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Aspen rental plan helps it adapt to lost hotel tax

By: The Associated Press
July 1, 2014 Updated: July 1, 2014 at 6:01 pm
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ASPEN — Aspen officials once estimated they were losing $100,000 a year in tax revenue to independent rental websites like Airbnb.

Now the city says it's getting some of that money back by issuing licenses and collecting taxes from individuals using the sites to rent their homes and apartments.

Two years after city officials adopted the licensing plan, to let people rent their domiciles as often as they wanted, as long as they got a license, paid taxes and named a local representative to respond to complaints about things like parking, trash and rowdy guests.

Airbnb co-founder and CEO Brian Chesky talked about the city's approach to rental shares this week at the Aspen Ideas Festival.

"We want to be regulated, because to regulate us would be to recognize us," Chesky said.

"What we don't want is a blanket prohibition," he said. "And we don't want people regulating us without even understanding what we are."

Other cities have also moved to recover revenue lost to home rentals. San Francisco-based Airbnb has reached deals to collect taxes on rentals in Portland, Oregon and San Francisco and has also been negotiating with New York officials.

Austin, Texas has adopted a licensing system similar to Aspen and has also limited the number of apartments that can be rented through such sites to 3 percent of units in any one building, said Brooks Rainwater, an expert in the emerging "sharing economy" at the National League of Cities.

"It's impressive to see how fast cities have responded," he said.

Aspen's city council estimated in 2012 that the city was losing $100,000 a year in sales taxes and licensing fees to such sites. The city council voted to let people rent their domiciles as often as they wanted, as long as they got a license, paid taxes and named a local representative to respond to complaints about things like parking, trash and rowdy guests..

Aspen hired a company called VR Compliance to scour the internet looking for properties being rented without a license. Once it knows who is renting their unit on their own, city officials reach out to the property owner and encourage compliance.

As of February 2014, the city had a total of 61 short-term rental licenses on file. In 2013, the city brought in $73,000 in revenue from 30 new licenses, the newspaper reported.

Aspen is not the only city working to tax this new approach to lodging.

Portland, Oregon, reached a deal this spring with Airbnb and the company will now collect lodging taxes on its rentals and remit them to the city instead of relying on individual hosts in the city to do so.

For owners in Aspen, a city license means sales taxes of 11.3 percent, on top of the 3 percent in fees charged by Airbnb. A renter on Airbnb pays what the host asks plus 6 to 12 percent to Airbnb.

Chesky stayed with an Airbnb host during his stay in Aspen and said neighbor complaints weren't a problem.

"His neighbors know he is a host and they think he's awesome," Chesky said.

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