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Moderate Democratic state lawmakers joined Republicans Monday night to defeat a bill that would have strengthened local Colorado governments’ authority to tax vacant residential properties.
House Bill 26-1036 had the support of the Colorado Municipal League, the Colorado Association of Ski Towns and a host of elected officials in mountain resort communities with severe housing shortages, who say vacancy taxes can disincentivize empty homes while helping to fund affordability programs. Any tax measures would have still required approval from local voters.
“We’re talking about Aspen, Vail, Telluride, where we have $20, $30 million mansions,” said state Representative Elizabeth Velasco of Glenwood Springs, an HB-1036 sponsor. “This is something that rural communities have seen — that our local workforce and local communities are not able to afford to live where they work.”
But three Democrats on the Colorado House Finance Committee — representatives Sean Camacho of Denver, Rebekah Stewart of Lakewood and Bob Marshall of Highlands Ranch — joined Republicans to kill the measure on a 7-4 vote after its first hearing Monday.
In many of Colorado’s mountain counties, the percentage of homes that aren’t the primary residence of their owners exceeds 30 percent, and reaches as high as Summit County’s 61 percent — compared to an average of about 4 percent in the Front Range urban corridor, according to 2024 American Community Survey data. During Monday’s hearing, Velasco and Rep. Brianna Titone, an Arvada Democrat also sponsoring HB-1036, amended the bill to limit the new taxing authority to local jurisdictions where the vacancy rate exceeds 25 percent, but that wasn’t enough to assuage the bill’s opponents.
Camacho said concerns about the “fundamental fairness” of the bill had been raised by constituents in his Denver district, who would “would no longer have the ability to own” second homes in other jurisdictions.
“If I own property in a community, and I’m paying my property taxes, don’t I have the right to choose what I do with that property?” Camacho said. “This bill says, ‘Not really.’”
Voters in Crested Butte rejected a vacancy tax in 2021, and city council members in Steamboat Springs narrowly defeated a similar proposal last year, expressing concerns about its legal and administrative feasibility. Supporters said HB-1036 would grant communities more explicit power to levy vacancy taxes and enable city and county governments to jointly administer such a program through local housing authorities.
The bill would have exempted short-term rental units, another controversial issue in Colorado mountain towns struggling with housing shortages. But state lobbying groups representing landlords, realtors and homebuilders all opposed the measure.
“These second homeowners pay a disproportionate portion of taxes,” Michelle Rampelt, a Vail real estate agent, told lawmakers during committee testimony. “They don’t use the services the way that full-timers use the services. They’re our biggest philanthropists, they’re our biggest investors, employers.”
Ted Leighty, CEO of the Colorado Association of Homebuilders, predicted vacancy taxes would lead to fewer homes being constructed in the areas that need it most.
“A lot of my builders, especially in the rural resort areas … they’re building homes largely because there are (buyers) that want to live up there part-time, or just have a getaway,” Leighty said. “If that market goes away, we’re going to get a lot less of it.”
Local control
In recent years, a loose bloc of moderate Democrats in the Legislature have repeatedly rebuffed and watered down proposals backed by housing advocates to require local governments to allow higher-density residential development, voicing concerns about infringing on local control.
Titone and Steven Woodrow, the Finance Committee chair, both noted during Monday’s hearing that HB-1036 would strengthen local control, formalizing a new tool at the request of the local governments and lobbying groups, including the Colorado Municipal League, that have been skeptical of state-mandated housing policies.
“I’ve taken a lot of heat for usurping local control,” Woodrow said. “I think it’s a balance that we have to constantly sort of toy with and struggle to get right in this building, and I would actually be in favor of giving locals more local control on this front.”
“Colorado municipalities and counties are on the forefront of this crisis,” CML’s Elizabeth Haskell told lawmakers. “They’re hearing from employers who can’t hire workers, who are leaving, and families living in overcrowded and substandard conditions, because there’s no alternative. They’re not asking the state to solve the problem for them. They’re asking for authority to let their voters decide if this tool makes sense for their community.”
This story was originally published by Colorado Newsline.