Crackdown on short-term rental properties across Colorado mirrors national effort as communities grapple with escalating home prices and a shrinking workforce.
Winter Park and Breckenridge are offering big incentives to homeowners who convert their short-term rental properties to housing for locals.
A program called “Short-Term Fix” offers homeowners up to $20,000 for converting their Winter Park vacation homes to housing for locals.
The Town of Breckenridge and Summit County last week unveiled a similar program. The “Lease to Locals” program offers short-term rental owners up to $27,000 if they ink a year-long lease with local workers. That’s on top of rent they collect from their tenants.
“Just like any industry, there has to be some checks and balances to manage the benefits and minimize the disruptions,” said Tamara Pogue, a commissioner in Summit County, where one-third of homes are rented by vacationers.
The incentive programs in Winter Park and Breckenridge are the latest strategies deployed by Western Slope communities grappling with a critical lack of housing that is the prime suspect in an equally painful shortage of workers. The regulatory tinkering with short-term rental growth spans the country as the American tourism economy rebounds with a tsunami of visitors renting private homes.
It’s hard to find any community in Colorado’s high country that is not yanking levers on short-term rentals. Councils are suspending permits. Capping numbers. Raising taxes and fees. And now offering big dollars to owners of vacation homes willing to pull their properties off the short-term market.
Voters in Avon will weigh special taxes on short-term rentals to fund workforce housing. Crested Butte’s ballot includes a proposal to raise excise taxes on short-term rentals to 7.5% from 5%. Voters in Crested Butte also will consider an annual $2,500 tax on in-town home owners who don’t live full-time in their properties and don’t rent at least half the year to local workers. Ouray also is asking voters to raise taxes on short-term rentals. Frisco voters could see a citizen initiative asking for an outright ban on short-term rentals in homes not occupied by working locals.
Telluride has two competing ballot questions: A citizen-initiated ordinance — Question 300 — would cap short-term rentals in the town at 400, which would cut more than 300 from the existing stock of homes rented to visitors. A second ballot question proposed by the town council doubles the fee for short-term rental license and freezes vacation home permits at the current level.
Gregory Craig, a 30-year Telluride local who has crunched historic licensing data on short-term rentals in his valley, said “the pell-mell rush to policy change over STRs is worrisome and that complete lack of data and analysis across the board is frightening.”
“Bad decisions are going to be made in haste and a lot of people may be damaged by it … and governments are going to regret it in the next downturn, if not sooner,” Craig said.
Craig’s examination found that the backers of Question 300 — which would cut the number of short-term rentals by more than 40% — overstated the problem. They say the number of short-term rental properties has grown by 75% since 2016. Craig says it’s actually up about 31% since 2016 to 2018.
The number of permits can be high because when a property sells, he said, its existing short-term permit remains on the books while the buyer applies for a new permit. And a large hotel that was managed under a single license sold its 45 units in 2019, adding 45 new permits without adding to the number of condos available for vacation rentals. Craig’s analysis of lodging revenue from short-term rental taxes and visitors shows a 40% cut in vacation home rentals would deliver a $48 million loss to Telluride’s town coffers and businesses.
“It will likely blow a self-induced hole in Telluride’s economy, including Telluride and San Miguel County government budgets,” Craig wrote in a report detailing his research.
A state lawmaker is joining the mountain community movement toward increasing regulation of short-term rentals. Sen. Chris Hansen hopes his plan to shift short-term rental properties from residential taxation to commercial taxation — which would more than triple property tax bills for vacation home owners — will deliver more revenue to schools, libraries, hospitals and other districts that rely on property taxes.
“If this is something we don’t get ahead of, it’s going to spiral out of control for the state,” Hansen said.
The website for Airbnb’s Colorado listings as seen on Sept. 27, 2018. Lawmakers have suggested a major tax change for short-term rental properties that could drastically change the industry as it stands in Colorado. (Eric Lubbers, The Colorado Sun)
Ask locals in towns like Breckenridge, Crested Butte, Salida, Steamboat Springs or Telluride and you will likely hear that short-term rentals are already a tornado, wreaking havoc on housing and hiring.
This is a national issue. Tourist-dependent communities are facing housing and labor crunches. Home prices are spiking, especially in rural resort areas. Second-home owners are moving in full-time. And short-term rental bookings are climbing as the appeal of outdoor recreation grows during the pandemic. So tourist towns are more crowded and working locals are finding fewer places to live.
Leaders and employers in those towns are increasing spending on affordable housing, but in the near term, they are looking to slow the growth of short-term rentals. There are dozens of approaches to short-term rental regulation underway in Colorado’s mountain communities. Some will work. Some may not.
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