Would a vacancy tax work here in Carbondale?

As we all know, one of the greatest challenges facing Carbondale and the region is the lack of affordable housing. Our housing issues are a constant topic in news articles, municipal council meetings, task forces and election campaigns. Various efforts have been made to reduce the shortage — such as rent controls and deed restrictions, subsidized company-owned housing units and restrictions on short-term rentals — but these have provided only limited results.
One component contributing to the housing crisis is unoccupied or rarely used homes. That is a situation generally recognized upvalley but is an issue in our area as well.
The city of Vancouver, British Columbia, has an acute housing shortage. It has been exacerbated by absentee homeowners — notably, wealthy Hong Kong residents who have bought a considerable amount of property in the city and surrounding municipalities as a means of sheltering assets from the Chinese government.
To address the situation, the city has instituted a vacancy (or empty-homes) tax for properties that are not occupied for most of the year. It applies to all property owners but is targeted largely at noncitizens. The process is fairly complicated, with provincial and federal levies in addition to the city tax; and the rate is high, the aggregate total now at 5% of assessed value annually for noncitizens.
However, there are a number of exemptions (e.g., property that is being renovated or is being bought or sold) that owners can claim to avoid paying the tax. The most important of these is renting out unoccupied properties, and it appears to be working. Per a 2023 city report, the number of vacant properties decreased by 54% between 2017 and 2022, and thousands of condominium units had been converted to rental properties.
In addition to increasing Vancouver’s housing stock, revenue collected from the tax has yielded tens of millions of dollars to be used for increasing affordable housing stock. Hundreds of new units have been constructed since 2017.
Could such a tax be implemented in our area? The immediate answer is no; Colorado’s Constitution prohibits municipalities from enacting new taxes without a specific legislative mandate. However, the Dillon-based Colorado Association of Ski Towns (CAST), which is a strong advocate for increasing affordable housing in the state’s resort communities, has been urging the Colorado Legislature to pass a bill that would make the vacancy tax a possibility.
Margaret Bowes, executive director of CAST, told The Sopris Sun in an email, “A vacancy tax bill would be enabling legislation only, so would not set a vacancy tax statewide but would authorize local governments to consider if such a tax is appropriate for their community, determine how that tax is structured, and then ask their local electorate if such a tax should be imposed.”
The Sun also reached out to the Carbondale Town government and heard from trustee Colin Laird, who is also the Town’s liaison for CAST. He told The Sun in an email, “I’m not aware of vacancy rates for the town. I know there have been some studies in the past, but they are focused more on resort communities like Aspen.” He continued, “I know that from other CAST members, the vacancy tax is more of an issue in more traditional resort communities. We need more information to assess whether it’s viable in Carbondale.”
One of the other approaches that CAST is taking is promoting real estate transfer fees. These are not subject to the same restrictions as instituting a new tax but still require legislation to allow municipalities to impose these fees. Revenue from these could be used to fund local affordable housing. Laird said, “The real estate transfer fee would probably be much more useful in Carbondale and other communities/counties in the region.” However, Bowes noted, “The current administration is not supportive of a real estate transfer fee.” For now, CAST is not pursuing such a bill.
There actually is a program already in the Valley that provides incentives for Carbondalians to rent to Aspen One employees during the ski season: Tenants for Turns, which Sun correspondent Kate Phillips wrote about for the paper last month. A recent email from Ellen Williams, Aspen One’s assistant public relations manager, stated that the program hoped “to house around 200 employees this season, and about 80 of the interested landlords are in Carbondale.”