The Colorado Court of Appeals in Dorotik v. Breckenridge upheld a Breckenridge ordinance imposing fees on short-term rental properties. It concluded the charge is a lawful regulatory fee rather than a tax subject to voter approval under the Taxpayer’s Bill of Rights.
The case challenged a per-bedroom fee applied to licensed short-term rentals, which the town adopted to address pressure on local workforce housing. The plaintiff argued the measure functioned as a tax because short-term rentals already generate tax revenue exceeding the costs of any related regulatory program. A trial court dismissed the claim, and the appellate panel agreed.
In affirming, the court focused on whether the fee was tied to a regulatory purpose and reasonably connected to mitigating impacts caused by the regulated activity. The panel rejected the argument that a charge becomes a tax simply because the broader activity produces net revenue for the government. Instead, it emphasized that municipalities may rely on their regulatory police power to impose fees aimed at addressing specific public burdens, so long as the charge is linked to those impacts.
The ruling offers meaningful guidance for local governments designing similar programs, particularly in resort communities managing housing and tourism pressures. The decision also underscores that courts will look to the structure and justification of a charge, rather than its revenue effects alone, when determining whether it complies with TABOR.
Read the full decision.