An ordinance that would regulate short-term vacation rentals, such as Airbnb and Vacation Rentals by Owners, will be considered by Colorado Springs City Council at its Sept. 24 meeting.
A measure of the controversial nature of this ordinance was the 3-3 vote by the city planning commission, which conducted a hearing on the proposed ordinance on Aug. 16.
With that vote, the ordinance goes forward to city council, but without a recommendation from the planning commission.
The draft ordinance defines a short-term rental as a residential dwelling unit or portion that is rented for less than 30 days, requires owners to obtain a short-term rental unit permit, sets basic safety standards owners must meet and outlines conditions under which permits can be revoked.
It limits the number of short-term rentals a property owner may operate, according to the residential zone in which the property is located. For example, in single-family residential zones, an owner may offer one short-term rental per property; in multi-family zones, an owner may operate a maximum of four short-term rental units within a multi-family property.
The ordinance does not cap the number of permits that may be issued but does set out conditions under which permits may be suspended or revoked.
The ordinance does not require property owners to live on premises they offer as short-term rentals but does specify that a local property manager must be available who can respond to an emergency within one hour.
It also requires owners to pay all applicable sales and lodging taxes, such as the Lodgers and Automobile Rental Tax.
A sharing economy
Airbnb-type rentals launched a “sharing economy” — an opportunity to trade spaces while on vacation, save money on lodging and put a few extra bucks in homeowners’ pockets.
Vacation rentals now have morphed into a billion-dollar, worldwide industry. Vacation rental owners range from homeowners who rent out part or all of their homes, to investors who buy and fix up properties and offer them to travelers.
Short-term rentals have proliferated in Colorado Springs “due to demand in the market,” said Rachel Beck, vice president for government affairs for the Colorado Springs Chamber & EDC.
Beck served on a stakeholders’ task force that began meeting in early 2017 to help the city planning staff develop the ordinance.
“The sharing economy is a big policy experiment not just for us but for cities and counties around the country,” Beck said. “The key is how the market evolves.”
No one knows exactly how many short-term rentals there are in Colorado Springs, but Assistant Planning Director Meggan Herington estimates that they number between 1,000 and 1,400.
“We started realizing that there were a lot of short-term vacation rentals that weren’t paying the LART tax,” Herington said.
“From a staff perspective, we’ve heard from both sides of the coin — some very opposed, and some pro short-term vacation rentals,” she said. “This ordinance tries to address some unique aspects of that type of rental, not only to find balance, but to make sure the short-term rental owners are aware of the regulations.”
Opponents of these rentals say that, in other cities, they have affected the availability of affordable housing and can interfere with the character of single-family neighborhoods. Proponents say they can improve run-down properties and increase property values.
“What we’re really concerned with is that this policy be driven by data, but that is difficult because this is a new industry,” Beck said.
As owners apply for permits and short-term rentals are tracked, the city can begin to evaluate how they are affecting Colorado Springs’ neighborhoods, Herington said.
The business of short term rentals
Ryan Spradlin got his start in the vacation rental business in 2010, when he and his wife started renting out their house during Air Force Academy graduation.
“We did graduations and parents’ weekends, and we got flooded with requests,” he said.
Spradlin, an applications engineer for a health care company, and his wife bought a home in Holland Park in spring 2017 and opened it as a short-term rental property.
“It’s literally been rented nonstop since we opened,” he said. “There were no vacancies for the first 75 days on Airbnb.”
He has acquired three more properties since then.
“My occupancy rate is 90 percent or more year round,” Spradlin said. “Even in April, the worst month, every weekend was full.”
Spradlin said he gets a lot of guests who are considering moving to the Pikes Peak region and want to see what it feels like to live here, as well as Air Force families coming to see their cadets and people who are traveling for business.
Because Spradlin had traveled a lot and enjoyed staying at short-term rentals, he knew he could get assistance from Airbnb.
He doesn’t have to worry too much about finding guests, booking or collecting taxes and fees; Airbnb does that for him, carefully vetting prospective guests in the process.
Through a smart pricing program, Airbnb adjusts rates guests pay depending on the property, length of stay, occupancy rates and availability of other properties in the area.
“I monitor it, but they do a good job,” Spradlin said.
Under an agreement with the city of Colorado Springs, Airbnb collects and remits fees and taxes on Spradlin’s and other hosts’ behalf, including Colorado Springs’ 2 percent lodging tax.
“We pay a total of 10.25 percent in taxes,” he said.
Spradlin still has to do some things himself, such as laundry, cleaning, checking his properties, fixing things and making sure his guests have everything they need.
“We try to make it an experience that far surpasses a hotel,” he said. “You’re not going to need for anything you have at home.”
He estimates that between his regular job and his short-term rentals, he works 80 hours a week, but said it’s worth it.
“As an investment, it’s great,” he said. “You definitely make more money with a short-term rental than with a long-term rental.”
Ordinance pros and cons
Spradlin organized a Facebook group called Colorado Springs Short-Term Rental Alliance about 10 months ago and said members have been meeting to oppose what they saw as over-regulation in the original draft of the ordinance.
He noted that some modifications were made to that draft, including the striking of a restriction that would have limited short-term rentals to one every seven days.
Although he would like to see further modifications and clarifications of regulations in the ordinance, Spradlin said he generally supports the current draft.
“We aren’t going to convince people who are adamantly against them, but we do want people to know that they do improve property values,” Spradlin said. “In a lot of cases, people are buying properties that are in terrible shape, remodeling them, and the neighbors then say it’s looking great.”
Airbnb publishes lots of information about how to be a good property manager, talk to neighbors and be respectful, and how to handle guests who cause problems, and rewards hosts with good reviews with higher positions in listings.
“Self-regulation is key for all of this,” Spradlin said.
At the Aug. 16 Planning Commission meeting, more than a dozen speakers were divided between those who thought the ordinance was too restrictive and those who thought it wasn’t restrictive enough.
“We want to facilitate adoption of the sharing economy [and] I want to use my property to my advantage,” said Brandon Behr, who wants to build a cottage on his property to use as a short-term rental. “Consumers want choices; they don’t want to be stuck in a giant hotel. My hope is that the planning commission will not over-regulate.”
Speaking on behalf of the Neighborhood Preservation Alliance, Michael Applegate said he wanted “to champion real home sharing. It’s our opinion that it’s very much a business… . Some people are home sharing; the majority of people are running a business.”
Applegate and others said they wanted to see short-term rentals limited to primary residences and a cap on the number of permits. They expressed fears that short-term rentals could destabilize neighborhoods and drive up the cost of housing for buyers and long-term renters.
Applegate stated in a letter to Herington that investors had bought a house across the street from his to operate as a short-term rental.
“Where there once was a neighbor, there is now a steady stream of strangers,” Applegate stated. “When the property is booked to near listed capacity [up to 13 people], traffic on our quiet street … can more than double.”
Similar concerns on both sides were expressed in the stakeholder task force meetings and two public meetings hosted by the Council of Neighbors and Organizations.
Although CONO has not taken an official position on the ordinance, “we support a good public process around it and want to make sure neighbors are involved,” said Sara Vaas, COO of CONO.
“We’re going to continue to watch this,” CONO President Diane Loschen said. “We’ll be talking about it in CONO’s public policy committee.”
The Colorado Springs Convention & Visitors Bureau also has not taken an official stance on the ordinance but provided a statement in an email.
“From a tourism perspective, short-term rentals of houses and similar facilities provide another lodging product that has some consumer demand,” President and CEO Doug Price said. “We believe it is important to develop a process to ensure that travelers and tourists have safe and secure lodging available to meet their needs.”
Colorado Springs City Council is scheduled to discuss the proposed ordinance at its work session at 1 p.m. Sept. 24 and to take up the ordinance formally at a regular meeting at 1 p.m. Oct. 9.