City officials are proposing updated rules for short-term rentals that they believe will make it harder for people to cheat the system.
The Denver Department of Excise and Licenses, which regulates short-term rentals like Airbnbs, wants to further bolster the requirement that a home or apartment listed on a short-term rental website must be the renter'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, writes to Westword in an email. There are about 2,700 active short-term rental licenses in Denver.
The city has 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 proposal, which must go through a public comment period and be approved by Denver City Council and the mayor in the coming months, would change the primary residence definition to "the place in which a person’s habitation is fixed and is the person’s usual place of return" and adds factors the Department of Excise and Licenses may consider when reviewing a short-term rental application.
"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 writes. "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."
The new factors include how often the applicant returns to the short-term rental property or resides at another location. The department would also be able to consider whether the applicant uses another location for "domestic, legal, billing, voting, or licensing purposes." Additionally, the department could look at any legal documents or tax assessment records to spot inconsistencies with addresses and other personal financial information, like the applicant's employment and income sources. The department could also look at how often the short-term rental has been or will be rented out within a calendar year.
The proposed ordinance update does not specify the exact number of days that a person must reside in his or her own home for it to be classified as a primary residence. Some cities, like Colorado Springs, have said that short-term rental operators must occupy their home for at least half the year. Denver officials say they decided against this option after receiving feedback from short-term rental operators serving on the city's Short-Term Rental Advisory Committee who said they preferred moving ahead without a specific number of days.
"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 14 committee meeting.
At that meeting, some on the committee questioned the proposed rules, like the one allowing the department to consider how many days a short-term rental will be leased out.
"I don’t know why that should stand when we don’t have a restriction on the days anyway," said Erin Ganser, a short-term rental operator.
Another member of the committee, real estate agent Sabrina Zunker, said that she'd like to see fewer onerous requirements placed on potential or current short-term rental operators.
"They want more freedom and not more restrictions," Zunker said in reference to the short-term rental operators that were in the audience.
In early 2019, the Department of Excise and Licenses and the Denver City Attorney's Office held the first administrative hearing to revoke a short-term rental operator's license for alleged violations of the primary residence requirement. During the hearing, the city and owner Garth Yettick argued about how much time he spent at the home and whether he actually lived somewhere else. Yettick's license was eventually yanked after the department determined that he wasn't using the short-term rental house as his primary residence.
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Excise and Licenses is holding two similar hearings this week regarding alleged violations of the primary residence requirement, including one over a short-term rental property that was the scene of a massive Halloween party and gunshots on November 1, 2019.
As part of its enforcement of the primary-residence requirement, in March 2019 the department began mailing affidavits for license applicants and operators to sign to affirm that the property they were applying for or were already renting was their primary residence. According to Escudero, hundreds of people have since given up their licenses or pulled their applications. Since last summer, the Denver District Attorney's Office has accused four operators of lying on their affidavits.
Excise and Licenses also wants to increase fees for short-term rental applications and licenses, which are free and $25 annually, respectively. Excise and Licenses is proposing a $50 application and $100 annual licensing fee.
"These proposed increases in fees [will] more closely align with our costs for regulation and enforcement, but will still not cover all the costs entirely. Denver will remain with some of the lowest [short-term rental] licensing fees in the nation," Escudero writes.