September 19, 2018 News » Cover Story

The Springs looks to regulate Airbnbs, and other short-term rentals 

The Airbnb next door

click to enlarge Within reason, Brandon Behr says, people should be allowed to do what they wish with their property. - BRYAN OLLER
  • Bryan Oller
  • Within reason, Brandon Behr says, people should be allowed to do what they wish with their property.

Meetings of the Colorado Springs Planning Commission aren't generally a hit with the general public, but the one held on Aug. 16, in the frigid, air-conditioned Council Chambers of City Hall, was an exception.

Nearly every seat was taken, and some people languished in the back waiting for a chance to say their piece at the podium as the process dragged on for two hours.

The subject: the regulation of short-term rentals (STRs) — or what most people these days simply refer to as Airbnbs. STRs, which are rented on a number of platforms including the ubiquitous Airbnb and VRBO, can be any number of setups: a room in someone's home, a mother-in-law cottage, a converted garage, a trailer, a tepee, or an entire house. They're rented online, and have exploded in popularity as many shun traditional lodging, such as hotels. Yet, even as cities across the country have passed laws to control STRs' explosive growth, or at least contain their impact, the city of Colorado Springs has so far done nothing.

At the August meeting, the Planning Commission was asked to weigh in on a proposed ordinance (City Council has final say) that could change all that. The proposal, nearly two years in the making, limits the number of STRs per lawful dwelling unit and per property; bans STRs in trailers, tents and other mobile or temporary structures; requires that neighbors be given an emergency contact available 24/7; allows the city to shut down or suspend nuisance rentals; requires registration and the payment of applicable taxes; and sets forth a variety of other standards and rules meant to enhance safety and promote neighborhood tranquility.

The proposal is, to be frank, widely unpopular. While many people spoke "in support" of the ordinance, almost all had at least one gripe. As the meeting was wrapping up, one official drew laughter by noting, "I guess it's a good piece of legislation because no one's really happy."

A wide range of speakers told the commissioners what they did and did not like about the ordinance. Most were regular citizens, though some had familiar names.

Amy Stephens — yes, that Amy Stephens, the former Colorado House Majority Leader, bullied by fellow Republicans for helping to create the state's health exchange — got up to speak on behalf of the local Short Term Rental Alliance, pointing to what she felt were some overreaches in a proposed ordinance to regulate the uber-Millennial business model. She felt it was unreasonable, for instance, to expect an emergency contact to always be able to respond within an hour. She argued that a suspension or revocation of an STR permit was an overly harsh penalty for violations (such as noise). And she felt it unreasonable to expect travelers to know and respect the finer points of the city's fire code.

Sara Vaas, Chief Operating Officer of the Council of Neighbors and Organizations, politely told the board that she believed all voices had been heard in the creation of the proposal, and that CONO appreciated that it included a local emergency contact that neighbors could call.

Trevor Dierdorff, the former chair of the El Paso County Republican Party, gave an impassioned speech opposing controls on STRs. Dierdorff noted that his adult daughter and her family paid student loans with the help of an STR in her home, and said he opposed limiting the number of STRs on a property.

"I'm all about individual rights and property rights, and shame on them for thinking they've got any business telling me what I can do with my property."

But most of the people lining up to speak were regular folks: People who owned STRs and people who lived near them. There were owners who claimed their STR was the nicest home on the block, and that it had led to neighborhood renewal and improved property values. There were others who spoke about what an important part of a person's income even a rented room could be — a way to support one's self in old age, or to put a kid through college. Others said that they loved running STRs out of their homes because it was a chance to meet new and different people and to make several times what they would on a traditional long-term rental.

On the other side, some said that STRs — particularly homes that are rented out and have no owner living on-site — had disrupted their neighborhoods. Strange people came and went. Renters lit up joints in front of their kids or made noise late at night. And, perhaps most importantly from the Planning Commission's perspective, they argued that they had bought their homes in areas zoned for homes and non-owner-occupied STRs were businesses. A person couldn't set up a liquor store next door, they argued, so why should they be allowed to set up "a hotel"?

One elderly man walked slowly to the podium and told the commissioners that the neighborhood where he had lived since 1973 was being slowly taken over by STRs as his neighbors — people he had known for decades, whose kids and grown up with his kids — died off. It was lonely, he said, and isolating and he feared being the last real "neighbor" on his block.

"This all comes down to money," he scolded. "Nothing have I heard about neighborhood stability."

Meggan Herington, the city's assistant planning director, says that initial planning for a city ordinance regulating STRs began in late 2016, when she put together a stakeholder committee to meet on the issue. At the time, the city had received some neighborhood complaints about STRs, and was aware that not all STR properties were paying the city's taxes. What's more, some bed and breakfast owners — irritated by the numerous laws and regulations they have to follow — had complained to the city about this new form of competition, which seemingly didn't have to meet any standards whatsoever.

