Call to action! Sudden shift in Colorado Springs' STR rules?

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Short-term rental regulations in Colorado Springs took another sudden turn for the worse last week. If you own an STR in Colorado Springs or want to in the future, now's the time to make your voice heard. (See end for how you can help.)

At a Nov. 12 meeting, the council basically said they're ready to ban all Airbnb rentals in R-1 zoning. This is a total pivot from what the council voted to allow in ordinance just one year ago. 

The council will take a final vote on a ban at their Nov. 26 meeting, which starts at 1 p.m. 

A soft vote at last week's meeting showed it's all but certain that the council will pass this ban. Without drafted language to review, the details remain murky. 

  • Will they grandfather in those who bought property with the explicit permission of the city from last year's vote?
  • Will this cover only non-owner occupied STRs in R-1 zoning or will it cover any STR in R-1, whether you live there or not?

It seems like the goal posts have shifted and we're just arguing to grandfather in existing permits. Me personally, I think an unfettered STR market could affect affordable housing, so I'm not against some limits. But I am against a city telling its citizens legalizing an activity one year, and then taking away that right the next year -- and in doing so putting in jeopardy millions of dollars in private investment. Regulatory uncertainty harms a city's business-friendly image.

Want to help? You can do two things:

  1. Attend the meeting at 1 p.m. on Nov. 26 at 107 N. Nevada
  2. Email council members. (Addresses found here.)

Thoughts?

I think frankly this is the wave of the future for larger cities.. 

Originally posted by @Jay Hinrichs :

I think frankly this is the wave of the future for larger cities.. 

Even small cities and counties too. Chelan County was prepared to do something similar. Luckily we had enough supporters for STR that showed up so the council didnt vote on it. Instead the pushed it on hiring an outside firm to do studies and come up with regulations instead of the council coming up with them. Not really the best outcome but it at least has delayed it for now....only the future will tell.

@Jay Hinrichs

I agree and am not opposed to thoughtful regulations intended to keep more housing stock for owner-occupiers or long-term tenants -- especially in a hot market where so many want to live like Colorado Springs. 

But I think at a minimum, there has to be a grandfathering in of people who put big sums of money down to buy a property for Airbnb or short-term rentals after the city passed an ordinance explicitly allowing STRs in all zoning and without any primary residence restrictions. Again, my issue is that the city is pulling the regulatory rug out from under small entrepreneurs.

Originally posted by @James Carlson :

@Jay Hinrichs

I agree and am not opposed to thoughtful regulations intended to keep more housing stock for owner-occupiers or long-term tenants -- especially in a hot market where so many want to live like Colorado Springs. 

But I think at a minimum, there has to be a grandfathering in of people who put big sums of money down to buy a property for Airbnb or short-term rentals after the city passed an ordinance explicitly allowing STRs in all zoning and without any primary residence restrictions. Again, my issue is that the city is pulling the regulatory rug out from under small entrepreneurs.

I get it but zoning rules change all the time..  and there are big WINNERS and BIG losers when that happens.. just the way the cookie crumbles. the owners of the houses are not losing their houses or the right to live in them or rent them in a normal manner so I think the argument that hey I spent money on a house and put a bunch of furniture in it  or I bought it for a certain purpose is not going to sway many frankly speaking and being on the front lines of many land use actions over the years in multiple states.. 

 

