Anchorage is in a housing squeeze. Families are competing for too few homes, rents continue to rise and home ownership is increasingly out of reach for working people.
While no single policy can solve this challenge overnight, one significant and growing factor is within our power to address: the proliferation of short-term rentals.
Across the country — and increasingly here in Anchorage — homes that once housed residents year-round are now being converted into de facto hotels and rented for days or weeks at a time on platforms like Airbnb and VRBO. This happens mainly in our residential districts. Each time a residential unit is taken off the long-term market and converted into a short-term rental, the available housing supply shrinks. And when supply decreases, costs go up — for renters and buyers alike.
Some economists call this the “Airbnb effect.” Study after study shows that even modest growth in short-term rentals can drive significant increases in rent and home prices. We are already feeling that effect here: Anchorage has fewer available rental units than it did just a few years ago, and our housing costs are rising way faster than incomes.
The short-term rental tax ordinance before the Anchorage Assembly is a practical, fair and necessary response. It would create a 5% tax on short-term rental transactions — in addition to the existing 12% room tax that hotels and short-term rentals alike already pay. That room tax currently generates more than $40 million a year for city services, and extending a modest additional tax to STRs is both equitable and strategic.
[Related news coverage: Anchorage Assembly weighing ballot measure to tax short-term rentals]
Importantly, this 5% tax would not apply to hotels, because hotels do not take housing units out of the residential market. The tax targets the precise segment of the lodging industry that is directly reducing supply — and fueling the affordability crisis — in our neighborhoods.
The revenue from this new tax would not vanish into the city’s general fund. Instead, it would be dedicated to a municipal housing trust fund — a powerful, flexible tool the city can use creatively to catalyze housing development and bring new units online.
Those funds could help pay for utility upgrades at key infill sites; off-site infrastructure improvements like alley paving, sidewalks, and access roads that make new subdivisions feasible; or even public-private partnerships to convert underused commercial buildings into housing. In short, this revenue will help turn policy ambition into concrete progress — literally.
Anchorage certainly wouldn’t be alone in treating STRs as part of the housing policy equation. Municipalities in vacation or resort markets around the U.S. have adopted similar excise taxes and dedicated them to affordable housing or infrastructure upgrades. Colorado provides some examples:
• In Dillon, Colorado, voters approved a 5% tax on short-term rentals, in addition to raising their lodging tax, with proceeds earmarked for street and parking improvements, town redevelopment, and workforce housing.
• In Steamboat Springs, Colorado, a 9 % tax on short-term rentals is expected to generate about $11 million annually over 20 years, dedicated to affordable housing.
• In Avon, Colorado, the town code includes a “community housing short-term rental tax” (2%) approved by the electorate, specifically called an excise to support community housing.
Short-term rentals are here to stay, and they offer value to both travelers and property owners. But they must also share responsibility for the broader impacts they create. By approving this ordinance, the Assembly can let Anchorage voters decide to take a meaningful step to balance our housing market, expand supply, and make our city more affordable for the people who call it home.
We face a choice: let short-term rentals continue to erode our housing supply unchecked, or harness their growth to help solve the housing problem.
Daniel Volland is a small business owner and represents District 1, North Anchorage, on the Anchorage Assembly.