While Denver Drafts Short-Term Rental Rules, Here's What Other Cities Have Done

Municipalities across the country are navigating the uncharted waters of the sharing economy, struggling to determine when, how and even whether to regulate mom-and-pop ventures. These days, the biggest struggles focus on seemingly grassroots businesses backed by internationally renowned corporations that provide users a platform for renting and selling their own property and services, including Uber and such short-term-rental offerings as Airbnb — and Denver’s a little late to the house party, as we report in the current cover story, "The Inn Crowd."

Colorado Springs has already decided to put no limits on the number of STRs in the city, but requires property owners or managers to obtain a license and pay taxes on nightly stays. No signage can be posted advertising an STR, explains a city-produced document on STR rules in the Springs, which also advises hosts on how to talk with neighbors about their operation and asks them to be respectful. 

In November, Aurora approved legislation that would require STRs to obtain a $38 tax license that must be renewed every two years for $25. Property owners/managers must pay the city a per-guest lodging tax of about 8 percent.

Boulder City Council recently approved allowing STRs, but only for 120 days a year — and residents then voted to impose a 7.5 percent lodging tax on STRs. (If this measure had not been approved, the former provision would not have taken effect.) The tax applies to property owners only and does not detail regulations for secondary properties or long-term tenants renting a property.

In Colorado’s high country, where there are an estimated 14,000 STRs, Vail has recently tightened the rules for short-term rentals. According to sales-tax administrator Sally Lorton, the City of Vail has always required STRs to obtain a free tax license and then pay 9.8 percent per night of lodging, which goes toward city, county, state, sales and Vail Local Marketing District lodging taxes; as of July 1, 2015, that tax license number must be posted on the hosting platform profile so that the City of Vail can better track STRs. Lorton says the new rule has had a very positive effect, and that other towns in the area are following suit. And starting sometime in 2016, property-management companies that are not based in Vail will be required to purchase a business license in order to engage in short-term rentals; 6,380 postcards were sent to all of Vail’s property owners, letting them know of impending changes.

Across the country, other cities and states are trying to come to grips with the ramifications of short-term rentals.

Since 2011, it has been illegal to rent a whole dwelling — whether single- or multi-family — for fewer than thirty days in New York State (unless the visitor is a relative of the owner); a private or shared room in a dwelling can be rented for shorter stays if the owner or tenant is on the premises. Eric Schneiderman, the attorney general of New York, has been in and out of litigation with Airbnb since at least 2013, when he issued a subpoena for the company to hand over client information so that the state could go after illegal hotels, some of which were making millions by renting entire apartment complexes.
A settlement reached between New York and Airbnb in May 2014 requires Airbnb to send New York hosts a notice informing them of state laws. At the end of that notice, Airbnb suggests that hosts seek a local lawyer or tax person in order to better understand the laws, then assures them that the company will do its utmost to keep the privacy of its clients intact. But there are exceptions to that rule.

Early this month, Airbnb released information on 36,000 active listings in New York. Roughly 55 percent, or 17,942, were rentals of entire homes or apartments — most of them illegal, according to the New York Post. The remaining 45 percent were for private or shared rooms, which are allowed under New York law. The average unit was rented for 42 nights a year, for an average take of $5,110 a year, according to Airbnb. The New York City Council is considering a bill that would impose a minimum penalty of $10,000 on all illegal STRs.

Portland, Oregon, has two levels of STR permits. One allows a host to rent two or fewer rooms in a property where the host lives for at least 270 days out of the year; the hosts must notify neighbors in writing that they are applying for a permit, and each room must have a smoke detector and fire extinguisher. Rentals of three to five bedrooms must adhere to the same conditions, as well as other criteria. Anybody renting six or more rooms must go through additional zoning requirements. In all cases, a Transient Lodging Tax of about 11.5 percent is applied to nightly stays, and a quarterly tax report must be submitted by the host.

Last year, San Francisco’s mayor signed an ordinance allowing short-term rentals, but with some limitations and registration requirements. Property owners and tenants living in a house or an apartment for 275 days or more can rent out their space for fewer than thirty days an unlimited number of times when they live on the property — but a maximum of ninety days annually if they are not in residence. Hopeful hosts must jump through some hoops, though. First, they need to submit a registry application with a check for $50 (good for two years).

The application must be submitted in person, and the applicant is required to meet with a staffer at the Office of Short-Term Rentals and bring eight documents. Among them is proof that the host has liability insurance of at least $500,000, or proof that the hosting platform provides such insurance. The property cannot have any outstanding city code violations.

Airbnb spent $8 million fighting Proposition F, an ordinance on San Francisco’s November 2015 ballot that would have limited any and all STRs to 75 nights a year and required them to pay hotel taxes and follow city code. One of the company’s campaign ads read: “Dear Parking Enforcement, please use the $12 million in hotel taxes to feed all expired parking meters. Love Airbnb.” The company later apologized for the sarcastic ads; the measure failed.