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An end of unfettered growth for short-term rentals in Colorado’s resort communities

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Hugh Carey, The Colorado Sun
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Breckenridge Ski Resort above town seen on Wednesday, September 15, 2021. The town council is weighing a cap on short-term rentals to help slow the conversion of long-term rentals into vacation rental homes.

Visitors to the 13-bedroom Little Mountain Lodge above Breckenridge’s historic downtown have supported the tourist town’s economy for many years.

They book snowmobile rides. They rent bicycles and ski. They reserve tables and rooms in local restaurants.

“All the business owners in Breckenridge who rely on visitor spending, they are getting it from my group,” said Carol Kresge, the manager of the sprawling home that was originally built as a B&B but now can be rented short-term by vacationing groups who pay as much as $4,000 a night.

The owners of the Little Mountain Lodge could lose their ability to rent to vacationers under proposed changes to short-term rentals proposed by Breckenridge’s town council.

Last week, Kresge, who manages a handful of high-end rental homes in Summit County, joined more than 75 other property owners, investors and real estate brokers in urging the council to reconsider a proposed cap and crackdown on short-term rentals in a town that has long relied on private property owners to house visitors.

Breckenridge, with its ski slopes reaching into the middle of town, is a short-term rental haven. The town has 3,945 privately owned homes and condos that vacationers can rent. The town council, in an effort town leaders described as a way “to protect our quality of life and the fabric of our community” and “fiercely protect the character of Breckenridge,” on Tuesday unanimously approved a 2,200-property cap on so-called exempt short-term rentals in the town. Those are the homes that are not part of a larger hotel-like complex that offers a staffed front-desk and security.

“Hearing that short-term rentals are destroying the character of Breckenridge is disturbing and it’s just not true,” Kresge told the council. “The visitors who visit the lodge are the character of Breckenridge. They come into town and they spend their money at the local restaurants and shops. A cap on short-term rentals is a broad brush approach designed to solve a problem that hasn’t been well defined.”

Resort communities across Colorado are turning down applications, increasing regulations and even slashing the number of permitted vacation rentals as local leaders and businesses grapple with a shortage of affordable housing and a dwindling number of workers. The vacation-rental strategies deployed in Aspen, Breckenridge, Chaffee County, Crested Butte, Eagle County, Grand County, Steamboat Springs, Telluride and Summit County all differ, but one thing is clear: The largely unfettered growth of short-term rentals in Colorado’s high country is coming to an end.

“You are about to make a law that will have a long lasting impact on my livelihood and the livelihoods of so many people in our community. Don’t punish us with such a low number,” said Mary Waldman, who owns Summit Mountain Rentals with her husband Mark and pleaded with the Breckenridge town council last week that any cap on short-term rentals be no fewer than 2,550 homes.

Breckenridge has 1,469 short-term rentals that are exempt from the cap because they are condos with front desks and full-time security. So the cap of 2,200 cuts 276 units from the 2,476 so called “nonexempt” short-term rental properties. The town’s leaders said the cap will not lead to a large-scale conversion of short-term rentals into homes for locals, but could “stop the rapid loss” of long-term rentals becoming vacation rental properties.

Many of the owners who spoke Tuesday were emotional, explaining their histories with the town and how, for years, they had assumed they were welcomed contributors to Breckenridge’s economic vitality.

“This feels like bullying,” said local real estate broker and 26-year resident Nathan Moorefield. “Most of the neighborhoods out here have HOAs. If they don’t want short-term rentals they can vote them out. This is a small group of people voting out the rights of a much larger group of people.”

Early Wednesday morning last week, after more than four hours of speakers largely critical of the proposed legislation, the Breckenridge town council unanimously approved the cap.

Breckenridge Mayor Eric Mamula, who is struggling with staffing at his own downtown restaurant, said a moratorium “was not enough.”

“We’re losing too many long-term rentals to short-term rentals daily,” he said following the marathon of public speakers, suggesting the council could revisit proposed areas to exempt from the cap and discuss zoning adjustments to allow short-term rentals in residential areas.

Housing, labor crises driving increased regulation

During an emergency meeting on Friday morning, the council hammered out more details of the pending cap. The council cited a rush on short-term rental licenses and identified owners who may be exempted from the cap on short-term rentals.

