Colorado cities try to keep up as Airbnbs, other short-term rentals multiply

Michael Orf is pictured at his short-term rental property Jan. 18, 2019, in Littleton.

LITTLETON — The short-term rental revolution is on a mad tear in Colorado: Last year nearly 2 million Airbnb tenants generated more than $300 million for host property owners in the state.

But regulations meant to protect neighborhoods amid the rise of online room-booking sites are moving at a much slower pace.

The friction between citizen landlords, neighbors and local government played out yet again last week in Littleton, where the City Council narrowly shot down an ordinance that would have imposed a set of rules and requirements on short-term rentals.

A recent debate over the rules in Littleton echoes the tension that bubbled to the surface in Colorado Springs and Summit County in the fall as both communities grappled with how to ensure people can make money off property they own without negatively impacting the character of communities and neighbors’ quality of life.

It’s tension that won’t end any time soon. Lakewood, Wheat Ridge, Northglenn, Thornton and Englewood all plan to float their own regulations this year, while next month, Denver officials will update rules on short-term rentals the city first enacted in 2017.

Short-term rentals are typically for stays of less than 30 days and are offered through popular websites such as Airbnb, VRBO and dozens of other online services. They have raised the same questions and concerns that accompanied the introduction of other disruptive technologies — such as ride-hailing services, electric scooters and widespread delivery of just about any product or service one can imagine.

Littleton Mayor Debbie Brinkman, who came up on the short end of the vote last week, said without safeguards on the industry, short-term rentals could flood the city’s neighborhoods with transient vacationers and visitors who have no ties to the community.

“This disruptor, without regulations, is a disruptor of our neighborhoods,” she said.

“Laws are so scattered”

According to data from AirDNA, a Denver-based firm that tracks and analyzes short-term rental activity worldwide, the number of listings in the metro area on the dominant platform Airbnb jumped from approximately 1,700 in December 2014 to more than 8,300 last month. In Colorado, Airbnb listings shot up from nearly 6,000 four years ago to just over 36,000 in December 2018.

James Carlson, a Denver real estate broker who specializes in the short-term rental market, said there is no one community to point to that has achieved the perfect balance in managing private rentals.

“The laws are so scattered. Even along the Front Range, the laws are scattered,” he wrote in an email.

But the trajectory in the metro area, he said, “is to restrict short-term rentals more and more.” One of the requirements that can make renting a property more difficult, Carlson said, is “primary residency” — a stipulation that says the host renting a property has to live on site.

“Denver has the primary residence rule. Aurora followed quickly after that,” he said. “Golden has it now, but they added a requirement that the primary resident of the home has to live there for 10 months of the year.”

In Littleton’s case, the primary residency rule would have required the property owner to live in the rental unit for at least eight months of the year. The aim, according to the city, was to prevent outside real estate investors, acting as de facto absentee landlords, from buying up homes in Littleton to rent.

“Are you wanting to ban short-term rentals?” Littleton resident Katie Edie asked the council Tuesday night, as the heavily attended meeting stretched toward the midnight hour.

She and others who offer accommodations — Littleton estimates there are 90 or so mostly unregulated short-term rentals already in operation — said the primary residency requirement is overly burdensome. Rick Acres, who rents a property separate from his main residence in Littleton, told the council he would no longer be able to do so under the proposed rules.

“I will be forced to close my business and suffer significant financial losses,” he said.

Others in Littleton opposed the regulations because they didn’t go far enough. Mike Price, a nearly 30-year resident of the city, said the proposed rules would have allowed rentals in almost all of the city’s residential neighborhoods. Properties under 2,000 square feet would be permitted to house a family plus five unrelated strangers. Larger properties could have had a family and seven unrelated persons.

That kind of arrangement is fine in more dense and commercial parts of the city, he said, but not in the quieter corners of Littleton.

“This is a quaint, peaceful area, and if you allow short-term rentals it becomes a party house,” Price said. “The tenants are not part of your community.”

Politics and rentals

Denver, which has more than 2,400 licensed short-term rentals, addressed the issue two years ago when it initially put in place its rules, which include primary residency and a $50 annual fee. Ashley Kilroy, who heads Denver’s Department of Excise and Licenses, said the compliance rate among short-term landlords in the city exceeds 60 percent.

“We wanted to protect our neighborhoods — we didn’t want investors coming in and buying up blocks of homes,” she said. “And we wanted to maximize the upside and allow people to have a secondary stream of income.”

The city gets its fair share of complaints about short-term rentals, with nearly 1,900 coming into the Department of Excise and Licenses through the first 10 months of 2018. The complaints include violations of the primary residency rule, excessive noise and trash.

Next month, Denver plans to tighten its rules with requirements that landlords carry a minimum $1 million insurance policy on their rental property and notify their homeowners associations that they are using a home as a short-term rental.

Carlson said he has noticed that short-term rental regulations in Colorado generally line up with the “political leanings” of a particular community. In part, he said, that’s influenced by how acute the need for affordable housing is in a certain place. The perception, Carlson said, is that renting homes to vacationers and visitors reduces the amount of housing stock that could be offered to permanent residents.

“The metro area tends more liberal, and affordable housing is their No. 1 issue,” he said, pointing to Boulder and Denver’s more restrictive rules. “Colorado Springs, on the other hand, is more politically conservative and the issue of property rights — of doing with your property what you want to do — seems to impact their rules.”

Michael Orf, a real estate agent who rents a downtown Littleton property to customers who typically stay four or five days for weddings or graduations, said he thinks the city should revisit the issue of short-term rentals. The 16-year resident was no fan of the primary residency rule being considered, but he thinks some kind of licensing system should be in place in the city.

“It’s a change, like with Uber and Lyft, but as we heard (last week), communities have to embrace change,” he said. “We need to figure out regulations that make sense.”

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