Vail treads lightly on rentals from Websites

VAIL — The lodging business is changing. How local governments keep up — and collect sales and lodging taxes — is a matter of some debate.

Like so many other industries, the Internet is driving the change. Websites including Vacation Rentals by Owner and AirBnB allow owners to rent their units without using property management companies. Owners using online services can often avoid management company fees and, in some instances, also avoid paying sales taxes on those transactions.

In Vail, 27 hotel and condo complex managers last summer brought the Town Council a proposed ordinance to regulate those rentals. That proposal called for regulations from safety and cleanliness inspections to requirements for owners to obtain town business licenses.

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That proposal was rejected by most council members, although council member Dale Bugby, owner of Vail Resort Rentals, was one of the sponsors. Council members did ask the staff to study the situation and bring back recommendations.

“The whole idea of rentals is changing. The market will determine how it works out.”
Margaret Rogers
Vail Town Council member

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After a few months of study, town staff members brought those recommendations to the council on Tuesday. The initial list of eight items was pared back to just one or two: a requirement that people renting units pay sales taxes, and that property owners include their sales tax license numbers with all print and Internet advertising.

But council members seemed to reject the idea of requiring town business licenses for individual property owners. While sales tax licenses are free, business licenses aren’t. Council members Tuesday said requiring the more expensive town permits might create problems with owners trying to dodge paying fees and taxes.

In advocating for more strict regulations — what he calls a “level playing field” — Bugby has said the town is losing revenue by not keeping close track of who is renting their units on the Internet.

But former town finance director Judy Camp, who retired earlier this year but is helping the town with this issue, said the town’s finance department is already diligently tracking town rent-by-owner ads and collecting sales taxes from those people.

Camp said the town now has about 200 owners who are collecting and paying town taxes, but she acknowledged that there are others out there.

“I don’t think we’ll ever have 100 percent compliance,” Camp said.

LIGHT REGULATIONS

Council member Margaret Rogers, who says she often uses rent-by-owner sites when she travels, has been an advocate for light regulations. She said that rent-by-owner units can be a more affordable option.

“We’ve been talking about how Vail is perceived as being really expensive,” Rogers said, adding that some people who can otherwise afford a Vail vacation may come if they don’t have to pay full rates at lodges.

“The whole idea of rentals is changing,” Rogers said. “The market will determine how it works out.”

Bugby is still advocating for a business license for rent-by-owner operators.

“If you have a home business delivering cakes and need a (business license), why not this?” he asked.

Other council members supported Rogers’ stand for lighter rules. Council member Dave Chapin said he lives in a neighborhood where other property owners rent out their units.

“If there was a problem, I’d call,” he said.

PUBLIC HEARINGS

The town will need to draft an ordinance to formalize requirements for individual owners. That will require a pair of public hearings. Bugby said he hopes lodging managers will have a chance to again make their case for tighter regulations.

“We had 27 hotels ask for an ordinance, and we’ve pared an eight-point plan down to two,” he said. “I hope we’ll take some feedback from them.”

Vail Daily Business Editor Scott Miller can be reached at 970-748-2930, smiller@vaildaily.com and @scottnmiller.