on their behalf (a “Qualified Owner’s Representative” or “QOR”), both the property owner and the QOR are required to obtain a combined Sales Tax and Business License. A Business License is a condition precedent to a permit, meaning no permits will be issued until a valid Business License has been verified for both the Permittee (owner) and the QOR.
In stark contrast to the previously unregulated short-term rental market, the City of Aspen has issued dense and detailed compliance guidelines and regulations that apply to every permit issued. Inspections will be conducted by City officials to ensure compliance, and non-compliance may lead to revocation of the permit.
The City has deployed various resources to find and penalize owners that seek to rent short-term without obtaining a license or paying any tax. So, we strongly caution against going that route.
For assistance navigating the permit application system and compliance with operational standards, please contact:
Leah Gallant (lgallant@garfieldhecht.com or (970) 925-1936 ext. 814)
Andrea Bryan (abryan@garfieldhecht.com or (970) 425-8119 ext. 645)
Chris Bryan (cbryan@garfieldhecht.com or (970) 925-1936 ext. 802)
