A federal judge has effectively frozen a legal battle over Summit County’s short-term rental regulations — at least temporarily — after county officials filed a motion to dismiss a lawsuit brought by area homeowners. 

In an Oct. 10 court filing, U.S. District Court Judge Gordon Gallagher issued a stay in a district of Colorado case brought this summer by county homeowners who said their rights have been violated by new county laws. 

In August, a group of around 100 county homeowners sued the Summit Board of County Commissioners for approving a package of restrictions on how short-term rentals can operate. 

Homeowners took issue with several new provisions, including an annual limit on bookings as well as caps on rental licenses in some parts of the county. 

“The regulations are a clear violation of a lot of federal laws that are being challenged in other jurisdictions,” said Todd Ruelle, a county homeowner who filed the lawsuit alongside the group Summit County Resort Homes Inc. “We think we’ll be very successful in federal court.”

The new rules place a 5% to 18% cap on properties that can hold short-term rental licenses in various neighborhoods located in unincorporated areas of the county. According to officials, the caps could reduce the overall number of these properties from 1,659 in 2025 to 1,290 in 2030. 

License caps were not implemented in areas the county deemed “resort overlay zones,” such as Copper Mountain and Keystone. These areas account for roughly 63% of all short-term rental properties, while neighborhoods where the caps would be in place account for 37%, according to officials. 

Exceptions to the caps were made for residents who work more than 30 hours per week in the county or who’ve retired and have a history of working in the county for at least 10 to 15 years. Licenses also became transferable between parents and children, spouses or domestic partners, siblings, or grandparents and grandchildren.

Ultimately, county leaders made the argument that these regulations were necessary for ensuring long-term housing remains available to working residents amid what they’ve called a “workforce housing crisis.” 

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When reached for comment on this article, a county spokesperson deferred to a previous statement issued by Commissioner Tamara Pogue in August when the lawsuit was brought. 

 “I believe the regulations are fair and reasonable and protect the interests of the community as a whole,” Pogue stated. “Our actions are reflective of the efforts made by communities across Colorado and the nation; we are all attempting to address the valid concerns of our citizens, neighborhoods, and industry participants in this dynamic, ever-evolving aspect of our economy — especially in highly desirable resort communities.”

The key arguments brought by the lawsuit include claims of potential harm to property owners’ livelihoods through loss of income due to the regulations. It also takes aim at the exceptions made for year-round residents, which it states amounts to “discriminatory treatment of out-of-state residents,” as well as the lack of caps in resort zones. 

In a Sept. 27 motion to dismiss, county officials contested several allegations from homeowners who claimed their rights were violated under the Equal Protection Clause of the U.S. Constitution. 

The homeowners “do not maintain that they are members of any protected class” and claim they “have a fundamental right to lease their property for whatever length of time they prefer,” the lawsuit reads. 

It goes on to state that the district court where the case was filed “has yet to recognize any such right, and has suggested that governmental limitations on the use of property do not implicate a fundamental right,” citing a 1992 property rights case, Lehman v. City of Louisville. 

The motion also defends the county’s regulatory differences for working residents and properties in resort areas, stating that reported complaints over short-term rentals in neighborhoods and the loss of housing stock “provide a rational basis for distinguishing between the tourist-oriented areas around the ski resorts of Summit County and neighborhood areas.”

Finally, the motion aims to send allegations of violation of Colorado law to state court. 

Those include claims by homeowners that the county’s rules violate the state’s protections of nonconforming property, which means structures of land operating when a law allows for it but have since fallen out of compliance due to a change in legislation. In this case, it means short-term rentals.

Homeowners filed an opposing response to the motion on Oct. 25 stating the county’s argument that short-term rental regulations “generally serve some legitimate interests is not enough for dismissal.”

It states the county’s “line-drawing” between neighborhoods and resort zones is “irrational” and “arbitrary,” and lists several reasons for why homeowners’ arguments should be considered. 

That includes describing neighborhood and resort zones as having the “same composition,” which it claims substantiates its allegations of discrimination. It also states the regulations “would impose untold costs on out-of-state homeowners” by losing short-term rental income.

The judge overseeing the case will now have to review additional comments submitted by both county officials and homeowners before making a decision on whether or not to dismiss the case in federal court.

Even if some aspects of the lawsuit are punted to state jurisdiction, Ruelle said he feels “our claims will survive both state and federal court.”

“We want our litigation to be used as the flagship for other jurisdictions,” he said. “We’re going to set the example in Summit County.”

Read both court filings in full here: