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Part I: The groundwork on Chaffee County short term rental realities

The topic of short term rentals is not a new one for Chaffee County, but it is becoming more urgent. As the county considered its next steps following the short term rental fee analysis conduced in Dec. 2019, it has scheduled a public hearing to continue discussion on the topic of short term rentals during its Wednesday, March 4 commissioners meeting.

The county, like its municipalities, saw an upsurge in short term rentals as the state came out of the Great Recession. The growth represents a variety of causes. It was related to residents creating additional revenue streams by renting out a room in their home, or a cottage on their rural property. It includes people from the Front Range buying second homes and renting them out when they were not here. In other cases, out-of-state buyers have bought up housing stock as investments and then contracted with short term rental companies such as VRBO and Airbnb to manage them as investments.

Chaffee’s municipalities have dealt with short term rental in responses customized to their local area; often allowing them fairly freely in commercial areas, while setting a variety of limits on short term rentals in residential areas. The county has been slower to address the issue of identifying, registering, inspecting and managing short term rentals. As late as 2017, it had no idea how many short term rentals there were on non-municipal county land. It also had no idea how they were being managed, or whether or not the rentals matched county occupancy limits for things like water and septic limits.

Also during this time, the county began to see an increase in public safety-type issues from nightly lodgers starting campfires in non-approved fire pits, breaking HOA rules in rural subdivisions, and leaving trash out that attracts bears. The topic became something county leaders realized had to be addressed.

The county’s process of moving from little supervision to organized oversight has been a bit rocky. Early on in 2018, the county hired a contractor to organize its approach hoping that people would self-enroll. The fee structure it began to implement was explained as the estimated time to oversee short term rentals: including the role of finance, the building and building inspector, as well as the cost of permitting and review by the planning deprrtment. The county announced a $500 initial registration to cover the cost of staff time to administer the program, and sent a letter to the 272 short term rentals that the consulting firm initially identified as running short term rental offerings.

The letter that went to the 272 identified persons running short term rentals was seen as a demand letter by some.

“Basically we have had no feedback from the county, we’re just getting demand letters – saying you have to do this, you have to do that,” said Cheri Charter, whose parcel just off U.S. 285 near the landfill area has a one-bedroom, one-bath cottage that gets rented from time to time.

“The county commissioners wanted to make it a level playing field,” said Development Manager Christy Barton. “There were a lot of short term rentals identified by our vendor who weren’t paying sales tax and lodging tax and others were. It’s not fair to the people who have those certifications when there are people out there not [paying the registration]. For some, who work with Airbnb and VRBO and Pinon Realty – those property managers handle the tax reporting. Others here sometimes hired a company to do that, just like they hire housekeeping.”

In Dec. 2019, the county got the results of its Short-term Rental Fee Analysis completed by RPI Consulting LLC in Durango, a study it had co-contracted with the city of Salida. The study determined that the across-the-board fee structure of $500 as initial registration and a $500 annual fee accurately reflects the county’s expense to administer the oversight program. But that news took many short term rental individuals by surprise.

“Our little cottage is really a ‘cottage industry’, it’s an occasional thing,” said Charter. “I had it with Airbnb and they handle the taxes. It used to be the county had only 270 or so short term rentals – and there are a LOT more now – they are everywhere. The letter says I have to apply by Feb. 29 to avoid being in violation of the county’s short term rental regs.”

During its Dec. 19 meeting reviewing the impact study, the county approved the initial registration fee levels based upon the finding of the impact study. They were less sure about an annual renewal fee. “There is no proposal, I don’t believe, at this time to say that the fees [proposed by RPI Consulting LLC] are to be implemented,” said Chaffee County Board of Commissioners Chair Greg Felt that day. “… There is a fee to enroll a property and to go through the initial analysis and then there is a different cost associated with the annual administration.”

The county did acknowledge public consternation over the fees. It is taking a two-year implementation approach to the fees by announcing that anyone who completed registration in 2019 would not see any renewal fee in 2020.

“On behalf of the county, I do apologize that this was rolled out before we totally had our ducks in a row,”said Felt. “However, we are pushing it back another year so that anyone who paid to enroll this year [2019], is already set for next year. We will have a hearing next year and we will work through these details with the public and the VRBO owners to get back on track.”

Barton agreed the county’s decision during its Dec. 19 meeting to approve those fee levels based upon the impact study hasn’t been popular. ”We did get pushback on the $500 fee, and the idea of a $500 renewal fee. We have about 70 [county short term rentals] registered so far.”

Charter says that the county is being shortsighted because it is failing to take into account the economic impact to the county that the short term cottage industry brings, of which she is a participant. “We’re recommending where these folks should go to explore to eat, to tour.

Discussion of short term rentals and their impact both on local economies and environmental impacts is a topic state-wide. HB1093 short term rentals just passed out of the Colorado House and is now in the Colorado Senate. Its purpose, say its sponsors is “leveling the playing field across all lodging operators.” Among the discussion points at the state level, not just the local county level, whether to declare that any lodging used for short term rentals would acquire commercial tax status with county assessors, to reflect that use. The legislations might mean that instead of sales tax, lodging tax, the county assessor would do some sort of short term property tax.

Charter and other small short term rental owners are leery of such a move, just as she is of the registration fees, saying it might have unintended consequences.“That commercial thing, the wealthy people coming into Summit or Eagle – they’re buying large homes they use maybe a month a year, and the rest of the time it’s short term rental. If they are being charged commercial, they’ll just sell it and buy somewhere else…. instead of becoming an income, it will become expensive.

“If they do this [require a big annual fee] they could put a lot of small businesses out of business,” aid Charter. “I’m not going to go with long-term renters ever again. They can destroy a place – I used to have four in town and they destroyed my duplexes on C and B streets – I’ll never do that again.”

Part II: Next week’s segment on Chaffee County short term rentals will dive into county statistics and include the thoughts of some county short term rental management companies with multiple listings in the county.

Earlier Ark Valley Voice coverage of the short term rental topic is available here