Town staffers said they would need to hire more code enforcement officials if the council added several new types of short-term rental licenses — for example, owners who rent only a couple weeks a year or locals who rent a room in their full-time home. The council also discussed a tourism core that would allow short-term rentals in some areas of the town’s 49 different land use zones. But largely, the council stuck to its guns. A second reading for the new ordinance is set for later this month.

“The council seems open to hearing different suggestions, which is fabulous,” said Julia Koster, the executive director of the newly formed Summit Alliance of Vacation Rental Managers. “We all need to work together on this thing.”

Many of the property owners who spoke last week suggested that a clamp-down on vacation rentals in town would force more visitors to rent homes outside of town. That would increase traffic and the need for more parking as more people commute into Breckenridge to ski, dine and shop.

“I hope you build more parking lots,” Moorefield said.

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Carol Kresge inside the 13-bedroom home for short-term renters on Wednesday, September 15, 2021, in Denver, Colorado.
Carol Kresge inside the 13-bedroom home for short-term renters on Wednesday, September 15, 2021, in Denver, Colorado. (Hugh Carey, The Colorado Sun)

There are very few mountain communities in Colorado that have not addressed short-term rental regulations in recent months as real estate prices soar, the number of homes sold reach all-time highs and local businesses close as workers lose affordable places to live.

Crested Butte, which capped short-term rental properties at 30% of all of the homes in town in 2017, has suspended vacation rental permits for a year. Voters in November will consider an annual tax of $2,500 on homes owned by nonresidents that are not rented to local workers for six consecutive months. A second ballot measure increases the short-term rental excise tax to 7.5% from 5%, with all extra revenue going toward affordable housing programs.

The Summit County Board of Commissioners last week approved a 90-day moratorium on new short-term rental license approvals in unincorporated areas of the county. In 2020, 65% of the new short-term rental licenses applications in unincorporated Summit County were for properties at Copper Mountain and Keystone resort areas. This year, only 55% are from those resorts and 45% are from residential neighborhoods. That increase prompted the moratorium so county staff could examine the impact of short-term rental homes in residential areas traditionally occupied by local workers.

Grand County earlier this month backed off plans for a temporary suspension of new vacation rental permits but is increasing enforcement of its regulations as it prepares a countywide study of the impacts of vacation rentals.

Chaffee County this month capped vacation home licenses at 6% of the county’s total number of homes, which is about 310 properties. Steamboat Springs’ council in June approved a 90-day moratorium on new short-term rental applications. Telluride voters in November will consider two ballot questions curtailing short-term rentals properties in the town. Ouray County is cracking down on unlicensed short-term rentals. Residents in Frisco are pushing for a ban on vacation rentals.

Even the Town of Del Norte recently enacted regulations that limit short-term rentals in residential areas to bedrooms in owner-occupied homes.

Bailey Epperson, an independent government policy analyst who works remotely from her home in Breckenridge, urged the town council last week to check out Ouray’s new regulations on short-term rentals, which gives a new owner of a home two weeks after a sale to reapply for the short-term rental license used by the previous owners. The proposed Breckenridge plan would not transfer a short-term rental license with a sale and new owners would have to join a waiting list to apply for licenses once they become available. Many property owners suggest that the wait could be as long as a decade until new licenses become available under the proposed cap.

Sandra Steadman, the owner of Breck Escape property management company, urged the council to pursue “a more nuanced approach” to the labor and housing issues, suggesting more deed restricted housing and taxes for affordable housing could do more to provide homes for working locals.

“You have so many levers to pull and you are grabbing a sledgehammer instead,” Steadman said. “There are lots of other solutions out there. We don’t need a sledgehammer.”

Representatives with the nearly 1,000-member Summit Association of Realtors offered several suggestions beyond the cap. If the council does pass a cap, let it sunset in a year so it can be adjusted, said Dana Cottrell, with the broker association board.

Jim Schlegel, who also serves on the real estate board, asked the council to adjust any new regulations to allow buyers of a home to get in line for a new license while they are under contract and not wait until the deal is closed.

“As it is now, buyers and sellers are frantically trying to get deals closed so they can get to the application process,” Schlegel said.

There is a frenzy of pending sales as owners unload properties they might not be able to rent to vacationers.

“It’s already creating something of a panic,” said Toby Babich, the owner of Breckenridge Resort Managers who also serves as mayor of Blue River, just upstream from Breckenridge.

Many of the speakers Tuesday night said the new buyers who are replacing owners of short-term rentals are not planning to rent their new homes. That means more empty homes, which will ripple through Breckenridge’s tourism-dependent economy, Babich said.

