Moratorium on town STRs headed to public hearing July 19

Council debates merits of studying impact to housing market

[ by Mark Reaman ]

After more than an hour of public comment, the Crested Butte town council voted Tuesday to set an ordinance imposing a 12-month moratorium on accepting and processing applications and issuing licenses for short-term vacation rentals (STRs) for public hearing on July 19.

Town planner Mel Yemma said the staff hopes to conduct a comprehensive study of vacation rentals to evaluate the impacts STRs have on the town’s housing stock and current real estate market as it relates to affordable housing. Currently there is a cap of 212 such STR licenses in town and they are all active. But the licenses do not transfer when a home sells and by imposing the moratorium, the thought is that perhaps some buyers might choose to not purchase a home in town that cannot be rented short-term thus lowering prices.

“We know there is no silver bullet to solve the housing crisis,” said Yemma. “STRs are many times pointed out as a culprit impacting housing. We don’t expect this to convert short-term rental houses to long-term rentals, but it gives us a chance to collect more data.”

“I think this research will be really important with or without the moratorium,” noted councilwoman Jasmine Whelan. “But I understand how the word ‘moratorium’ can sound scary to people. This only applies to new vacation rental licenses and anybody with one of the licenses now will not be impacted. I want to emphasize that it is a tool to look at how taking away the licenses impacts the housing market.”

“I think we are seeing the Crested Butte housing market moving to be more of a commodity,” said councilman Jason MacMillan. “It is more commodity than a community right now.”

Mayor Jim Schmidt again voiced displeasure at the moratorium idea. “We set up a goal to help housing and I don’t think this will help housing in the least bit,” he said. “No one expects any long-term rental conversions. At the real estate prices these days, people can’t long-term rent a property and pay the mortgage. No one will go that route. So then, why are we doing it?”
“The goal is community,” said councilwoman Mona Merrill.

“Then it’s the wrong way to go,” responded Schmidt. “We can do the study without a moratorium. Staff can gather the needed information with the 38 licenses that have gone away in the last two years. Have they done that?”

Town planner Patrick Church said the staff has gathered some of the information but haven’t contacted everyone who gave up a license. He said of the 38 licenses that were relinquished in the last two years, 20 of them were renewed. The other 18 lapsed and he said some of those homes had people move into them full-time or part-time as second homes. Others he said seemed to be purchased as an investment.

Schmidt said the council and a citizen’s committee struggled for a year-and-a-half to come up with the 212 STR cap compromise that went into effect in 2018 and it seemed to be working well. “Most other mountain communities don’t have a cap and I believe Telluride has more than 800 STRs in their community,” said Schmidt. “We’re ahead of the curve in some ways.”

“What’s the harm of a moratorium?” asked Merrill.

“It could hurt revenue to the town including revenue generated for affordable housing,” said Schmidt.

“Who are you advocating for?” asked councilman Will Dujardin.

“I’m advocating for a year-and-a-half process that reached a good compromise and works,” said Schmidt.

“We’re trying to pump the brakes to look at ways to get more data and provide long-term housing,” said Dujardin.

Councilwoman Mallika Magner provided statistics indicating the average price of a house was now at about $2.4 million in Crested Butte. “That would require an $8,000 per month mortgage. It is hard to believe a long-term renter would go to such a house,” she said. “We’re in crisis and the most important thing to do is house people. That’s where our resources and effort should be.

“The harm is that valuable staff resources that are already stretched thin will go to another study,” she continued. “We already know housing is a burning issue and we are tapping staff out.”

“I assume these people are paying cash and don’t have a mortgage,” said Merrill. “And I want a living, breathing person buying houses here, not an LLC.”

“If this decreases prices 20-percent and the average house goes down from $2.4 million is there a working person who can then buy a $2 million house?” asked Magner.

Dujardin then pointed out that Magner had her house on the market and perhaps she might want to recuse herself from the discussion because of a potential conflict of interest.

A startled Magner said she would consider it if the town attorney advised her to, but she was shocked and hurt by the insinuation she was making the decision based out of self-interest. The town attorney did not weigh in on the matter at the meeting.

Yemma again emphasized the moratorium was considered a tool in the affordable housing toolbox.

“If it generated additional housing it would be a different story,” said Magner.

Resident Kat Loughan said the population and situation was different when the 212 cap was implemented and the council appeared short-sighted to not consider the action.

Property manager Steve Ryan was part of the citizen’s committee that came to the compromise and he said the data has showed there is no correlation between STRs and long-term rentals. “People who buy the homes want the opportunity to use them when they want to come here and be part of the community so they can’t long-term them,” he said. “If short-terming isn’t an option, our owners have said the houses will sit dark.”

“This economy increased the haves and the have-nots during the pandemic and it’s changing the town,” said Merrill. “If the moratorium allows your clients to not lose their license and we learn more it could be a good idea. Plus the optics are better.”
“So optics are worth losing revenue for the affordable housing fund?” asked Ryan.

“This is a pause that gives the staff a chance to learn,” said Cole Thomas. “Maybe at the same time the town rewrites the STR regulations and makes some changes like charging a lot more for a license. The annual $750 is pretty cheap. Attach some potential solutions to the moratorium.”

Luz Spann-Labato said she came from New Jersey and was afraid Crested Butte is heading toward the super expensive communities that no working person can afford. “I don’t want Crested Butte to end up like so many towns without a heart,” she said. “Focus on what Crested Butte is all about — the locals and the originality. Keep it what it was and sort of still is. Don’t let CB turn into an exclusive Jersey town.”

“There is no way to keep Crested Butte the way it was when I got here with 400 residents,” said former realtor and long-time resident Cathy Benson. “There is already a bit of a moratorium with the 212 cap. Study what’s happened as a result of that. Look for creative ideas like making ADUs (accessory dwelling units) mandatory when someone builds a garage in town. A moratorium won’t solve what you are trying to solve.”

“What a moratorium might do is perhaps keep some local constituents from being kicked out of their house for a year,” said Cass Rea.

“We won’t understand the buyer’s market unless an STR license is not even a possibility,” commented Beth Goldstone. “That’s different than the current situation. And it shows that Crested Butte cares about community and not just investments.”

“The bottom line is we are losing our community. The moratorium sets the expectation that the community wants people living full-time in town,” said resident Jim Starr.

“It is a small gesture and small step toward giving some of us hope,” said Adam Maestle. “Things are absolutely not okay right now.”

Kent Cowherd suggested the moratorium could provide an opportunity for STRs to be tied into the in-deed program that will pay to convert some existing homes to deed restricted units. He also said the allowance of renting a home for 31 days is not being considered a short-term rental and should be evaluated.

Councilman Chris Haver said the whole discussion had left him with more questions than answers but he was willing to move to the next step.

Whelan advocated setting the moratorium proposal for a public hearing at the July 19 meeting. The council voted 6-1 to proceed with that action with Schmidt voting against the motion.