I was talking to someone at the last meeting. (The one before the actual last one where they weren't supposed to discuss STRs. :-/) I was told that the city legally has to grandfather existing permits? I don't know how true this is though. I'm sure you've seen all the emails from Morgan where she reassures us that we will be grandfathered. Interesting that you mention affordable housing. This does not seem to be our city's main concern. That rarely comes up at meetings...it's always about "preserving neighborhoods". I could/can understand concern about rising housing costs. (I still disagree with government intervention. ;-)) However, I don't sympathize with people who are afraid of "transients" (their words not mine). These "transients" are here enjoying our city with their friends and families and spending money. STRs makes vacationing here for many a reality. Large families who couldn't afford multiple hotel rooms can afford an STR and have more room in their budgets to spend at local businesses. STRs also provide a decent income for families like mine who contribute to the economy here. We invested thousands of dollars into our STRs based on what we were told last year. I am able to be a SAHM bc of our STR. I'm trying to keep faith in our city council but after watching the last meeting online it's hard. Last year's regulations were reasonable. If I'm understanding correctly (someone from COSSTRA pointed this out at last meeting) there are less STRs this year than last...so why the sudden new potential regulations? Was this the plan all along? Did they intend to slowing chip away at our rights each year? I'm planning on being at the meeting on the 26th as well as writing the council members. Jill Gaebler and Andres Pico are the only ones who I will support in the future. The other ones are fear based and instead of working with the sharing economy trying to find win-win solutions it seems they want to work against it or shut it out completely. That's my two cents. :-)

Any property owners in the class mentioned above by @James Carlson (namely, those who purchased a property with the specific intent to use it as an AirBnB pursuant to last year's ordinance) or any other AirBnB operators in R-1 Zoning, let me know if you have interest in the below:

Not here to argue the futility or wisdom of a suit against the city, just curious to know if any of the owners mentioned above would have sufficient interest for a class-action lawsuit against the city re: the proposed ordinance.  

@Jenn N. - I've said it a million times from the top of my soapbox:  Even the first inklings of regulating an industry is the just the thin edge of the axe.  I completely respect the position of @James Carlson and those like him who promote "reasonable" regulations (and usually don't disagree), but they usually portend further regulations.  Once there's a foothold, the argument about what is "reasonable" is often reduced to "Well, we're just completing the work that the first regulation kicked off.  We all agree that the industry needs regulation, so what's wrong with a little more?"

@James Carlson I wonder if the mountain towns will be next. I know some of them like Breck just updated their STR rules recently and seem to be tolerant overall but slowly adding hoops to jump through while still allowing, but it seems like STR owners have to be ready for the goal posts to be moved at any time now. NYC really set a tough precedent with their basic Cart Blanche defeat of AirBNB back in 2011, then AirBNBs own home base SF in 2014, and dominoes in many major metros after that, now spreading to smaller cities. I wonder how the progression of increased regulation from big cities to smaller ones will affect the expected 2020 IPO for AirBNB. I don't even think about STR as a strategy here in Boulder anymore, it can still be done but the regulations to comply with (STR license and associated annual fees, taxes, SmartRegs (energy efficiency standards) compliance, must be owner-occupied (even if it's a duplex you have to occupy the side being rented short term), limits on number of nights it can be rented per year, limits on number of STRs in proximity of each other in a neighborhood, annual inspections, etc.) make it not even worth doing here basically IMO I'd rather just do corporate rentals with 30 day minimum stays or regular term rentals. My buddy has had one here (in Boulder County) for a long time that was a cash cow, allowing him to keep a place for his parents to stay when they visit as well as allowing his wife to be a stay at home mom with their disabled child. It's on acreage, way out in the county with no neighbors nearby to bother or hotels to divert business away from, doesn't effect the character of the neighborhood or any of the usual arguments against. This past summer BoCo made him redo the whole driveway to add one parking spot in order to renew his STR license, which cost $8k and ended up triggering the whole Site Plan Review process which was a major can of worms involving an architect to recreate the original house plans because the county didn't have them on file from the original building permit in the 50's. Then when he did all that, they set a limit to maximum 40 nights per year and now he's applying for a variance in that. It's been just one thing after another, not an official ban but rather a slow "regulation creep". I could see the mountain towns just piling on the regulations like that over time, and limiting the number of STRs through making it a huge hassle rather than an outright ban. Breck's requirement of having someone on call locally 24-7 to respond to nuisance complaints as an example. NYC, SF etc. lawsuits proved cities can do whatever they want and STR owners basically don't have any recourse.

@James Carlson Give Jim Clark at call at ICOR @icorrockies He can help spread the word to our Colorado Springs members. 

