CB council preparing for the VRBO issue in town

Council just gathering information. No action—yet

While making it clear they were just dipping their toes into the pond that is the short-term rental issue in town, the Crested Butte Town Council is preparing to collect information and determine what impact such rentals have on the community.

How deep they go remains to be seen but council members indicated they want to look at the issue from the perspective of similar resort towns and obtain specifics for Crested Butte. They likely will join in a CAST (Colorado Association of Ski Towns) study of the situation.
Figures compiled this week from Crested Butte finance director Lois Rozman show that an estimated 172 homes in town are listed on VRBO (Vacation Rental By Owner) or AirBnB. That amounts to about 15 percent of the total units in town. Of the $247,111 collected from the 4 percent sales tax in the “lodging” category in 2014, short-term rentals accounted for more than $146,000 of it, or 60 percent. That is a huge climb from 2007 when short-term rentals brought about $51,000 into the town coffers and accounted for about 39 percent of the lodging sales tax category.
Those renting their homes on VRBO pay a total of 12.5 percent in various taxes. Rozman’s figures cite just the 4 percent sales tax numbers.
During a Monday evening work session, mayor Aaron Huckstep presented a series of PowerPoint slides showing that Crested Butte is not the only place that has a short-term rental bed base through community homes and condos. “It is certainly happening in our community,” he said. “There has been some concern voiced that it is having a big impact locally on the number of long-term rentals used by workers.”
Huckstep said CAST was gearing up to hire a slate of consultants to look at the VRBO issue in ski towns. They want to examine the impact on affordable housing, taxes and the economy. “Towns are dealing with it from different angles and in different ways,” Huckstep said. “So CAST felt this was a good way to collect information. The discussion tonight is to prepare the council and staff about what is coming down the pike, to learn more information on the issue itself.”
Among the consultants will be Crested Butte’s affordable housing consultant Melanie Rees.
“I’d like to know how many of the homeowners in town are residents that maybe rent their place a few weeks a year, versus absentee owners who rent the homes out, often like a business,” said councilman Jim Schmidt.
Huckstep said that is a determining factor in San Francisco, which regulates short-term rentals. To short-term a house there, Huckstep said, it must be occupied by an owner or long-term renter at least 275 days a year.
Rozman said from a taxing perspective, the town monitors VRBO and AirBnB to see which local houses are being offered for rent, so she feels confident her department has a good handle on the situation from a tax angle. “Are we 100 percent? No. But we’re darn good.”
Town building and zoning director Bob Gillie said his department has less of a handle on the issue from that perspective. “We have some short-term rental regulations in place that allow it in certain zones but we haven’t updated them in years,” he said. “We don’t put a strong regulatory eye on it right now. I’m sure it’s happening in zones where it is prohibited. Plus there are rules in place for owners to make sure there are things like adequate parking, contact numbers and trash removal, and I doubt any of that is going on.”
“VRBO is a concern,” admitted Elk Mountain Lodge owner Mike Nolan. “At what point do the local lodging people say ‘Screw it. I’m out’? It’s not a big concern in the summer but winter definitely is an issue. People can cram into a house at half the cost of a lodge.”
Nolan said if VRBO were not around, its absence would likely help his business. “But the lodging community is not totally against it. We see it can help the town,” he said.
“But a lot of the properties on VRBO are now taking the two-night stays, which are our bread and butter in January and early February,” Nolan relayed. “Maybe there should be a four-night minimum. Admittedly it is a bit of a chafe. I’m paying three times the amount of money in property taxes than a house and they’re doing the exact same thing I am.”
Commercial property tax in Colorado is based on 29 percent assessed valuation of the property, while residential property tax is based on about 8 percent.
Gillie said that another part of leveling the playing field between commercial lodges and residential homes that are rented would come in the town codes. Standards for things like emergency exits and fire extinguishers are different between the two facilities.
“There is a social impact of the issue in resort towns,” said town manager Todd Crossett. “Rentals are tight here and everywhere.”
“Visitors like to stay in the real towns and historic districts,” noted councilperson Skip Berkshire.
“If they couldn’t rent a home downtown would they go on the mountain or just not come here?” said councilman Chris Ladoulis.
“There are two competing interests,” summed up Huckstep. “There’s the impact on workforce housing and on the other end this is a tourism-driven economy and people need places to stay. Finding a way to balance it is what we are discussing.”
“There’s also the issue of numbers and occupancy. How do rentals impact neighbors with traffic, parking and noise?” asked Schmidt.
“For me the financial analysis will be easier to understand,” said Ladoulis. “How we want to navigate the cultural impacts on the community will be the philosophical discussion, and we can spend a lot of time kicking that around.”
“We need to be clear the council is not considering eliminating or adding extra regulations on short-term rentals in town right now,” said councilperson Glenn Michel. “There are definite benefits to this. It brings in more people and more revenues. What is the real problem? Is it a zoning question? Is it a revenue question? A safety question? If a problem truly exists we can have a discussion to determine if new regulations are needed. But we need to be aware there can be unintended consequences if we take action.”
“This discussion is to open the discussion to understanding the issue,” said Huckstep. “This phenomenon touches a lot of policy and probably every department in town.”
“It probably touches every citizen in town,” said Schmidt.
Resident Paul Merck cited some statistics indicating that visitors spent a lot more than locals when going to art events. “People visiting create quite a bit of revenue for the town and the people of town,” he said. “Don’t forget that element. Plus, people will pay the required taxes as long as the process is transparent.”
Nolan mentioned one way to impact affordable housing would be to further enforce regulations on accessory dwellings deed restricted to long-term rentals. It is believed not everyone with such a structure adheres to the deed restriction.
“This discussion is a primer for what might be coming at us in the future,” reiterated Huckstep.
Crossett indicated contributing to and participating in the CAST study of the VRBO issue in resort towns would be a good use of money.
CAST is expected to begin its study in March.