Town Council ready to cap short-term rentals in CB

Local primary residences could be excluded

By Mark Reaman

The Crested Butte Town Council is amenable to putting some tighter regulations on short-term rentals (STRs) in town and also capping the number of homes allowed to be rented short-term in Crested Butte.

But they are also leaning toward not imposing a limit on the number of “permanent residents” who can get into the STR business with their primary house. In other words, if you live in your home and meet certain “local” qualifications, such as being registered to vote in Crested Butte, you will be allowed to rent out that primary home or a room in that home for at least two months of the year.

A special Town Council meeting on the issue was held Monday, September 26 and about 50 people packed the council chambers for two hours to listen to the findings and recommendations from a citizens committee that met nine times last summer to review the STR issue.

Chairperson Alex Fenlon laid out the 14 recommendations that included everything from making sure every STR had a “local contact being capable of physically responding to issues within a one-hour time limit” to limiting the number of STRs in the historic core area of town to 25 percent and the outlying areas of town to about 20 percent—the approximate percentages of STRs on record early this summer.

When the council began considering a moratorium on issuing any more STR business licenses, homeowners rushed in and increased the percentages to 38 percent in the historic core and 21 percent in the newer residential areas. The committee had voted 4-1 to try to get the percentages back down to pre-summer numbers.

Doing that would essentially mean not issuing any more such business licenses until the number of active licenses was reduced, and not allowing the STR licenses to automatically transfer with the sale of a house in town. As expected, that was the most controversial element.

“Everyone who has a license before a new ordinance is approved would be grandfathered in and would not lose that license,” reassured Fenlon. “But we felt capping the numbers at the status quo at the time [in early summer] was good.

“In our findings we concluded that the unfettered licensing of short-term rentals at some point is detrimental to the community, housing availability and the culture of Crested Butte. It can also harm the values and ‘brand’ of Crested Butte that attract tourists here,” Fenlon continued.

Fenlon pointed out that the committee found some positives with STRs, primarily in providing a tourist bed base that generated income and jobs.

“It was a great, respectful, thorough discussion and the committee wanted to make it clear there was never any thought to banning short-term rentals. The issue is not inherently evil. There are pros and cons to such rentals. Our mission statement was asking the question, ‘Is there a point where STRs are harmful to Crested Butte?’ and we voted 5-2 that there is a point it is and we came up with percentages that we felt worked.”

Committee member and property manager Steve Ryan said the issue is much bigger than most people realize but he disagreed with the capping of STRs in town. “Telling a private property owner what they can do with their property is dangerous,” he said. He said he supported the recommendations to implement stronger safety measures and keep making STRs a good fit for the neighborhood. “Being a good neighbor is important,” Ryan said. “I had a group check out Sunday and told them never to come back. They were bad neighbors.”

Councilperson and committee member Jim Schmidt said the town currently imposes a number of regulations and limitations on private property. He said the issue is being discussed in every resort town and no one has yet found the perfect solution.

“Everyone feels the safety elements of the recommendations should be a slam dunk. They just make sense,” he said. “Which leads us to the percentages. Are they where they should be? And everyone should realize this doesn’t solve the long-term housing issue. But the bottom line is that I don’t want to live in a hotel. A community needs people who volunteer and live there.”

Councilmember Laura Mitchell participated on the committee for the first part of the discussion and said the proposed licensing fees that range from $250 to $1,000 were a “little arbitrary. The caps tread on private property issues and it really bothers me. We need public feedback on this.”

Kat Hasebroek of the committee chimed in that the committee discussed the connection between STRs and long-term affordable rental issues in town and wanted to intertwine the two issues. Hence, one recommendation was a possible move to eventually collect a tax or a fee from STRs that would be earmarked for long-term housing relief.

Mayor Glenn Michel led the council through the list of recommendations to make sure the council was generally on board with each item. He then asked the town staff to delve into the details of the recommendation and come back with specific proposals that could be used in an ordinance.

