Navigating the STR Landscape: The Impact of Aspen and Pitkin County's Short-Term Rental Regulations

Stephanie Kroll

In a bid to address the challenges posed by accelerated residential construction, environmental concerns, and socio-economic impacts, the city of Aspen and Pitkin County implemented stringent short-term rental (STR) permit regulations about six months ago. While these measures aimed to regulate the burgeoning vacation rental market, their effects on the industry are becoming evident.

Aspen's journey into STR regulation began in December 2021 when the City Council imposed an emergency moratorium on new residential construction proposals and STR permit applications. Following a code-amendment process, the city approved new regulations in June, introducing three distinct permit types: lodge-exempt (STR-LE), owner-occupied (STR-OO), and classic (STR-C). These regulations allowed unlimited STRs in specific zones but imposed quotas in residential districts.

As of April 3, Aspen had issued a total of 790 permits, with the majority falling under the classic category. However, a backlog has emerged, with over 50 properties awaiting permits, and some residential districts reaching or surpassing their set caps.

To manage this, the city set a 75% cap on the estimated number of STRs prior to the moratorium, allowing existing permit holders to renew, even if exceeding new caps. The city also imposed an additional 10% tax on most STRs, effective May 1, as approved by voters in November.

Pitkin County took a different approach, introducing regulations in June and July with a focus on prior rental history and a tiered-fee structure limiting annual rental nights. The county requires applicants to submit proof of rental history between May 11, 2017, and May 11, 2022, and imposes a four-night minimum duration for each rental period.

As of April 20, Pitkin County had issued 111 STR licenses, significantly fewer than the estimated 316 existing properties before the regulations. The county's approach has faced criticism for excluding new homebuyers without rental history, limiting participation in the program.

Enforcing STR regulations has become a priority for both Aspen and Pitkin County. A third-party monitoring system is being utilized to scrape major rental platforms for unlicensed units. Violations can result in fines of up to $1,000 per day. However, challenges persist as some properties operate through word-of-mouth or smaller platforms.

The impact of these regulations on the local marketplace is already surfacing. Ben Wolff, general manager of Frias Properties, notes stark differences in rules across zones, affecting property owners' ability to obtain new permits. Tightening regulations may lead to an increase in 30-day leases, countering the intent of the regulations.

Concerns about the additional 10% tax on STRs, effective May 1, are also prevalent, with uncertainties about its impact on bookings and revenue.

As the short-term rental landscape in Aspen and Pitkin County undergoes transformation, the success and effectiveness of these regulations will become clearer. Striking a balance between regulation and maintaining a thriving vacation rental market remains a challenging task for local authorities. Property owners, regulators, and industry stakeholders will be closely watching as the impacts unfold in the coming months.

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