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Town gathering more data on short-term home rental issue

No desire for a total ban in town

by Mark Reaman

The Crested Butte Town Council is starting to drill down into how to deal with short-term rentals in town. In a PowerPoint presentation Monday evening, town manager Todd Crossett reviewed the town situation and specific areas the council might want to address.

One thing the council agreed on was that there was no desire to totally ban short-term rentals from town.

“The housing shortage seems to have blown up in the last year,” Crossett told the council. “There has also been an increased cost in the rents. Many people feel there is a connection with what we are calling Vacation Home Rentals [VHRs].”

Crossett said VHRs are allowed in certain zones in Crested Butte with specific rules. But he admitted that the town does not currently enforce those rules because there are no dedicated personnel in town to do so. So he admits that VHRs exist outside of the permitted areas.

There are 170 units registered for short-term rentals in town and that amounts to about 15 percent of the housing stock. Lodging sales tax collected in town amounted to $254,571 in 2014. Short-term rentals and property management firms dealing with such rentals contributed $173,485 in 2015.

The town participated in a study commissioned by the Colorado Association of Ski Towns and found that pretty much every resort community is facing the same issue.

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The findings indicated no community has found an answer and concerns vary between communities.

Crossett’s presentation indicated some “positives” with VHRs. The rentals supply beds for visitors who do business in town. They are a source of revenue for property management companies and provide some jobs for people. Some locals use VHRs to supplement income to offset their mortgage or expenses.

The primary impacts mentioned centered on the overall community impacts brought on by VHRs. There are impacts to the neighborhood with increased people, parking and noise, and there could be safety issues in homes that are not up to the same standard as local hotels. The idea that VHRs reduce the local rental housing stock and increase pressure on local rents was a concern the council wanted more information about.

“We need more specific data to make policy decisions,” said mayor Glenn Michel.

“For example, how many short-term rental properties are owned by local homeowners?” asked councilman Chris Ladoulis. “How many are seasonal homeowners who might live here six weeks or six months and rent it out the other times? How many are strictly for investment?”

“Good questions and it all ties into the idea of Crested Butte,” said Crossett. “One appeal of Crested Butte is that it is lived in by people of all ages. It is a real community. So does this have an impact on local housing? Does it encourage ‘dark neighborhoods’ with empty houses?”

“It seems second homes would contribute more to the dark neighborhood idea,” said Michel. “VHRs have people in them contributing to some vitality.”

“But they change the neighborhood,” added councilperson Jim Schmidt. “If there are six cars and 30 people in a house, it impacts the neighborhood. Nothing is easy on this.”

“Some things around safety issues and regulation can be easily solved,” suggested Ladoulis. “The community impact issue is harder to solve. That’s where we should be spending our time. You have homes that are becoming houses. I think we need to look at different models being used across the country and apply some here.”

“For me the number one issue is how is it impacting the local housing stock,” said Michel. “How large of a problem is it really?”

“It is definitely happening,” responded Schmidt. “It’s not alleged. People are losing their rentals after many, many years.”

“Then we need to perhaps ask what has changed with the house itself,” suggested councilman Paul Merck. “Did the mortgage increase? Did costs go up and the owner feel short-term rental was the easier way to address the changes?

Rebecca Suazo, who owns Alpine Getaways, said her company has lost several short-term rental properties in the last several years when new owners decided they didn’t want or need to rent the house.

Crested Butte building and zoning director Bob Gillie estimated that between 2011 and 2014 the town lost about 17 long-term rental properties to short-term rentals.

“So the impact of short-term rentals on local housing is worth investigating,” confirmed Crossett.

“The problems we are seeing are dark houses and losing community members living in town,” said Ladoulis. “We don’t want this town to turn into a museum of what a community used to look like. I’m not sure VHR regulation is a way to solve the problem but those are the problems we need to be talking about.”

Councilwoman Erika Vohman said she wanted data to see the impact of off-seasons on local businesses. As more locals are forced out of town, she postulated, local businesses were feeling a greater pinch in the less tourist-oriented times because there are fewer locals in town to support businesses. However, sales tax figures show that last year, the off-season months of April, May and October all set new revenue records.

Crossett said other issues that had been brought up in the past were putting VHRs on a level playing field with local hotels and bed-and-breakfast establishments.

“Mike Nolan of the Elk Mountain Lodge has spoken up in the past advocating longer stays be required for VHRs so as not to compete with single-night stays at hotels,” noted Michel.

Several property managers at the Monday meeting said they don’t even entertain stays less than three days.

Schmidt said VHRs should maintain some of the same safety standards as hotels. “I think we should hire an enforcement officer to inspect parking and the number of beds and other aspects of VHRs,” he said. “Again, it’s more for the customer but we should be charging enough to pay for an enforcement officer. That is low-hanging fruit. It’s the easy part. The hard part is the challenge and the relationship with affordable housing.”

Property manager and Crested Butte Fire Protection board member Ken Lodovico said the fire district might help with such inspections.

Michel touched on the idea of a possible linkage fee that would tax VHRs, with the funds going to supplement work-force housing.

 

“We have such a linkage fee on commercial projects but not with short-term rentals,” he said. Approval for such a fee would likely take a vote of the people.

Susan Eskew said the One Valley Prosperity Project was discussing a regional tax for the same purpose. “It is important to look at the housing issue in a regional way,” she said. “It’s not just the ten square blocks of Crested Butte.”

“The same questions are happening everywhere,” reiterated Schmidt. “No one seems to have a good solution.”

Councilperson Laura Mitchell did say the town should look at the current $10 pillow tax that she felt was pretty low. “We definitely should review the fee structure with VHRs,” she said.

Vohman wanted Crossett to compile a list of what the town could legally do with taxes and fees in the realm of the VHR issue.

Crossett will compile more information on the topic and give another presentation to the council later in March.

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