Updated on August 22, 2024
In early 2024, Colorado entered the national spotlight for proposing extreme taxation targeting short-term rentals (STRs). To raise revenue, state lawmakers introduced Senate Bill 33 (SB33) to the Legislature, increasing the property tax on STRs by 400% in one go.
The bill would have classified properties rented out on a short-term basis more than 90 days a year as commercial lodging. That would have required owners to pay a 27.9% property tax assessment on those properties, compared with the 6.76% residential property tax rate.
The bill’s passage would have entailed significant repercussions for Colorado’s thriving tourism industry and the livelihoods of thousands of STR property owners statewide.
However, the bill also posed a broader threat: Attempts to tax STRs as commercial lodging property are a growing trend around the nation. Had it passed, SB33 would have encouraged more states to pass similar laws and threatened a lengthy legal battle—the outcome of which could have national repercussions.
“When SB33 was introduced, it didn’t come as a shock – we’ve seen similar bills before. However, the rationale behind it – tax parity – was quite surprising,” said Dana Lubner, board member of the Colorado Lodging and Resort Alliance, president of Mile High Hosts in Denver, and Director of Community Development at Rent Responsibly. “Short-term rentals are essentially homes, not commercial enterprises like hotels that have multiple revenue streams. What’s more, STRs significantly boost local economies by spreading tourist dollars across community businesses. So, this proposed tax hike ignored the real-world implications and unique contributions of STRs, impacting not just property owners but entire communities.”
Mobilization and Strategy
Recognizing the threat SB33 posed to STR operators and the tourism industry, the Colorado Lodging and Resort Alliance (CLARA) spearheaded a comprehensive advocacy campaign to defeat it. An influential element of this campaign was CLARA’s survey of 2,500 Colorado STR owners and an economic impact study prepared by Laffer Associates.
Survey results indicated that if the law passed:
- 54% of owners would reduce annual STR bookings to 90 nights a year to avoid the commercial property tax rate
- 13% would sell their properties
- 19% would discontinue short-term renting
- Just 8% would pay the new assessment rate and continue operating as before
As a result, SB 33 would reduce the total STR nights booked per year in Colorado by an estimated 55.7%. This would, in turn, reduce visitor spending by a projected $1.36 billion and eliminate tourism-related jobs by an estimated 8,148, the study concluded.
Coordinated advocacy
CLARA activated its network statewide, mobilizing stakeholders by sharing data from the study and personal stories of STR operators via webinars, alerts, direct communications, social media posts, and YouTube videos.
Another essential part of CLARA’s strategy involved leveraging booking platforms like Vrbo and Airbnb to disseminate critical messages to Colorado stakeholders, amplifying the campaign’s reach and impact.
CLARA’s strategic communications extended to the media, presenting data showing the bill’s potential to strip local economies of jobs and revenue and diminish the state’s appeal as a tourist destination. Notable articles and editorials appeared in local publications like Summit Daily and Colorado Sun and national publications such as Newsweek. These pieces played a pivotal role in swaying public opinion and framing the legislative debate.
Advocacy Day at the Capitol
The organization’s efforts culminated in the STR Advocacy Day at the Capitol on Feb. 6, 2024. The event drew 150 advocates, dressed in coordinated blue shits, to voice their opposition to the bill.
“The Day at the Capitol was a pivotal moment in our advocacy against SB33, showcasing the power of grassroots mobilization,” Dana said. “It provided a unique opportunity to directly engage with legislators and resulted in significant awareness and understanding among policymakers about the real-world implications of the bill.”
CLARA helped coordinate advocacy efforts and organize volunteers who assembled informational kits the night before for distribution at the event. Participants also shared their personal stories that underscored the bill’s potential impact on their livelihoods and rural communities without hotels.
“The event demonstrated the unity and determination of the STR community, which was crucial in swaying opinion and ultimately contributed to the bill’s defeat,” Dana said. “I believe it has inspired similar efforts, and my hope is that this event will continue to inspire future advocates to make an impact through face-to-face engagement with lawmakers.”
Outcome and Lessons
The campaign against SB33 was overwhelmingly successful. In the face of public outcry, members of the Senate Finance Committee voted 6-1 to kill the bill during its first hearing on April 16.
This outcome underscored the effectiveness of CLARA’s multifaceted strategy. Legislators reported unprecedented communications from constituents, highlighting the campaign’s extensive reach and influence.
The defeat of Senate Bill 33 is a powerful testament to the efficacy of strategic advocacy and community mobilization. For CLARA and the Colorado STR community, the campaign was energized by the motivation to safeguard their economic interests and preserve Colorado as a unique tourism destination.
“The lessons from CLARA’s advocacy campaign illustrate the importance of preparedness, the power of economic evidence, and the impact of personal engagement,” Dana said. “These strategies will continue to inform CLARA’s efforts as lawmakers propose other STR-related legislation in future sessions. They also serve as an example for STR advocates in other states who face similar threats.”
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