An ordinance was intended to set some ground rules for STRs, protect neighbors from nuisance properties, help the city track the growth of STRs, and make sure STR owners were paying their applicable taxes.

Herington, it should be noted, appears to have done an expert job navigating shark-infested waters — passionate people on both sides had nice things to say about her. But she says that in a career that's spanned over 15 years, "This is one of the most difficult things I've ever had to deal with."

She started by looking at data from other cities and came up with a draft ordinance, assuming it would be submitted for approval to the Planning Commission and then City Council. In reality, however, it would be the first of three drafts — so far.

The first issue was that word got out about the proposed ordinance and both STR owners and their neighbors wanted more say in it. At the time, a single STR owner was on the stakeholder group.

Ryan Spradlin owns five area STRs, including his own home. He says he's both financially and emotionally invested in the business model, which he has long used himself to travel with friends and family. "I'm not going to lie, it's an awesome investment," he says. "You can't beat it from an investment perspective, but at the same time, having experiences where I meet these families who have come with multiple generations ... This is, like, fantastic. This is something that did not exist when I was a kid. We would struggle to find weird hotels with rooms next to each other when we would travel and meet up with our cousins and stuff."

Spradlin initially set up a Short Term Rental Alliance in the Springs with a Facebook page and blog. It was a place to share hosting ideas and best practices with a group of 10 to 15 people.

Around May, he caught wind of the city's proposed ordinance and put out the call that more input was needed from people like him. Spradlin wasn't the only one surprised to find out the city was on the verge of regulating STRs. Brandon Behr, a 33-year-old Realtor who is in the process of constructing an STR at his home, says, "We found out about it from a Realtor in Denver, if you can believe that."

News of the Alliance and the ordinance "caught on like wildfire," Spradlin says. The Alliance grew to around 175 members, and a GoFundMe (which was quickly fulfilled) was set up to raise money to hire a lawyer to give input on the process.

The STR owners were able to usher in changes over the next couple drafts of the ordinance. Most notably, the group successfully campaigned to remove a provision that STRs only be rented once every seven days, which Spradlin noted would have been nearly impossible to enforce, while creating a logistical nightmare for STR owners. Plus, he said, "It clearly favored the hotel industry."

Other notable changes included allowing someone other than the owner (such as a hired company) to manage STRs, refining the limits on STRs per property, allowing food (but no meals) to be served, and specifying that an emergency contact must be able to respond to the property within an hour (rather than 45 minutes).

"It's been a back and forth, and I think a positive back and forth," Spradlin says.

But many STR owners feel the proposed ordinance still goes too far.

Young, bright, and perhaps a little snarky, Behr takes a free-market approach: If the demand is there, he says, government shouldn't try to fight it. When asked about a central complaint about the industry — that STRs bring in far more revenue than traditional long-term rentals, meaning they could put further strain on the city's affordable housing inventory — Behr explained that some markets were simply too pricey for some people. He doesn't believe it's the government's role to correct that. But he says the larger issue is that few affordable housing units have been added as Colorado has grown, and he argues that the owners of what is estimated to be 1,200 to 1,500 STRs in the Springs shouldn't be held accountable for such a large problem.

What's more, he says, "You want to talk about affordable housing? A lot of people are renting out rooms because they can't afford to live here."

Behr adds that the government would be diving into some pretty odd territory by calling a short-term rental a business and a long-term rental a residence. He notes the cut-off between the two is often whether the property is rented out for 30 days or less, or 31 days or more.

"We don't feel like there's any difference, except one day, between a short-term rental and a long-term rental," he said.

And, in at least one case, a court has agreed with that logic. In June, the Texas Supreme Court overturned lower court rulings in favor of a homeowners association that had sought to limit a resident's short-term rental activity. The court found that the HOA could not impede the owner, so long as he "use[d] the home for a 'residential purpose,' no matter how short-lived."

Behr has other qualms with the ordinance. Prime among them: The proposal calls for an emergency contact to respond within an hour, but doesn't define an emergency. Is running out of towels an emergency?

To him, much of the ordinance is a solution in search of a problem. There were less than 15 complaints about STRs to the city last year, he notes. And Behr says long-term neighbors can also be a nuisance, and are tougher to get rid of. Plus, as another STR owner at the August meeting, Tavari Appieh, pointed out, a lot of STR owners have already made an investment, and are relying on that income.

"Even restricting STRs isn't going to restrict the growth of Colorado Springs," Appieh told commissioners. "...Rumors are, this is going to be the new California."

Of course, not everyone wants Colorado to become the new California. And not everyone is keen on the idea of turning traditional neighborhoods into the new headquarters for a sharing economy.

While Behr claims "the angry neighbors were well represented from the very beginning" in the stakeholder group, some of those angry neighbors beg to differ.

Michael Applegate recently joined with around 15 others to form the Neighborhood Preservation Alliance. He and others showed up at the August meeting with presentations warning the commissioners of dire consequences should the STR market be able to grow unfettered. Chiefly, the group wants two things: a ban on non-owner-occupied STRs and a cap on the number of STRs in the city.

