Summit County considering regulations for Airbnb and rest of short-term rental industry
December 15, 2017
Summit County is laying the groundwork for short-term rental regulations as the hot-button issue was brought up again Tuesday morning during the Board of County Commissioners' regular work session.
Summit residents frequently mention short-term housing as an issue of concern, and the county has been debating for years over how to go about establishing rules and regulations for the booming industry. Towns like Breckenridge already have licensing requirements for short-term rentals, but there are no such rules for unincorporated property in Summit.
The arguments in favor of short-term housing are mostly about the money-making potential. Short-term rentals allow homeowners to make money off of unused space and make it easier to pay off mortgages.
However, short-term rentals have many negative effects for Summit County, which already has some of the most expensive housing in the state. According to the U.S. Census' American Community Survey, 68 percent of housing units in the county were vacant in 2016, up from 62 percent in 2012. That means a vast majority of Summit's housing is being used as second homes and vacation properties. Property investment groups frequently snap up new houses on the market and then flip them into short-term lodging, depleting the county's housing stock and raising the price of available units.
While Summit leaders have grappled with the issue for years, little has been done to establish actual rules for the industry. Assistant county manager Sarah Vaine explained that Summit lacks the basic foundation for comprehensive regulations.
"We do have a definition in our code about short-term rentals as rentals of less than six months," Vaine said. "However, we do not have anything else in our code regulating short-term rentals, aside from deed restrictions."
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Vaine also presented data from short-term rental research vendor Host Compliance, a company that researches listings on short-term rental sites like Airbnb and VRBO. Their data shows that out of the estimated 5,100 short-term rental units listed in unincorporated Summit, only about 400 — or less than 10 percent — are registered with the state to pay sales tax. The figure stunned the commissioners.
County manager Scott Vargo cautioned the numbers are unofficial and may not be accurate, but that they do reflect the trends for short-term rentals in Summit.
"We know the amount of (short-term rental) activity is growing in leaps and bounds," Vargo told the board, "and we know that the sales tax generation is not growing commensurate with that. So we know we're missing a significant number of units paying sales tax, we just don't know what that number is."
Summit County Housing director Nicole Bleriot then presented data from the greater Keystone area showing that despite the exponential increase in short-term units, only 22 percent of the units were occupied at the time the data was collected.
"If you're in the lodging industry, that's a horrible number," Bleriot said. "So while the number of units are tripling and quadrupling, demand is not."
These numbers show that the negative effect of short-term housing on the housing market isn't actually bearing much fruit for most owners of short-term rentals. The financial arguments for keeping the industry unregulated seem less and less appealing.
Other counties in Colorado have adopted regulations for short-term rentals. Ouray, for example, requires permits for short-term rentals. The application requires an extensive amount of information about the owner and the property itself, and a list of rules that short-term rental owners must abide by in order to obtain the permit. These requirements include affirming that the short-term unit will be appropriate for the neighborhood and that any nuisances will be resolved immediately. The city and county of Denver require short-term rentals to be the owner's primary residence, meaning that one person can't buy up multiple properties and convert them all to short-term rentals.
Commissioner Thomas Davidson said that the BOCC is seriously considering similar regulations, and there is a broad consensus among community leaders that the county should pursue a regulatory framework.
"I think there's a fairly common argument," Davidson said, "that we need to come up with a set of regulations that provide a level playing field in terms of any business or individual that is involved in the activity of short-term renting."
Davidson also points out that there is a broader social problem to address when it comes to short-term rentals. The county has heard complaints from residents about nuisances related to short-term lodgers, who have no real connection to their neighbors. There is also the problem of large parts of residential areas becoming commercial in nature, altering the nature of the neighborhood and disrupting the sense of community.
"We need to think about what this means to community character, and that these residential neighborhoods maintain their residential character," Davidson said.
Davidson said that the BOCC plans to start building a foundation for regulations within the next year, and Summit might finally bring some order to the Wild West world of short-term rentals.