Denver City Council Approves Tougher Short-Term Rental Rules

At its weekly meeting on March 31, Denver City Council approved updated rules for short-term rentals that city officials believe will make it harder for people to cheat the system.

Crafted by the Denver Department of Excise and Licenses, which regulates short-term rentals, the rules bolster the requirement that a home or apartment listed on a short-term rental platform like Airbnb must be the owner's primary residence.

"Our goal is a higher compliance rate of people following the important primary residence rule in Denver, which is a critical part of Denver’s effort to have responsible short-term renters and prevent investors from lowering the housing stock by buying up investment properties to short-term rent and operate mini-hotels in neighborhoods," Eric Escudero, a spokesperson for Excise and Licenses, had previously told Westword.

As of February 19, there were 3,773 active short-term rental licenses in Denver.

"Unfortunately, we continue to see cases of people trying to skirt the spirit of the primary residence requirement or trying to find a loophole," Escudero had said. "We believe adding factors will make it more difficult for those trying to find loopholes and add protections for those with unusual circumstances who are legitimately trying to follow the important rules."

Until this latest change, the city had defined a primary residence as "a residence which is the usual place of return for housing as documented by at least two of the following: motor vehicle registration, driver's license, Colorado state identification card, voter registration, tax documents, or a utility bill."

The update changes that definition to "the place in which a person’s habitation is fixed for the term of the license and is the person’s usual place of return." With council's approval, Excise and Licenses also added to the code other factors the department may consider when reviewing a short-term rental application, including how often an applicant lives at the short-term rental property, and whether an applicant uses another home for "domestic, legal, billing, voting, or licensing purposes."

Additionally, the department can look at legal documents or tax assessment records and an applicant's employment and income sources to spot inconsistencies on an application. It can also consider how often a short-term rental is rented out.

The rules update does not specify the exact number of days a person must reside in a home for it to be categorized as a primary residence. Some municipalities, such as Colorado Springs, have mandated that short-term rental operators must occupy their home for at least half the year. But Denver officials say they skipped this option after getting feedback from short-term rental hosts serving on the city's Short-Term Rental Advisory Committee.

"We heard really clear that a hard black-and-white, one-size-fits-all, 183-day requirement wasn’t a good fit for Denver, because everyone has unique circumstances," Erica Rogers of Excise and Licenses said at a January committee meeting.

In Denver, numerous short-term rental owners have either had their licenses revoked or given them up voluntarily after the city claimed they weren't using their short-term rentals as their primary residences.

A handful of short-term rental operators have been charged with felonies after being accused of lying on their applications. One defendant had his charges dismissed; some of those cases are ongoing.

In addition to the primary residence requirement changes, the update to the short-term rental rules increases short-term rental application fees from free to $50 and the annual licensing fee from $25 to $100.

City officials say that the fee increases will help Excise and Licenses cover regulation and enforcement costs.

Like just about every other business, the short-term rental market has been rocked by the coronavirus crisis; Airbnb is offering full refunds for guests who cancel because of the pandemic, and has also reserved $250 million to partially reimburse hosts who are losing money from these cancellations.

Denver City Council, too, has made emergency provisions: At its March 23 meeting, it approved action allowing virtual meetings...but twelve of the city's thirteen councilmembers appeared in person at the March 31 meeting.