Short term havoc: What can be done?

by Olivia Lueckemeyer

This is the second part of a series on the trend of short-term rentals in Crested Butte. Now that we’ve explored the impact short-term rentals have on community members, this week we follow the progress of the short-term rental committee, the group tasked by the Crested Butte Town Council to come up with ways to regulate an unchecked market.

What can be done to curtail the effects of a problem that is not easily solved? Jim Schmidt is a Crested Butte Town Council member who also sits on the Short-Term Rental Committee, recently formed by the council to begin addressing the issue. According to him, if Crested Butte did impose strict regulations, it would be leading the charge, as many ski towns across Colorado are at a loss when it comes to managing short-term rentals (STRs).

“First of all, we have found out that this is an incredibly difficult issue,” Schmidt said. “All of the resort towns are going through this crunch of a lack of long-term rentals. And it’s not just affecting resort towns, but big cities, too.”

According to the New York Times, AirBnB recently filed a lawsuit against its hometown of San Francisco after the city voted to charge the STR giant $1,000 per day for every unregistered host on its service. This follows a lawsuit the company filed against New York City after its lawmakers voted to heavily fine anyone who used the site to rent a whole apartment for fewer than 30 days, a practice that has been illegal in New York since 2010.

“The companies are making a ton of money; it’s a very lucrative market and they seem to be willing to jump in and challenge any rule that anybody puts up, so we are being very careful,” Schmidt said.

Approximately 19 percent of residential units in the town of Crested Butte are used at least part of the time as STRs, Schmidt says. Geographical Information System (GIS) analyst for Crested Butte Hilary Mayes says that amounts to approximately 175 residences in 2016. Crested Butte’s building and zoning director Bob Gillie says that last year, the town issued 162 BOLT (Business & Occupational/Sales Tax License) licenses for STRs. The STR trend has steadily risen since 2006, when about 40 licenses were issued. The report comes with a disclaimer from Gillie, stating, “We do not represent that we have captured all STRs in the BOLT licensing.” In other words, there may be some STRs in town that are unaccounted for.

Figures for Mt. Crested Butte are harder to approximate; any unit that rents individually is charged a pillow tax, so the number of STRs is conflated by things like hotel rooms. However, Mt. Crested Butte town clerk Jill Lindros says, of the 877 units that pay a pillow tax to the town, 105 are single-family homes. The pillow tax amounts to $10 per pillow; so, if a STR “sleeps six,” for example, that property owner would be required to pay $60 annually to the town of Mt. Crested Butte. According to Lindros, that money goes to the Crested Butte/Mt. Crested Butte Chamber of Commerce.

Technically, STRs in Crested Butte are expected to adhere to a certain set of rules; however, the town admittedly has no dedicated enforcement to make sure those regulations are followed. Only certain zones in Crested Butte allow for vacation rentals, and the town does charge a business license fee and sales tax for STRs. According to town finance director Lois Rozman, in 2015, sales tax collected from STRs in the town of Crested Butte amounted to $156,878.

It’s clear to all involved that a Wild West approach to handling STRs is not working, so the short-term rental committee was formed in April to begin looking into potential concrete regulations. The committee, made up of two Town Council members, two representatives of the property management community and three citizens-at-large, was tasked to pay special attention to four areas when forming its recommendations: the impact of STRs on neighborhoods, such as with noise and parking; the larger community impacts, such as the loss of workforce housing and the impact on the town’s “brand”; the safety and fairness of STRs versus hotels and lodges when it comes to things like taxes, inspections and building standards; and the licensing and neighborhood notification processes needed to operate an STR.

As for the impacts on neighborhoods, issues such as parking, trash collection and safety are also being discussed by the committee.

“We are considering the impacts on the neighborhoods, which are noise, cars and a lot of people,” Schmidt said. “Garbage collection is one problem; people rent through the weekend and put their garbage out on Monday but it doesn’t get collected until Thursday. We want to make sure that is regulated.”

Employing a safety inspector to ensure that each STR is equipped with features such as smoke detectors and proper egresses is another idea that has been debated amongst the committee. It also plans to recommend an agent-on-call in case something goes wrong, or if a neighbor wishes to submit a complaint.

“For a lot of these places, the owner is in Denver or anywhere else across the world, and how quickly they can handle something is always dependent on getting hold of somebody,” Schmidt said. “Why shouldn’t they have somebody on call? I think that’s very reasonable. It’s not just for the person who is renting, but for the neighbors as well.”

The committee is also considering measures that could utilize the short-term rental market as a way to generate income for long-term housing. Schmidt says they may recommend a tax, which would be subject to a vote. They definitely plan to recommend a registration fee to be put toward paying an inspector or any other staff person who helps enforce regulations.

“I think everybody on the committee is finding out that it is terribly complicated, and in a lot of ways it’s like the proverbial balloon—if you push one way, it pushes out the other way, so we don’t want to be hasty about any of our recommendations,” Schmidt said. “It’s not something we are taking lightly.”

Citizen-at-large committee member Alex Fenlon echoed Schmidt’s sentiments, calling the trend a “really dense issue.” The committee had planned to have a recommendation ready to bring before the Town Council by early August, but once it realized the breadth of the issue, that timeline was extended.

“When you start diving in, and you keep going more in depth, it really touches every corner of the community,” Fenlon said. “You start thinking about more than just ‘How much should you charge for this?’ It’s very deep.”

The committee has met every week since it was formed in April and it will continue to do so until it’s ready to make its recommendation to the Town Council in late August.

“It’s been a very far-reaching discussion,” Fenlon said. “I’m impressed with everybody, there has been a lot of thoughtful conversation in that room and that’s really necessary for something as complicated as this.”

Schmidt maintains that treading lightly is the safest course of action, since Crested Butte would be setting a precedent for other ski towns facing the same obstacles. A full-on ban of short-term rentals is probably not realistic; however, the committee may recommend a limit. The consensus is that a compromise can be reached between those who profit from STRs and those who suffer from their prevalence, but the solution must be carefully crafted and well thought out.

“We are not alone,” Schmidt said. “But if you’re a front runner on something, people are more apt to sling arrows at you.”