Opinion | Kim McGahey: Short-term rentals are the precious metals of our boom economy
Conservative Common Sense
There is a misguided notion circulating around Summit County that short-term rentals are the problem and that eliminating them is the solution. This economic heresy could not be further from the truth.
But first, we must identify the severity of the problem before we can craft a reasonable, if necessary, solution. As proposed by a recent petition drive intended to force the Frisco Town Council to vote on a short-term lodging ban, the problem in the petitioners’ eyes is a lack of affordable local workforce housing. Their solution is to outlaw short-term rentals and convert those lodging units to long-term rentals for local workers.
On the surface, this redistribution of wealth seems reasonable and fair until you look more closely at the local economic damage such a redistribution would cause and the unconstitutional violation of private property ownership rights it would entail.
As covered in a previous column, the workforce housing problem is not the crisis that the media and the town councils pretend it to be. Nobody has the right to live in a cool, clean resort community like ours. Nobody should be compelled to pay for another person’s perceived entitlement to that housing. And nobody should expect the government to control the normal supply/demand curve that creates the prices of our exclusive resort real estate.
Real estate is the main driver of our local economy, and an income feature is an integral part of the incentive for most people to own Summit County real estate. Without that income feature, ski resort property ownership is unattainable and those purchases would be significantly reduced. The income feature makes it possible for owners to reduce their costs of ownership while at the same time providing the basic lodging need of vacationers who make our economy run.
If we have no short-term units for vacationers to rent, those guests will no longer come to Summit County. They will find other resorts that satisfy that lodging need. With no guests coming here to vacation, no money will be spent in local businesses, and those businesses will become unprofitable and close. Local workers will then be laid off.
The local economy will disappear just like it did 120 years ago when the gold ran out and the mines closed down. Short-term rental income is crucial to resort property ownership in the modern era and is like the precious metals of the previous boom economy.
What if short-term rentals were outlawed and converted to long-term rentals? Could that government-induced conversion provide the income feature that property owners need? Not likely. Long-term rental rates would have to increase dramatically beyond the affordability range of local workers in order to provide property owners with an income stream equal to short-term rental income.
In both cases, the local worker is out of luck and out of town by being either unemployed or priced out of the long-term rental market and is forced to return to Iowa and work in his father-in-law’s hardware store. Economic facts don’t lie when you do the math.
A government mandate to convert short-term rentals to long-term rentals would almost certainly be declared unconstitutional as a blatant violation of individual property ownership rights. What made America great in 1776 was the constitutional guarantee that the government could not confiscate, control or condition our right as individuals to own private property and use it as we see fit. The British parliament tried to suspend those property ownership rights, and that turned out badly for the British crown and made America the land of opportunity.
A coerced conversion of property owners to long-term rentals is synonymous with the false notion that employers making a profit are naturally oppressors of their employees. In reality, however, the employment offered by the employer makes it possible for employees to make a living while the boss makes a profit.
The same dynamic is at work with short-term rental income. Real estate is the engine that drives the Summit County economy and transports vacationers here. Short-term rental income is the fuel that drives that engine. Without the short-term rental income feature, we would kill the golden goose that allows us to be a world-renowned resort destination and for real property ownership that enables our local economy to thrive.
Kim McGahey’s column “Conservative Common Sense” publishes biweekly on Tuesdays in the Summit Daily News. McGahey is a real estate broker, tea party activist and former Republican candidate. He has lived in Breckenridge since 1978. Contact him at firstname.lastname@example.org.
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