It's time for everybody to start getting involved with city and state governments. People are in charge that don't understand how we as property owners and landlords help support the whole community.  

Update on the potential STR ban in Colorado Springs ...

A city planner sent out an email laying out a few more details about the potential STR ban.

Meetings
There will be a planning commission meeting to discuss this at 8:30 a.m. on Nov. 21. They will recommend approval/denial/any changes to the proposals. Public comments are welcome.

Grandfathering
At the end of this planner's email, she says existing permits will be grandfathered in. That's a relief. Kind of. It's important to note that the council has indicated leaning one way in the past and then turned a 180. Case in point, this potential ban. So don't rest on your laurels.

Details about the two proposals
There are a few more details about what is being proposed. There are actually two proposals.

  1. Limit all non-owner occupied STRs in any zoning district to every 5 lots.
  2. Limit all non-owner occupied STRs in any zoning district to every 5 lots AND ban non-owner occupied STRs in single-family zoning districts (R, R1-6000, R1-9000, and single-family PUDs). The potential to request a Conditional Use for locating in a single-family zoning district has been proposed.

So what would still be okay under the most restrictive proposal?

  • All previously permitted STRs
  • All new owner-occupied (read: primary residence) STRs in any zoning 
  • All new non-owner occupied (read: investment) STRs in R-2 zoning and up as along as they're five lots away from existing non-owner occupied STRs.

@Thadeous Larkin  Where do I send you your positive referral fee? 

What's disconcerting about you is that your uninvited opinions have the semblance of rationality. What world do you live in?

@James Carlson any time you are investing in a new technology that is not mature, you should expect regulations to catch up over time. This is exactly what I have predicted would happen with STR.

Here is the bottom line, STR are basically just hotels. (Like Uber and Lyft are taxis.) Neighborhoods are zoned residential, hotels are commercial. Follow the logic and once regulations catch up, the STR will not be allowed in residential zoned neighborhoods.

Of course vacation rental locations are different. If you have a cabin in the mountains or on the beach, these properties were build with vacation rental in mind. These are not residential neighborhoods. Therefore the vacation rental locations will stay protected.

There is also probably going to be protections for owner occupied STR, where you rent just a bedroom. That is not viewed as a commercial business.

The reason cities pass legislation is to avoid entire neighborhoods from becoming hotel complex. Investors are buying 2, 5, 10+ properties and making a business out of it. It removes houses where families can live. My guess is Colorado Springs wants to be a community not a vacation complex. A community needs residents. Every city makes their own choice.

Your best bet is to fight for existing properties to be grand fathered in. It will actually help keep your rents higher, so those who got in early benefit. Don't try to play the "all or nothing" game. That is likely to result in a total ban.

A quick update on the proposed Colorado Springs short-term rental changes. (Or Airbnb changes, for you keyword warriors.)

The council meeting scheduled for Nov. 26 has been rescheduled for Dec. 5 at 8 a.m. The Airbnb legislation will be discussed at 10 a.m. Again, the two proposals are either to 1. implement a density restriction for non-owner-occupied STRs or 2. implement said density restriction and ban all future STRs in R1 zoning districts.

Want to help? You can do two things:

  1. Attend the meeting at 8 a.m. (again STR talk starts at 10 a.m.) on Dec. 5 at 107 N. Nevada
  2. Email council members. (Email addresses found here.)


@Archer Newlun

Yeah, the Colorado Springs city council voted to approve the measure. It's essentially what I laid out in my post about halfway down in my "update." I think for those looking to buy a pure Airbnb/STR investment, the easy days are over. There are still a few homes for sale that come up that are both A) in R2 zoning and B) outside of a 500-foot bubble from any other non-owner occupied short-term rental. 

I send a list of possible properties to the city every Friday to check whether they're outside of the bubble or not. 

If you're looking to invest in Colorado Springs, you can be patient (very patient) for a home that meets the above criteria or you can get more creative and look for a house hacking opportunity or straight-up rent-by-the-room model (if you don't want to live there).

I wish you luck!

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