Mt. CB council struggles to nail down STR license fee

“Our purpose is to establish a baseline”

By Kendra Walker

The Mt. Crested Butte Town Council attempted to set the fees for town’s short-term rental (STR) licensing program during their January 7 council meeting, but was unsuccessful in achieving a majority vote and will try again at the January 21 meeting.

Council has already enacted Ordinance No. 9, Series 2019 to create a licensing program to regulate STRs in town, and the next step is to adopt the fees for the licensing, regulation and inspection of those STRs based on town administrative costs and time.

“With the growth of rental by owner throughout the community, we found it necessary to establish a short-term rental licensing program,” said town manager Joe Fitzpatrick, “first of all, primarily for life safety issues to ensure that places that are used for short-term rentals have things like carbon monoxide detectors, smoke detectors, fire extinguishers and proper access to egress.

“The VRBO challenges throughout the community include things like parking issues, need for local contact, impacts on neighborhoods with parties … trash and recycling challenges. All of those things put together, we need to get a better control and better handle of what’s going on with short-term rentals throughout the community.”

Fitzpatrick explained that after looking at other STR licensing programs, staff has estimated an initial annual cost to run the licensing program for 2020. “The STR license from town’s point of view is just the cost of the license whether you’re a condominium or single-family home,” he said. “The fee will be reviewed annually once we have an actual year under our belt. Understanding what it really does cost for administrative time, etc., we will be able to adjust the fee.”

Staff has suggested a $200 fee for each short-term rental unit that is not a hotel (based on approximately 867 non-hotel STRs in town) and a $500 fee for each hotel, the Elevation and the Nordic Inn. For comparison, the Town of Crested Butte has a two-year rolling license that requires two years of fees paid in advance at $1,500 the initial year, and $750 each following year.

Because each hotel has only one owner, town will inspect a sample of the hotel rooms. “If we start inspecting a sample and find problems, then we’ll inspect every one,” clarified Fitzpatrick.

However, based on public input letters and comments received prior to the January 7 meeting, council members had some issues with charging owners an inspection fee as part of the license cost when units vary so much in size. Additionally, many STR owners already pay for and go through an inspection by a management company, like Crested Butte Mountain Resort for the Grand Lodge.

“If I put myself in their shoes that’s a tough nut to swallow,” said council member Michael Bacani.

“It’s similar to a business license,” said Fitzpatrick.

“To me in my head it’s not,” replied mayor Janet Farmer. “My building that’s so heavily inspected versus some home that might take a lot more time … I have issues charging everyone the same amount.”

“But the inspection is only a portion of that budget,” said Fitzpatrick. “There are multiple different managers within that building … We won’t know until after we’ve been able to go through all of these units and see if any of these violations exist. Once we’ve been through we’ll have answers to that and we can adjust accordingly.”

He continued, “In the first year the goal is to share the burden of the cost evenly across the board. It gets extremely complicated to figure out a fair distribution for all these different complex configurations.”

Public comment

Many Mt. Crested Butte STR owners attended the meeting and council opened the discussion to public comment.

Joel Benisch, owner in the Grand Lodge West who also serves on its HOA board, explained his issues with including an inspection fee in the short-term rental license. “Everything you’re talking about charging us for is already done as part of our HOA dues.”

“Are you advocating for a reduction in the fee or for remission from the program?” asked council member Roman Kolodziej.

“The [inspection fee] would be a duplicate payment on my part … because we’re already paying for it through our HOA dues and providing adequate documentation,” said Benisch.

“Could there be an option to have your STR privately inspected?” council member Nicholas Kempin asked Fitzpatrick.

“We’re not suggesting it or recommending it,” said Fitzpatrick.

Town attorney Kathleen Fogo offered additional clarity, “One of the issues that has come up is life safety, but also where are people planning on putting people.” She explained that units often have lofts or futons that get included in the room/pillow count that shouldn’t be. “I don’t think it’s necessarily a standard inspection,” she said. “That is one of the main reasons the town wants to see the units.”

Kim Aronson, owner in the Grand Lodge East and member of its HOA board, suggested town charge the STR units per square foot or have all the CBMR-managed units at the Grand Lodge be charged $500 collectively, as if a hotel. “If they are not, they have to pay the individual [$200] tax,” she said.

Barbara Haas pointed out that owners being managed through CBMR aren’t allowed to bring in additional furniture, pillows or décor to their units that haven’t been provided by CBMR. “We really count on CBMR to do the maintenance. We’re paying 50 percent [of the nightly rental fee] basically for that. We don’t have the option. We’re totally different from a home. CBMR keeps very good track of us.”

“It does seem like there could be a mechanism for a third-party inspection,” said Kempin.

“How can we say CBMR is doing a good job but Crested Butte Lodging isn’t?” said Kolodziej. “We have no way to base that.”

“We’re establishing a baseline. We’re not going to inspect every year,” said Fitzpatrick.

“People don’t always tell the truth,” said Fogo. “The goal is safety and also the proper taxes being paid for what they’re renting. People will rent a two-bedroom unit as a three-bedroom unit. We’re trying to protect people and we’re also trying to protect the town.”

“While I still think there’s a lot of huge questions here we have the opportunity to go with this for one year and evaluate,” said Farmer. “I would charge the hotels more,” she added before voting on the resolution.

With council member Dwayne Lehnertz absent from the meeting, council was split with a 3-3 vote, which ultimately killed the resolution to set the STR license fee. Council members Steve Morris, Kolodziej and mayor Farmer voted yes; council members Koelliker, Bacani and Kempin voted no. Staff asked for more direction, as the licensing program has already been enacted and a fee needs to be set as soon as possible.

“I would like for the opportunity for the inspection to be carried out by a third party,” said Koelliker.

“We are attempting to protect the town by doing the inspection as a town,” replied Fitzpatrick. “We have a building department, we have a building code that we live by. Our purpose is to establish a baseline. We need to do the inspection, not the third party.”

By the end of the discussion, the majority of council appeared amenable to the $200 STR and $500 hotel license fee figures if staff could clarify that the fee, especially the inspection portion, will be revisited annually. “It will look like it does tonight with the addition of that sentence,” said Fogo.

With mayor Farmer out of town for the upcoming January 21 meeting, council faces the possibility of another split vote.