Tommy Jefferies has had more than 220 guests this year rent rooms in the four-bedroom home he has converted into a hostel in a neighborhood north of Breckenridge.
He does all the cleaning and reservation work on top of his gigs as a snowcat driver, ski shop manager and dog walker. The 35-year-old who scraped up just enough to buy the home six years ago calls Airbnb “my full-time job.”
“Without income from my guests, I could not live in this town,” he said.
This story first appeared in The Outsider, the premium outdoor newsletter by Jason Blevins.
In it, he covers the industry from the inside out, plus the fun side of being outdoors in our beautiful state.
When Summit County’s new regulations on short-term rentals land next month, Jefferies will be limited to 35 reservations a year. He’s certain he will not make enough to pay his mortgage with a nearly 90% annual reduction in bookings.
He pleaded with county commissioners to help him protect the only way he’s found to stay a resident in the county.
“It’s so frustrating,” he said. “I went to so many meetings where all this was being discussed and we were literally laughed off the speaking podium. I’ve never experienced such a gross display of not being heard. They are not counting me as a local. They have shown this dark light over everyone who is a short-term renter and they want us to all look like absentee owners. I’ve lived in this valley for 13 years and they are forcing me to leave. They treat me like an outsider in my own home.”
In Summit County, Jefferies is part of a 100-homeowner group that is suing the county commissioners. In Pagosa Springs owners sued and overturned new laws. In Salida they are pleading with local leaders to lower a new $15 per-bedroom nightly tax. In Breckenridge, they are gathering money for a legal battle.
Property owners are fighting back in Colorado mountain communities after two years of local leaders vying to ease a shortage of worker housing by imposing new caps, regulations and taxes on short-term rentals.
“We are asking some pretty basic questions. Show us the data that supports the claim that it will help. How can you prove to us that these regulations are making some sort of impact on the goal you set? Are we opening more long-term rentals for locals?” said Julia Koster, the head of the Summit Alliance of Vacation Rentals in Summit County, one of a growing number of high country property owner coalitions uniting to contest strict regulations on short-term rentals.
The short-term rental industry was born in Summit County more than a quarter-century ago when entrepreneur David Clouse built a website and started selling nights in his Breckenridge condo. Today the county is ground-zero for new regulations, caps and taxes designed to slow decades of largely unfettered growth in vacation rentals so workforce housing can catch up.
Last month a group of more than 100 homeowners sued the Summit County commissioners in federal court, calling a recently adopted rule that limits property owners to 35 bookings a year and a 2% tax “a blunderbuss response” of “successively more severe, wide-ranging, misguided and unlawful regulations.”
A group in Breckenridge “is picking up momentum” with plans to challenge the town of Breckenridge’s new caps on short-term licenses and zoning that curtails rentals in residential neighborhoods, said Bill Ray with the newly formed Colorado Property Owners for Property Rights. The Breckenridge town council in 2021 approved a $400 per-bedroom annual fee on short-term rentals in the town after a housing assessment survey showed 14.5% of renters in Summit County had had their lease terminated because the owner was converting the property to short-term rentals. The annual short-term rental fee climbed to $756 per bedroom this year.
“We’ve hit the tipping point”
Doug Turner is among the growing group of disgruntled homeowners in Summit County. He and his wife purchased a home in Keystone more than 20 years ago and have relied on rental income from vacationers to maintain and improve the four-bedroom, two-bath house.
Citing “short-sighted” regulations, he’s pulling the home off VRBO and renting to families from the Front Range for three months at a time. That kind of rental generates no tax revenue for the local community because lodging taxes only apply to rentals of 30 days or less.
He’s attended many Summit County commission and local town council meetings in the past couple years as elected leaders hammered out plans for caps, taxes and regulations on short-term rentals. He says a system designed to license and tax vacation homes is now morphing into “a way for the county to control over 4,000 homes.”
“We’ve hit the tipping point. These folks think there is an unlimited pile of money in short-term rentals that is just waiting to fix all the county’s problems,” said the 62-year-old lawyer from Golden. “That’s not true. Every dollar we have made and then some has gone back into the property and we enjoy doing that, paying local tradesmen, landscapers, cleaners and managers. Now no one is getting any of that revenue. It’s a shame.”