“This hits across all demographics and all industries and all manner of community members. And it hasn’t not been modeled out,” Babich said. “They are cutting 13% of short-term rentals, so if our economy dips 13%, what does that look like in terms of revenue for the town, revenue for businesses. How many employees will lose their jobs?”

J.T. Mueller, whose LiveBreck Property Management company offers more than two dozen homes for rent, said Breckenridge’s vacation rental traffic is declining and pacing below 2019. He urged the council to more closely study the impact of the cap.

“Please take some time and let things settle out,” Mueller said. “We could be on lockdown in a few months. We don’t even know. So please, take your time.”

Many speakers on Tuesday questioned how the cap on short-term rental properties would help Breckenridge find more affordable housing for workers.

“The vast majority of vacation-home owners will never rent their home for long-term housing,” said Adam Parker who owns Summit Luxury Estates management company. “People buy their vacation homes to use them.”

Not every speaker opposed the cap.

“A lot more people in favor of this cap wanted to be here but they had to work,” said longtime Breckenridge local Devon O’Neill, who pointed to Arapahoe Basin ski area’s decision last season to cap the number of season passes it sells to preserve the ski experience there as an example of “nontraditional decisions” required to protect a place’s character.

O’Neill cited Breckenridge’s steadily increasing sales tax revenue and lodging tax collections as proof that his hometown is on solid financial footing with an untarnished brand.

A cap, O’Neill said, “is asking an already booming market to give a little so the town stays healthy.”

“To argue that this cap is going to crush our economy is self-serving,” he said.

Duke Barlow, a 23-year local, said the ordinance “is not perfect and not a cure-all.”

“But it’s a good first step and pushes us back toward balance,” said the longtime ski patroller. “By passing this measure you will be prioritizing Breckenridge’s hard-working, full-time locals. Thanks for stepping up for them.”

Telluride voters asked to regulate short-term rentals

Wes English, the president of the homeowner owners’ association at Wildwood Lodge, detailed the money he’s spent on his short-term rental property, where he lives for several weeks a year.

“I’m not getting rich on my investment,” English said. “And that’s exactly what it is, an investment into the fabric that is Breckenridge.”

Jeff Zallaps, an attorney who owns the Summit Vacations property management company, said if the council passed the legislation, he would support second-home owners and property managers seeking an injunction to stop the short-term rental cap.

Many of the speakers asked the council to push the issue toward the voters. That’s what’s happening in Telluride.

A citizen-initiated ordinance will ask Telluride voters this November to cap short-term rentals in the town at 400, with an annual lottery distributing the licenses. About 737 of Telluride’s free-market homes are available for rent to visitors, so the ballot measure, which would go into effect on Jan. 1, 2023, would cut short-term rentals by about 44%.

A second ordinance, forwarded to voters earlier this month by the town council, would double the fee for short-term rental licenses to fund the town’s workforce affordable housing fund. It also places a two-year moratorium on new short-term rental licenses, which the town council can adjust.

Keith Hampton, who started SilverStar Luxury Properties company in Telluride in 1995 and manages about 80 homes for rent to visitors, helped organize the second ballot question.

He said the town’s lodging community did not believe the citizen initiative “really addresses the town’s housing issue.” He doesn’t think property owners will convert their properties to long-term rentals for locals if they are not allowed to rent to vacationers. He also didn’t want to wait until 2023 to begin working on housing in Telluride.

“We wanted a solution that could be implemented immediately and could have an immediate impact,” he said.

Like many of the property owners in Breckenridge, Hampton wonders about the impact of a 337-unit reduction in short-term rental properties, which he estimates could mean as many as 1,685 fewer visitors a night in Telluride. (Hampton’s math: 337 units x 2.5 bedrooms x 2 people in each bedroom = 1,685.)

“What are the tax implications of that? What does that mean for the 235 people who work directly in the short-term rental business?” said Hampton, who is helping the town pursue an economic impact study of short-term rentals. “Let’s just not cut STR licenses and see if that solves the problem. I think short-term rentals are an easy target for people, but I haven’t seen anything that shows caps will fix our housing problem.”

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This story was written in partnership with The Colorado Sun, through a collaboration powered by COLab, the Colorado News Collaborative — a nonprofit formed to strengthen local public-service journalism in Colorado. KSUT joined this historic collaboration with more than 40 news organizations to share in-depth local reporting to better serve Coloradans.

Mark Duggan provided online production of this story for KSUT.

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