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Denver Short Term Rentals Update
Planning & Neighborhoods Committee
December 9th, 2015
Excise and Licenses
Community Planning and Development
1
Denver’s Short Term Rentals Update
1) Answer questions from previous PLAN
Committee
2) Discuss proposed licensing and regulatory
framework
3) Provide details on next steps and legislative
timeline2
Popular STR Online Platforms
3
Short Term Rentals At-A-Glance
Recent estimates show Denver has approximately 2,000 short term rentals (STRs) listed across AirBnB, VRBO, and other websites. Most STRs appear to be concentrated in Northwest, Central, and South Denver – closer to tourist and visitor attractions.
– *AirBnB:
Approximately 1350 hosts listing approximately 1700 units in Denver
Average number of nights rented per year; 55 nights
Average length of stay per booking; 3–4 nights
– *VRBO:
Approximately 370 units listed in Denver
No data yet on average number nights, or length of stay.
Many different variables and models make it difficult to determine actual STR numbers in Denver:
Average number of nights booked per unit
Units cross-listed on multiple platforms
Frequency of booking per unit
Booking success rate per unit
Without licensing tool, real STR number is difficult to determine. Multiple variables may mean actual STR numbers listed could be lower. STR “footprint” may be much more relevant discussion.
*Sources: AirBnB, Denver STR Alliance Representatives 4
STR Variables to Consider
Variables such as booking frequency, average length of stay, and
cross-listing of websites all contribute to STR “footprint” in Denver:
Daily STR Variables
Number of STRs Listed Across All Platforms (appx 2,000)
Percentage of STRs Cross-Listed on Different Platforms
Actual STR Footprint
Percentage of STRs Available for Booking
Percentage of STRs Booked
STR Nights Booked
5
Wide Range of STR Models in Denver
STR Scenario A
Rents out spare
bedroom
Primary residence
Average of 120 nights
rented out per year
Average stay of 3-4
nights per booking
STR Scenario B
Rents out entire unit
Non-primary residence
Average of 85 nights
rented out per year
Average stay of 5-7
nights per booking
STR Scenario C
6
Multiple STR variables and models make it difficult to determine
real number, or impact, of STR operations in Denver.
Rents out entire unit
Primary residence
Average of 30 nights
rented out per year
Average stay of 2-3
nights per booking
Number of Hosts Operating Number of Units (AirBnB)
Source: Colorado Public Radio Article, November 1st, 2015
7
Short Term Rental FAQs
Question: What does current enforcement look like?
Answer: Neighborhood Inspections Services (NIS) receives complaints and pursues enforcement of existing 30 day rental rule. Currently, STRs are not licensed or regulated in Denver.
Question: What is the impact of STRs to housing affordability, housing stock, and other neighborhood concerns?
Answer: Using the 2,000 STR estimate as a baseline, less than 1% of Denver’s total housing units (appx 285,000) are being used for STR operation.
There are multiple variables to affordability and neighborhood impacts to consider such as primary resident/hosted units, booking frequency, length of stay, and revenue generated to hosts for housing costs (see CO Public Radio article for more context).
Increased concerns related to noise, parking, and other day-to-day neighborhood issues.
8
Short Term Rental FAQs Cont…
Caps on number of STR units allowed in a city as a whole
Caps on number of STR units allowed per census tracts
Caps on number of nights allowed to rent
Caps on people allowed in one unit
Different types of licenses for hosted / non-hosted operation
Zoning / location restrictions
Rental information packets
Primary residency / owner-occupied restrictions
Question: What regulatory tools have other cities used?
Third party inspections
Smoke detector requirement
CO2 detector requirement
Fire extinguisher requirement
Liability insurance requirement
License number requirement
on advertisements
Conditional Use Permits
Enforce existing restrictions
Booking registries
Taxation
9
Short Term Rental FAQs Cont…
Question: Can STRs be taxed? How much revenue would be collected?
