Saturday, April 18, 2015

Denver is Getting it Wrong on Short Term Rentals

Mary Beth Susman and Denver City Council are looking at the issue of short term rentals in the city because the zoning department has reported a total of 9 complaints about them.

Since 1956, it has been illegal to rent homes and apartments for less than 30 days.

With the popularity of  websites like Airbnb, there are 1000 landlords in Denver currently flouting this law.  Since it is such an obscure law, most landlords have been unaware of it.  The nine with complaints have been threatened with fines up to $52,000/year

Council is considering changing the law under the condition that the rental is the landlords primary residence.  I don't know where this strange condition came from, maybe some other city thought it was a good idea, and Denver is trying to copy their model.

When questioned about it, Ms. Susman, the chairman of the Sharing Economy Committee, said:

"Homeowners may operate one dwelling unit for rental periods of less than 30 days.  This unit must be part of their primary residence.  The reason for this is if a nonresident investor is allowed to offer multiple dwelling units for short term, then those units are out of the city's inventory of affordable long term rental housing.  The result of that is higher rents across the city."

It sounds logical at first, but there is absolutely no data anywhere to support this assertion.

Councilman Chris Nevitt said, "I don't see embracing a new model of lodging that doesn't play by the same revenue rules as the old model of lodging," .   "We are here to embrace new models of business, but we aren't here to pick winners and losers."

Chris, do you understand what "disruptive business model" even means?  Instead of supporting the aging status quo, consider what Long Beach did when the new Uber-style taxi companies began taking away business from the old-guard, regulated taxi companies.  They loosened the old regulations!  Smart.

So I'm just urging Council to gather and then consider only facts, not write laws that address fears.

Here's what might really happen - If investor short term rentals are truly as profitable as everyone thinks they are, then many more will be built in all the zones where additional units can be built.  This increased supply could drive down prices for short term rentals to the point where these new units are returned to the long term rental pool! Remember, I'm just speculating.  Council, please don't write laws based on speculation.

The "primary residence" requirement is the newest in a long history of specious arguments for various zoning regulations.   I'll list a few:
  • "We must provide 1.5 parking spaces for every dwelling unit in the city or parking citywide will be awful."  (This was true in all zones until changed in 2010)
  • "We must not allow more than three unrelated adults to reside in a single dwelling unit or the neighborhood will be horrible."  (Also changed in 2010)
  • "We have to provide tons of parking at the light rail station and prevent parking in the nearby neighborhood or else parking will be awful." In fact, increased transit ridership reduces parking requirements citywide.
  • "We must not allow rentals of less than 30 days or else the neighborhood will go to hell." (This probably will be changed because there are 1000 illegal short term rentals in the city and only 9 related complaints)
We turned up the following document from the City of Colorado Springs website.  It indicates that the Springs is proud of their tourism heritage and trusts its residents to self regulate short term rentals.  Apparently Denver City Council doesn't trust us to act like adults.

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