STR owners — and Herington, for that matter — were surprised by the demands, with Herington saying that a ban on non-owner-occupied STRs was discussed briefly at the start of her process but quickly dismissed when no one showed an interest in it.

Applegate and his young family live in Holland Park, and across the street from an STR where he says large parties have occurred and renters have sometimes smoked pot directly in front of his kids. He remembers one man in particular, who smoked a joint on the porch every morning for close to a month while renting the place. Applegate says he didn't feel like he could talk to the man. While neighbors may compromise in the name of preserving the peace, he says this guy just saw the place as a hotel room. He didn't care who he pissed off.

That alone is enough to make Applegate dislike the STR model, he says, but there's something else too. "I have no idea who's there," he says. "... It's just this sense that that house is no longer a part of the neighborhood."

"It erodes the fabric of our community," he adds.

Applegate also believes that STRs could go from a small industry to a transformative one in the Springs — very quickly. He notes Airbnb is valued at up to $38 billion according to Forbes, which also noted that the company had 3.5 million listings at the end of 2016, 4.2 million at the end of 2017 and was expected to have 5.3 million by the end of this year.

The company, he says, is not concerned about his neighborhood; it's concerned about its bottom line. Bloomberg recently wrote that Airbnb had become increasingly litigious with cities that sought to control STRs or compel Airbnb to release data on them (many cities require registration of STRs).

Cities across the country — and the world — have been met with various struggles as STRs boom. New Orleans is in the process of addressing STRs, again, after they have put the squeeze on their rental market. New York has huge issues with illegal STRs. In Austin, the American-Statesman reports, code enforcement officers are busy every day ticketing illegal STRs, and neighbors are furious with the constant party taking place on their residential streets. The paper estimated that there were anywhere from 8,000 to 11,300 Airbnb listings in that city, though only about 1,900 were legal.

The tracking site InsideAirbnb.com recently published a study that accused Airbnb of being a tool of gentrification in New York City, noting 72 percent of hosts in black neighborhoods were white and that: "The loss of housing and neighborhood disruption due to Airbnb is 6 times more likely to affect Black residents, based on their majority presence in Black neighborhoods, as residents in these neighborhoods are 14% white and 80% Black."

A January 2018 study from the Urban Politics and Governance research group at the School of Urban Planning of McGill University found that in New York City, Airbnb had removed 7,000 to 13,500 housing units from the long-term rental market, increasing the median long-term rent in the city by $380.

In a city that is already struggling with affordable housing, Applegate asks: Do we really want to allow STRs to grow without limit? And there is evidence that cities that allow non-owner-occupied STRs encourage companies that buy up properties and convert them. That McGill study on New York City found the top 10 percent of hosts in the Big Apple earned 48 percent of all revenue in 2017. It also noted that 51 percent of Airbnb listings in the city were for a whole house or apartment, even though "87% of entire-home reservations are illegal under New York State law." Those whole-home listings accounted for 75 percent of Airbnb revenue, the study found.

Plenty of cities have banned non-owner-occupied STRs, including Denver and Boulder. Applegate says he fears that the growth of such properties in the Springs will be explosive if it's not stopped now — creating a problem that, like New York or Austin's, is nearly impossible to control.

At the August meeting, Applegate was one of several to issue dire warnings about STRs. Another woman, who said she had just moved to town from San Diego, warned that STRs take over fast, and can be deceiving.

They look beautiful, she said, but neighborhoods are quickly taken over by them, and then those areas are no longer safe — no one "takes pride in them."

"I don't want to see that happen here," she said.

At the end of the meeting, the six members of the nine-member Planning Commission who were present were left with their own thoughts — and they mirrored those of the public.

Commissioner Scott Hente, a former City Council president, said he struggled with STRs in his own neighborhood that had increased traffic and trash.

"There are some people that said ... that 'it's a private property, and I should be able to do what I want,'" he said. "Well, that would be fine unless I decide to put a night club next to your personal residence. Now granted, that's an extreme, but that's what the zoning code is for; the zoning code is for protection. The zoning code is kind of a faith base between the city and its residents, that if we tell you that you live in a certain residential area, or a certain zoning code, that you have certain expectations of what's going to be there."

Hente and two other commissioners showed an interest in amending the ordinance to ban non-owner-occupied STRs, or at least ban them from areas zoned for single-family housing. Still, they made no motion to amend.

The other three commissioners said they wanted to look forward, that a flawed ordinance was better than no ordinance, and that there was little sense in trying to further limit the legitimate uses of people's property.

Chair Rhonda McDonald said the controls in the ordinance were appropriate and noted that HOAs can add further regulations. "I think there's an extra step of protection there for the residents," she said.

The commission voted 3-3 on whether to recommend the ordinance.

City Council will have the final say, and is expected to first hear the details of the proposal at a Sept. 24 work session. If they give the nod to move forward without changes, a public hearing and vote would likely be held in October.

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