Answer: The City’s Treasury Department and City Attorney’s Office are exploring how to best administer Lodger’s Tax on STRs. Tax tools for STRs in other cities include:
San Francisco – 14% Transient Occupancy Tax
Portland – 11.5% Transient Lodger’s Tax
Philadelphia – 8.5% Hotel Tax
Colorado Springs – 2.5% Sales Tax, plus 2% Lodger’s Tax
No estimate yet on future tax revenue for Denver STRs
Major online platforms have ability to enter into tax remittance agreement with cities on behalf of hosts.
Question: What safety provisions are in place for hosts and guests?
Answer: As STRs are currently not licensed, hosts and guests must rely on the web-based platforms to provide basic security and safety provisions.
Excise and Licenses will propose a regulatory framework to include additional safety requirements, such as liability insurance, rental unit info packet, smoke detector, carbon monoxide detector, license number, etc.
10
Short Term Rental FAQs Cont…
Question: How do we address STRs that are “cannabis-friendly”?
Answer: As with any other residential property in Denver, STR guests and hosts are obliged to comply with local and state laws related to the consumption, sale, and possession of marijuana.
A benefit of licensing is an ability to monitor and track behavior that doesviolate any local or state marijuana laws.
Question: How are neighbors notified?
Answer: At this time, there is no proposal to provide official notice for every STR license administered. This is primarily due to host confidentiality concerns, combined with no public hearing requirement for obtaining a STR license (consistent with current Excise and Licenses practices).
11
Proposed Licensing and Regulatory Framework
Excise and Licenses will propose a licensing and
regulatory structure with three core principles:
1) Convenient, online application process to achieve
a high-rate of STR compliance
2) Obligation of licensee to certify compliance
(affidavit of certification)
3) Effective and streamlined enforcement capability 12
Zoning vs. Licensing
13
Zoning LicensingBasic rules for all properties Rules for operating a business
Attached to the land Attached to a specific business or
person
Remains the same when properties
change ownership
Requires annual renewal
Enforcement may be lengthy due to
property-rights considerations
Ability to issue citations, fines, and
license revocations
Where short-term rentals are permitted Additional safety requirements; i.e.,
smoke detector, CO2 detector, liability
insurance, etc.,
Permitted locations on a property Tax license, affidavit of certification
I. General STR License Requirements
a) Licensee must be a legal resident of the United States
b) Licensee must have permission from the landlord or property
owner to operate STR (if applicable)
c) Licensee must be the primary resident of the unit (to be defined
in ordinance)
d) STR unit must be located in a zone district that allows residential
use
e) Licensee must possess a valid tax ID number 14
II. Additional STR License Rules & Regulations
a) The licensee must provide the STR unit address and personal contact information to Excise and Licenses at the time of application.
b) The licensee must provide a rental packet with applicable city rules and restrictions, as well as pertinent unit safety information, to guests upon each booking:
i. Applicable city rules and restrictions may include but are not limited to, on-street parking restrictions, noise regulations, refuse collection schedule, etc.
ii. Unit safety information may include, but is not limited to, pertinent egress/ingress, fire evacuation route, safety features, etc.
c) The licensee must maintain general liability insurance to protect against property damage / bodily injury.
d) The licensee must maintain an operable smoke detector, carbon monoxide detector, and fire extinguisher in the unit at all times.
e) The licensee must list the unit’s STR license number on any online, print or other advertisements.
15
STR License Online Application Steps* Denotes Affidavit of Certification
Create User ID
Provide Host Contact Information (if different from User ID) and Unit Address
Proof of Premise Affidavit*
Primary Residency Affidavit*
Rental Information Packet Affidavit*
Liability Insurance Affidavit*
Smoke Detector / CO2 Detector / Fire Extinguisher Affidavit*
Tax License ID Number
STR License Administered (along with license #)
Yes
Yes
Yes
Yes
Yes
No
No
No
No
No
N/A
16
III. STR License Enforcement
Enforcement of STR licenses will combine complaint-based enforcement operations with routine
compliance monitoring. Complaints of non-licensed STRs received will be investigated through Excise
and Licenses Inspectors:
Advertising without a license number:
a) Upon receipt of a complaint of a non-licensed STR, an inspector will determine if a
particular unit is being advertised without listing the license number in the
advertisement.
