Short-Term Rental Hosts, Industry Leaders Want Changes in Proposed Denver Regs

Leaders representing Denver’s short-term rental industry, who feel that their concerns have gone unheard, held a roundtable discussion Wednesday morning to present new data and discuss a Denver City Council proposal that they say would significantly constrain STR owners, especially those renting out secondary properties.

STRs have been a point of controversy in Denver, with neighbors complaining about negative effects on the community.

In contrast, advocates argue that they help hosts pay their bills and support the local economy. A study released in February by the University of Denver reported that STRs brought in $21 million a year in ancillary spending.  

As we reported in our December cover story, "The Inn Crowd," councilwoman Mary Beth Susman has been working for a year to craft an ordinance that would regulate the industry. That proposal will go before the council for a second reading on June 13, and the May 4 gathering — which included hosts as well as industry representatives — was part of a push to alter the proposal before then. As it stands, a provision calls for hosts to only use primary residences for STRs. If passed, hundreds of hosts would be forced underground when renting out secondary properties, and Denver would lose out on tax revenue, according to Matt Curtis, government-affairs director for Homeaway, an online advertising platform for whole-house STRs. 

The business might go into what Curtis calls a "cottage industry," where hosts have their guests sign a 31-day lease that is then terminated once their stay is finished. 

Cities like San Francisco and Portland have strict regulations comparable to the ones on the table now in Denver, he adds, and they have seen compliance rates as low as 10 percent. Curtis suggests Denver instead look at Nashville, Galveston and towns along the Coachella Valley that have achieved high rates of compliance.

"We like to look at best practices, and those are just some of the examples,"Curtis says. "But can you have a conversation about best practices and what will work for the people engaged in the activity without bringing all the stakeholders together? That’s one thing we want to make absolutely sure this city council does before going any further and having further discussions.... We want to get all the stakeholders at the table.”

In 2006, Homeaway bought VRBO, which was founded in Denver; the Mile High City is considered “the birthplace of the industry,” according to Curtis. But the Denver proposal would put an end to that, and Curtis says that only one STR player — Airbnb — has been consistently invited to the discussion regarding regulations.

“The Denver City Council is regulating to create a monopoly,” says Shahla Hebets, president of the Denver Short-Term Rental Alliance. Hebets's group has over 100 members who rent out mostly secondary properties; it was organized last year in response to Susman’s work.

At the gathering, Hebets presented data from a recent poll of 447 people that found that 71 percent of Denver residents think having a small stock of STRs is beneficial to the economy, 67 percent agree with regulations, and only 27 percent want to see short-term rentals banned. Hebets says the proposed regulations come in response to a small, vocal group of residents “worried about the unknown;" she feels that the facts don’t support the measure.

Although Susman has been working on the proposal for over a year, the opposition took a while to organize. Brian Egan, co-founder and CEO of Evolve Vacation Rental Network, says the primary-residence provision really caught the attention of this portion of the industry.

And while council backers may think the proposal is conservative, the result will “eliminate your core group of constituents who have been in this business and performed more of these transactions than anybody," Egan says. "To cut them out of the equation is not conservative. It’s actually a risky approach to introducing short-term rentals on a regulatory base in Denver.”

Secondary-homeowner hosts want to be in compliance, the industry leaders say, but they want the new measure to be fair. “This is a group of people who want to be in compliance, who want to be regulated," Hebets says. "This decades-old rule that isn't relevant today is something that most people want to come out from."

City council will hold a first reading of the proposal on Monday, May 16, with a second hearing June 13.