The council basically agreed to higher fees for STR business licenses to help offset costs of hiring an employee to oversee the businesses and, for instance, inspect the properties. Those fees could be adjusted annually by the council. Mitchell suggested the fees be based on the number of bedrooms in each house. The staff will come back with some suggestions.

The council agreed to the town collecting data to create a nexus between STRs and affordable housing needs. The council agreed that each STR should be uniquely numbered and have a visible plaque posted on the home with details. Michel likened that to having a public building permit on site. Most homes would be limited to a maximum of ten renters at any one time under town code. If a property has designated parking onsite, it must be utilized.

Inspections will be required for each house every other year and if a license is turned down, the decision can be appealed to the town manager. Locals renting their permanent residence could be limited to renting between 60 or 90 days a year. The number of days is still to be determined.

Concerning suggested caps, building and zoning director Bob Gillie felt some people had obtained STR business licenses as a “placeholder” when word of a possible moratorium got out. He felt some of those owners would not rent out their houses and if the fees were significantly higher than current fees, they would probably let the licenses lapse.

“My gut tells me we’ll have about 200 homes that really want to short-term rent,” estimated Gillie.

Schmidt said limiting licenses has definitive impacts. He suggested that there be no limit put on those who live in the home they want to rent or those who live in a house and rent rooms.

“The cap idea rubs me the wrong way,” said Mitchell. “There is value to VRBOs when people come in and rent and go out to eat and shop in town. The caps would be okay if there’s no blowback from the real estate community. Putting restrictions on private property rights—I just don’t know about that.”

“It is important to have neighborhoods with people living in them,” said councilperson Erika Vohman. “I like the proposed caps and think we’ll get there through attrition.”

“I agree with Jim on this one,” said councilman Roland Mason. “I don’t want primary homeowners severely impacted with STR regulations. Let’s not put a limit on primary homeowners. But the caps help keep Crested Butte, Crested Butte. I could go with the 25 to 30 percent cap in the core district and 20 percent in the rest of town. It’s not just a bunch of new families rolling through every weekend. Primary residents would still have to pay the fees and abide by the regulations but not be part of the cap.”

“If the council wants to pursue caps, staff will need some time to research the legal implications around limiting the ability to transfer licenses,” explained town manager Dara MacDonald.

Michel allowed about 15 minutes of public comment after the council discussion concluded.

Several people said prohibiting the transfer of the STR licenses in a house sale was not fair and perhaps not even legal. “All of the homes in this town are investment properties because they have equity,” said Keith Payne. “If you can’t pass the license along in a sale it will devalue the home and scuttle some sales in town.”

“Some people are using STRs to help pay their mortgages, but no one is making a lot of money. And I agree that home values will go down if you can’t transfer the licenses,” said Jaima Giles.

“If those safety regulations are an issue for short-term rentals I can’t believe you don’t have the same discussion for long-term rental properties,” commented DeeDee McLeod.

“Let’s enforce the same safety rules for long-term rentals,” agreed Erich Ferchau. “Fix the decks. Address the parking issues. And take into consideration there are hybrid properties out there, too.”

Jim Starr thought the council was headed in the right direction. “I agree you shouldn’t put a cap on locals doing short-term rental,” he said. “And if you drive down real estate prices, it could make property more affordable for locals. That’s not a bad thing. I don’t think you need a nexus in a tax issue so I would suggest you put an issue to the voters taxing short-term rentals and using the money for affordable housing.”

Peter Sherman said there could be legal ramifications if licenses were not permitted to be sold with a home. “It will cause values to go down and to take that away would be wrong,” he said.

The staff will come back to the council with detailed proposals on how to implement the recommendations they agreed to in concept. Gillie said they want some regulations in place before the 2017 short-term rental season kicks into high gear. The goal, according to MacDonald, is to have an ordinance ready for first reading at the October 17 council meeting.

Check Also

Elevation announces major renovation plans

Converting hotel rooms into residences  By Kendra Walker One of the major base area players at …