b) If the unit is found advertising without a license number, the inspector will attempt to
contact the responsible party/owner and issue a warning or a General Violation for
advertising without a required license number.
c) Inspectors will routinely monitor online platforms to identify STR units advertising
without license numbers. If an advertisement is found without a license number, the
inspector will attempt to reach the property owner or responsible party and issue a
either a warning or a General Violation. 17
License Numbers Required in Advertisements(Effective Tool Used in Other Jurisdictions)
AirBnB Advertisement Example VRBO Advertisement Example
18
IV. Enforcement and Revocation
Neighborhood Complaints:
Complaints surrounding noise, trash, parking and safety will be
fielded to the respective city agencies who currently handle these
type of complaints via 3-1-1 (DPD, NIS, Solid Waste, DEH, etc.)
Excise and Licenses tracks complaints in Accela to use for license
renewal or revocation purposes.
Certain HOAs and apartments already prohibit STRs through private
covenants and leasing contracts (privately enforced).
License Revocation
The Director of Excise and Licenses may enter a summary suspension
order for the immediate suspension of any STR license pending
further investigation through a show-cause hearing which could lead
to revocation of the STR license. 19
V. Fines & Fees / Promulgation of Rules & Regs
Fees and Fines:
Application and renewal fee for a STR license will be $25.00 annually.
Fines for advertising without a STR license number will be subject to the
existing General Violation process (up to $999.00 per incident).
Fines for operating without a STR license will be subject to the existing
General Violation process (up to $999.00 per incident).
Promulgation of Rules and Regulations:
The Director of Excise and Licenses can promulgate reasonable rules and
regulations for the purpose of administering STR licenses.
Scenarios where flexibility is needed in rules and regulations are fees,
fines, insurance requirements, rental information packet requirements,
and any other regulations or restrictions that may need to be updated
over time. 20
DRAFT STR Next Steps
Licensing and regulation framework ordinance drafting; In progress
Text amendment process for STR use; early 2016
INC update; late January 2016
Community town hall presentations; February 2016
Legislative adoption process; March - April 2016
Final STR licensing bill adoption; May 2016
Host education and awareness campaign; May – June, 2016
STR licenses available online; June 2016 21
DRAFT STR Ordinance Timeline
22
Item / ProcessTimeline
October November December January February March April May
Early Late Early Late Early Late Early Late Early Late Early Late Early Late Early
STR Internal Steering
Committee
Consensus on framework, principles, licensing tools
Taxation tools, final ordinance direction, prep for PLAN
Progress Check-in
Progress Check-in
Progress Check-in
Progress Check-in
Progress Check-in
Research / Best Practices
Continued Research / Analysis
PLAN Committee & Planning
Board
PLAN Update on
framework, timeline
Text Amend.Notice
Planning Board
Update
Notice for Planning
Board Hearing
Planning Board
Hearing
Move ordinance
out of PLAN
INCINC
Update
Ordinance Drafting
First Draft ProducedNecessary Revisions
AccelaImplementation
Individual CM Briefings
One-on-One CM Briefings
Town HallsSTR Town Hall Presentations
Mayor Council / 1st Reading
Mayor Council
Introduction
2nd Reading /Public Hearing
Final Adoption
Establish Denver STR Advisory Committee
STRs are still a new, dynamic industry across the nation.
Denver may need to re-evaluate STR regulations after City Council adoption to keep pace with fluid business models.
Excise and Licenses is committed to establishing a one-year advisory committee after ordinance adoption to study, review, and assess effectiveness of STR licensing in Denver.
STR Advisory Committee can include, but not be limited to, RNOs, community members, hosts, guests, industry platforms, city agencies, City Council members, and other relevant stakeholders.
Purpose of STR Advisory Committee to provide Excise and Licenses with suggestions, recommendations, independent surveys/research, and potential modifications to STR licensing structure. 23
Questions?
Suggestions?
Are we on the right track?
Contacts:
Excise and Licenses:
• [email protected] – 720-865-2763
• [email protected] – 720-865-2809
Community Planning and Development:
• [email protected] – 720-865-292424