Opinion | Bruce Butler: Short-term rentals, long-term problems | SummitDaily.com

Opinion | Bruce Butler: Short-term rentals, long-term problems

As the winter tourist season fast approaches and municipal ordinances move toward first and second readings, proposed short-term rental regulations are, once again, a highly contested public debate. There is no question Summit County’s economy is heavily dependent upon visitors to support its resorts and to sustain its many lodging and hospitality businesses. So figuring out how to balance the demand for short-term vacation rentals with the overall cost of real estate and permanent housing availability are important public policy questions.

As emotions rise and tempers flare, it is important to remind ourselves what problems we are trying to solve with new short-term rental rules and regulations. The most prevalent complaints about short-term rentals are threefold: First, noise, parking, and trash problems associated with short-term rentals in predominantly owner-occupied, family-oriented neighborhoods. Second, the sale of properties that were previously long-term rentals, that get converted to short-term rentals, as landlords opt to cash-in on a hot real estate market. Third, the stress on local infrastructure, from traffic, to snow removal, to emergency services.

Of course social and emotional arguments are often injected into the mix as well as the inevitable friction between the self-interest of permanent residents and second-home owners. Sometimes the debate gets skewed by arguments that are based upon false premises, such as the supposition that if owners cannot short-term rent, they will long-term rent. In my opinion, this argument is a logical disconnect, and it fails to understand the reasons why many second-home owners buy into our community.

Many second-home owners want to use their property several weeks a year, so they will not or cannot sign long-term leases. The home is already furnished, and they rely on short-term rental income to cover the cost of the mortgage. Some might argue that if these second-home owners cannot short-term rent, they will sell their property, thereby increasing inventory supply, lowering home prices and providing more opportunities for locals to buy. However, it is more likely the property will simply remain empty and dark, which doesn’t help anybody.

There is not enough time or space in this column to examine the specific nuisances of the proposed new laws and rules in each of the towns or in unincorporated Summit County, but there are two common themes that seem to have emerged across the board. 

The first is to divide the jurisdiction into zones.

I support the zone concept because it is an effective way to encourage short-term rentals in areas where they are more desirable, and to discourage short-term rentals in areas where that use is less desirable, such as predominately full-time resident, family-oriented neighborhoods. Other keys to success under this approach are working with homeowners associations to ensure reasonable compatibility with property covenants and working with adjoining jurisdictions to ensure similar zone compatibility, such as where an incorporated town ends and unincorporated Summit County begins. This is a distinction without a difference for many, but it can be a major source of frustration and confusion if ignored.

The second prevailing theme is to cap the number of short-term rental licenses available in each of the designated zones. 

It seems to me that capping the number of licenses available is begging for lawsuits under constitutional property takings grounds. In fact, it surprises me that national real estate and property rights groups have not been quicker to initiate lawsuits under the argument that limiting the number of licenses is government action that arbitrarily devalues the real estate of private property owners who are not able to obtain a license.

I continue to believe the more prudent course of action is to variably price the cost of short-term rental licenses by zone. So, in zones where short-term rentals should be encouraged, like Keystone and Copper Mountain, the cost of licenses is low, and in places where short-term rentals are less desirable the cost of obtaining a short-term rental license is correspondingly higher. This provides economic incentives and disincentives that each owner can weigh the pros and cons of, rather than arbitrarily limiting what owners can and cannot do with their property. I believe this approach is far more defensible and rates can be easily adjusted on an annual basis to find the correct balance.

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