Our view: Short-term rentals need fair regulation
There is no great solution that will appease both sides of the short-term rental argument. It’s a debate across countless areas of the world, especially in popular resort destination markets like Grand County. Across the Rockies, each town deals with short-term rentals in their own way — either by choosing to ignore the issue, regulating them to the point of obscurity or somehow trying to find the middle ground.
The issue continues to confound Grand County and its officials, as it does in most other areas.
Several letters to the editor that Sky-Hi News has received over the past few weeks have added to the public discourse over short-term rentals. The letters have been largely from locals who oppose short-term rentals or at least who want to see steeper fees and regulations. Often their stance is clear but only spell out half of the issue.
Officials in the last month adopted a new fee structure for short-term rentals within unincorporated Grand County. Approved by county commissioners and effective Aug. 1, the new structure created a per-pillow fee meaning the rental owners will pay $25 per person for their maximum amount of advertised spaces. There is no longer a flat fee.
For some, that would mean obtaining a permit to legally operate in the county only costs $100 a year. Not such a big deal. Others would obviously pay more, depending upon the maximum amount of guests they allow in their rental.
Some rental owners have criticized that fee. Still, it’s less than the $600 annual fee for rentals in Grand Lake.
The positive effects of short-term rentals are undeniable. They provide accommodations for visitors coming into the county that aren’t otherwise met by our relatively small amount of hotels and motels. They add to the local economy, not only by the renters spending at local restaurants and shops, but also through the taxes the owners pay. If considered an independent industry, short-term rentals would be the largest in the county, more than agriculture, logging or skiing.
But the tax obligation of short-term rentals is a different story, and perhaps the most controversial.
Short-term rentals are most often located within areas zoned for residential properties, not commercial, though they are still businesses in the sense that they exchange a service for money. They do not pay the level of property taxes a traditional hotel would, even though they are relatively the same business.
While sales and lodging taxes remain the same, short-term rentals pay a 7.2 percent property tax rate. Hotels pay 29 percent, the standard rate for commercial property in the state of Colorado.
That’s a sizable discrepancy that deserves attention.
Short-term rentals are competing for the same customers as hotels and motels, but pay less than half in property taxes. That allows short-term rentals to undercut the rates of hotels, often forcing them to charge more.
We can’t afford to lose the already small amount of traditional lodging that we have because one day they might not be able to effectively compete. However minimal, we still need that space to accommodate visitors. At the same time, we don’t want to lose short-term rentals either; we don’t want to lose any beds.
But short-term rentals, considering the rate at which they are taxed, have an unfair advantage.
Then there’s the effect short-term rentals have on housing.
There’s a huge demand to buy properties around the county and turn them into short-term rentals. Considering the supply, the increased demand drives up costs for local families who are looking to purchase a single-family home. It raises the basement and forces them to stay in the rental market, which is already largely overcrowded.
The long-term rental market in Grand County, particularly considering affordable or attainable housing, is small. Every condo or house for rent that is changed from long-term to short-term leads people to compete for the reduced amount of housing stock. There are far more short-term rentals than there are long-term in the county, creating a struggle for people looking for housing options other than purchasing a home.
While we don’t believe there should be a ban on short-term rentals, which would lead to a huge slump in our local economy, instead we believe in smarter — not necessarily stronger — regulation and leveling the field to help ensure fairness in short-term rental operation.
If a steeper fee were to be imposed, after covering the costs of the county’s short-term rental program, the funds could be set aside in an attainable or affordable housing fund that would help spur more development of the real housing needed in the county.
Officials should re-evaluate property and commercial taxes, though that would be a massive undertaking that could only be done at the state level. Since that seems unlikely, at least in the short term, we encourage our local leaders to continue discussion on this issue to find a middle ground between the government, the public and owners of short-term rentals.
Sitting through many short-term rental workshops held by the county, it appears the majority of people who attend are short-term rental owners. We encourage the public to also attend these meetings.
There might never be a consensus or singular practical answer to satisfy all involved, but the county’s new variable fee structure is a step, albeit a small one, in the right direction. It promotes fairness.
So, win or lose, do it fairly.
The Sky-Hi News editorial board is comprised of Sky-Hi News Editor Bryce Martin, reporters Lance Maggart and McKenna Harford and Sky-Hi News General Manager Emma Trainor.
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