Breckenridge passes new short-term rental regulatory fee on 1st reading in split vote
Some council members want to work with the new advisory task force before making decisions
On Tuesday, Nov. 9, Breckenridge Town Council voted 5-2 on first reading to approve an ordinance that would create a new regulatory fee for all accommodation unit licensees, with a couple of changes to come for second reading.
As written in the council packet, the ordinance adds a $756 fee per studio or bedroom that would be paid at the same time as the annual licensing tax. The fee would replace the current administrative fee for short-term rentals and would include lodging properties previously exempt from the administrative fee, which are those with phone, front desk and security service 24 hours a day. The fee would not apply to lodges, though, of which there are eight licensed in Breckenridge.
The town hopes to use the fee money to defray direct and indirect costs of mitigating negative impacts of short-term rentals on the community, including the displacement of workforce housing, the strain on town infrastructure and resources, and the guest experience in Breckenridge. Town staff said the fee will benefit short-term rental licensees by supporting employees who provide guest services throughout town.
“These are typically lower-paying jobs, and the reality is that you probably couldn’t pay people enough money that they could still afford a market-rate unit in this community,” Town Manager Rick Holman said about service industry workers.
The town worked with Economic & Planning Systems, a consultant that specializes in housing policies and real estate economics, to draft the ordinance and come up with the fee amount, and representatives Brian Duffany and Andrew Knudtsen joined the meeting virtually to talk to council about the process. The consultants completed a study comparing short-term rental properties and housing in the town.
“Much of the town’s economy is dependent on guests and tourists, and … when they stay in a short-term rental, they spend money in the local economy,” Duffany said. “That supports jobs in industries that are typically low paying: retail, food and beverage, recreation and services. The local businesses support jobs; jobs need to be housed.”
Duffany said based on a needs assessment survey from 2019, about 14% of employees in Breckenridge had been affected by short-term rentals.
He said the fee calculation was based on a gap analysis, comparing what workers earn to the cost of housing. The fee is based on the difference between the impact of a short-term rental unit versus if the unit was occupied year-round by a local resident.
The town is hoping to have the new fee implemented by the start of the new year, but some council members were concerned about pushing the new fee onto the lodging community with such a quick turnaround.
“I am in full agreement with this study and the fee,” council member Dick Carleton said. “… I think it’s what we need to do. … However, I want to work with the short-term lodging community, because I understand they’ve set rates for this winter. So here we are charging a significant increase in a fee — even though we’ve talked about it in almost every meeting telling them it’s coming, it’s still a significant change — and they don’t have a chance to reflect that in their pricing.”
In an effort to phase the fee in, most council members agreed it would be best to start with a lower fee this year since most folks in lodging have already set their rates for the upcoming year. The wording in the ordinance will be changed for second reading to describe the fee as “up to $756,” and council agreed with starting the fee at $400 per studio or bedroom in 2022.
Council will then review whether it wants to increase the fee to the full $756 for 2023 when the town goes through its yearly budgeting process next fall.
Council members Dennis Kuhn and Carol Saade voted “no” on first reading because they both want to make use of the new short-term rental advisory task force that is looking into tourism overlay zones, or areas that could potentially be exempt from the license cap. They emphasized that the advisory commission comprises experts on all things accommodation and that they want to use the group as a resource before making a decision.
“I really believe we have to listen to them first and then make our decision,” Kuhn said.
The rest of council agreed that they want the task force to look at the ordinance but wanted to vote on first reading to move the process along in time for the start of 2022 because revenue from the fee is needed to mitigate the town’s housing shortage.
Council member Jeffrey Bergeron said he thinks the fee makes sense but that he would want to see an exemption for locals who rent their homes a few nights a year over Christmas to defray costs. The rest of council was on the same page but also wanted feedback from the advisory task force on exemptions. Council was generally comfortable with an exemption for folks who rent less than three weeks a year and folks who rent out their primary residences.
Bob Barto, general manager of Beaver Run Resort, said during public comment that his company has been doing the same thing for the 30 years he’s worked with them and hasn’t gained or lost units in that time. He said before Beaver Run was built, the company was required to build a 35-room apartment complex for its employees and that the homeowners association had purchased more units since then, housing about 90 of its own employees seasonally.
“Beaver Run has been a strong community supporter for all those years,” Barto said. “… We’ve been innovative, forward thinking, offering our own housing versus relying on the town to build it. We’ve been doing the right thing for our employees since Day 1. … We paid our own way for 30 years. Why now do we have to pay for others? We encourage the council to provide incentives to businesses that have been doing the right thing versus penalties.”
Several council members said Barto’s points resonated with them.
“Bob’s one of the few that has provided that level of housing for employees, so if there’s a way to at least honor that, I think that’d be something worth looking into,” Mayor Eric Mamula said. “And I would like the advisory committee to have a look at this.”
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