Denver Short-Term Rental Proposal for Airbnb and Beyond: Possible Changes

Two councilmembers have proposed amendments to the controversial short-term-rental regulations proposal that's been making its way through the city since last year and on March 30 landed at the council's Neighborhoods and Planning Committee meeting.

The current proposal, spearheaded by councilmember Mary Beth Susman, has riled up Denver's STR host community because it includes a primary-residence requirement. Right now STRs are illegal under Denver's zoning code, but those rules are often unenforced; Susman's measure would tax STRs and enable Denver to enforce delinquent rentals. Two councilmembers want to take the regulations even further.

Councilmember Kevin Flynn wants to keep all of the provisions in Susman's proposal, "but elevate it into a use overlay in our zoning ordinance," he told the committee, "so it doesn't automatically apply as a blanket, one size fits all."  Under this amendment, individuals, groups or companies could apply to have an area zoned with a use overlay that would allow STRs. Flynn thinks industry groups, such as Airbnb or VRBO, will apply for these use overlay zones since they know best where their hosts are concentrated; an application would go though the city's normal rezoning process. And Flynn says he's open to not including the primary-residence requirement, if that's what the applicants and neighborhoods decide.There are an estimated 2,000 STRs in Denver, many of them concentrated in areas like downtown, Five Points or Highland. Flynn estimates that District 2 in southwest Denver, which he represents, has only about twenty STRs. And ten to one, neighbors don't "even want a well-run STR next to them," he said. 

"At this moment, probably 500 people are running stop signs in Denver, and we're not ticketing them. But I'm not proposing we take down the stop signs," Flynn said at the committee meeting — adding that he wanted to slow down the STR proposal process in order to ask whether Denver wants STRs in the first place — "and if so, where do they belong?"

Currently the zoning code has different use overlays, allowing some areas to have billboards or adult stores, for example. But Abe Barge, senior city planner, explained that the zoning code prohibits the addition of any new use overlays; for Flynn's proposal to work, council would have to vote to approve striking that prohibition from the code and then approve the actual use overlay.

"The philosophy is that we addressed permitted uses within zone districts," Barge told the council committee. "And there's a real hesitation to start saying restaurants are not permitted in this overlay, or convenient stores aren't permitted in this other overlay, and that it would be much better to address those fundamental issues, which really apply to broad areas of the city or use within the city in the underlying zone district." 

Flynn cites homeowners' associations as another impetus for his program. There are about 850 active HOAs in the city, he told the committee, and no one knows which ones have language in their guidelines that address STRs. By legalizing STRs city-wide, council could be causing conflict between residents and their HOAs, argues Flynn.

If his amendment is added to the proposal, he hopes that whoever applies for a use overlay boundary would do their due diligence and draw the boundary to exclude neighborhoods where the HOA doesn't allow STRs. "We are licensing them to do an activity that they, by private contract, are prohibited from doing," he says.  "We are creating a problem by throwing a blanket across rezoning the city."

Councilmember Rafael Espinoza, who represents District 1 in northwest Denver,  has been advocating for the use overlay "as a tool that we should have in our tool box." Espinoza told his fellow councilmembers that he sees Flynn's proposal as a good way to get use of that "tool."  

But Susman told the committee that she fears a use overlay would remove the process from zoning. "The proposal to me, it seems, is the beginning of zoning by democracy," she said. "We would forfeit our very essential zoning process and have it done by vote of the people, so I think that's part of my concern."

Flynn responded by noting that his proposal would help "empower neighborhoods" that don't want STRs at all, like his own; he said he wants something in the proposal to help protect those residents.

Responded Susman: "I think if we do nothing, and do not regulate this and try to get our arms around it and dive in, it will thrive, it will thrive unchecked, unregulated, untaxed, and it has been our experience that it has, because of the growth of it."

District 10 representative Wayne New proposed another amendment as a compromise to the primary-residence requirement; it would still only allow one license per person, but it would allow that license to be attached to a secondary property. 

"It also allows fair participation by all of the short-term-rental companies," explained New, who said he is worried that Susman's proposal would limit some of the primary industry players; VRBO, one of the STR platforms, lists mostly whole houses that are often a host's secondary property.  "So I think being fair to everyone would be good," he continued. "Also, rental income means a lot to a lot of people, especially right now."

New said he'd surveyed his district, which includes Cherry Creek, to determine neighborhood sentiment: 82 percent of those he surveyed said they were not affected by the rentals in residential areas but did want them regulated by the city;  61 percent agreed with the primary-residence requirement and just over half do not want people hosting up to two properties. Seventy-three percent said renters should not be allowed to run an STR, and 78 percent said hosts should be identified on their online listing, another requirement of Susman's proposal.

Both Flynn's and New's proposals are substantial enough that they would need to be introduced individually, as opposed to becoming amendments attached to Susman's bill, according to City Attorney David Broadwell. The representatives could file their proposals as regular applicants, as Susman did, and they would then go through the lengthy process of committee hearings, public outreach and hearings before Community Planning and Development and the Planning Board.

However, councilmembers do have the power to file zoning code amendments directly, bypassing the whole process, Broadwell noted. Flynn said he plans on taking that approach when Susman's proposal moves to the full council for a public hearing and vote on June 13.

The council committee will meet again April 13.