Denver Wants to Penalize Platforms Allowing Unlicensed Short-Term Rentals

Denver has been bolstering its short-term rental regulations.EXPAND
Denver has been bolstering its short-term rental regulations.
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As part of its ongoing efforts to regulate the local short-term rental industry, the City of Denver wants to create a financial penalty for platforms that book stays at unlicensed rentals.

"Denver has been asking the major platforms to prevent bookings at unlicensed short-term rentals since 2017 to help us achieve our compliance goals, but we have not seen any voluntary compliance from these platforms. Thus the law is necessary to ensure such booking-service providers are accountable if they are profiting from illegal activity," explains Eric Escudero, a spokesperson for Denver Excise and Licenses.

On November 23, Denver City Council will vote on an ordinance proposed by Excise and Licenses that would create a $1,000 fine that could be applied to operators such as Airbnb and VRBO each time they book a stay at an unlicensed rental.

Other major cities have established financial penalties for non-compliant platforms. Chicago, for example, has fines that range from $1,500 to $3,000, while Seattle fines violators between $500 and $1,000. Denver is looking at a $1,000 fine.

The Denver ordinance won't specify how platforms must remain in compliance in order to avoid fines. However, the city is suggesting that platforms require all hosts to enter their license number, then verify the validity of that license before allowing a host to post a listing, and also deactivate or remove listings that don't have a license number or display an invalid license number.

As of November 12, there were 2,009 active short-term rental licenses in Denver, down from 2,575 active licenses in mid-March, just as the COVID pandemic locked down the city.

Denver began licensing short-term rentals at the start of 2017. Since then, Excise and Licenses has fielded complaints from neighbors about problematic short-term rentals that often focus on noise, trash or parking issues.

"We’ve found over and over again that the problematic short-term rentals are either not licensed, or they’re not being operated by a primary resident," Molly Duplechian of Excise and Licenses said at a November 4 council committee meeting.

Although Airbnb has shown a willingness to sue municipalities that enact platform accountability measures, that doesn't seem likely to happen in Denver. (Airbnb did not respond to a request for comment.)

"The booking service providers, we’ve been in close conversations with them," Duplechian said. "They’ve stated they’re in support of this change and are willing to be partners toward compliance. They just expressed that they wanted to see that all booking platforms are held to the same standard."

Short-term rental hosts who serve on a short-term rental advisory committee for the city expressed support for the proposed ordinance at the November 4 meeting.

"I think this is a really good thing. I think that we hosts will not be competing as much with people who aren’t following the rules," said Buffy Gilfoil. "As a homeowner, I’m really glad that we’re less likely to have unregulated listings where things get out of hand."

Added Susan Bailey: "I believe the i's have been dotted and the t's have been crossed to get to a model that is a workable model for the city and for hosts and for platforms."

Earlier this year, council approved tougher rules for short-term rentals that were designed to make it harder to cheat the system. The rules bolstered the requirement that a home or apartment listed on a site like Airbnb must be the owner's primary residence.

The ordinance came over a year after Excise and Licenses began aggressively pursuing short-term rental operators that the department believed were using non-primary residences for short-term rental purposes. The Denver District Attorney's Office got involved with enforcement of the ordinance in 2019, charging four short-term rental hosts with the felony of attempting to influence a public servant for making allegedly false claims about their primary residence on an affidavit.

In December 2019, DA Beth McCann's office dismissed one of the felony charges, with prosecutors expressing their belief that they didn't have enough evidence to win a trial. This summer, the DA's office dismissed the charges against the other three individuals, citing the pandemic and a desire to focus on violent criminal cases, according to BusinessDen.

In January 2020, two short-term rental hosts surrendered their licenses after their homes were reportedly used by renters to throw parties that both led to gunfire.

Under Level Red COVID restrictions, of course, even parties without gunfire are problems these days.

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