Summit County Commissioner Tamara Pogue has watched the rapid increase in short-term rentals transform neighborhoods. She worries that there is little review of the individual businesses and the impacts to local communities and regional infrastructure. Hotels are scrutinized by planning and zoning boards, she said, but hundreds of vacation homes are not.
“We have to find a way to balance out the economic success of individuals with these properties against the economic success and infrastructure capacity of our communities,” Pogue said.
A Colorado District Court judge in December 2022 struck down a voter-imposed fee on short-term rentals in Pagosa Springs.
The fee, which was passed by 11 votes in the town’s April 2022 election, established a workforce housing fund with a $150-per-bedroom monthly fee collected from owners of short-term rentals. Two months later, a group of homeowners sued to overturn the new tax, arguing it violated administrative rules for fees and “has no essential nexus between short-term rental properties where the owner does not live on the property full-time and workforce housing.”
The judge invalidated the fee, agreeing that it violated the equal protection clause of the 14th Amendment “because of the lack of any rational basis for the unequal treatment of owners of short-term rental properties.”
“I don’t think there was any basis for the per-room fee and there was just a vague idea of where the money would go,” said Clinton Alley, who first started renting his home to vacationers in Pagosa Springs 14 years ago and was among the owners who sued the town. “We are fine with paying fees that are reasonable.”
A call for “reasonable taxation” in Salida
A group of homeowners in Salida is asking the town council to modify a new tax on short-term rentals. In 2022, Salida voters approved a council plan to increase annual fees for vacation rental licenses from $270 to $1,000 and charge owners $15 a bedroom per night for short-term rentals. The new revenue is directed toward affordable housing.
The plan proposed by a group calling its Salidans for Reasonable Taxation proposed reducing the annual fee to $540 and the per-bedroom nightly fee to $5. The proposed plan would only impose the annual fee for short-term licenses on owners who do not live in Chaffee County. Salida council members at a meeting in August expressed concern with that differentiation between residents and nonresidents but proponents of the plan think it’s legal considering that the town has banned new short-term rental licenses for out-of-county owners.
The Salida council is weighing the plan. If the council declines to adopt the new plan, the initiative could land on the November ballot.
Kalen Steeves grew up in Salida, working at the health food store her mom ran behind their home. Now she’s a massage therapist and says she’s struggled to support her family as prices escalate in her hometown. A few years ago she started renting out her home to vacationers while she and her boys moved into a tent.
“It wasn’t luxury by any means, living like that with children, only having a cooler in order to eat fresh food,” she said. “Sometimes we couch surfed. However, my children preferred that trade off to moving, which has been a strong consideration of mine for a long while.”
The new taxes this year have made Salida short-term rentals among the most taxed in the state. Steeves rents her three-bedroom for $200 a night. Steeves said many of her group’s members are enduring significant drops in visitors they attribute to the new fees.
Taxable spending in Salida was $106.4 million for the first five months of 2023 since the new taxes went into effect, down from $107.3 million in the same span of 2022, according to reports from the state Department of Revenue. Those numbers are up from 2021, 2020 and 2019.
Pam Knudsen heads up compliance for Seattle-based Avalara, which develops the tax collecting and remittance software for vacation rental platforms like Airbnb and Vrbo. She’s seeing more homeowner groups forming “to provide a consolidated point of view” and urging local leaders to take “a more holistic view” of short-term rental regulation.
The groups are speaking at council meetings and even pushing possible voter referendums, but she hasn’t seen any lawsuits, except for the one filed by Summit County property owners.
Knudsen toes the industry line when it comes to the possible threat of increased regulation running off tourists. She asks: If property tax rates quadruple or local lodging taxes and fees become too onerous, could visitors stop coming to Colorado, triggering a broad range of impacts to communities that have grown to rely on tax revenue flowing from vacation rentals, hotels and tourist-dependent businesses?
A decrease in tourist-paid taxes will lead to increases in sales tax and property taxes as local leaders scramble to make up the deficit, Knudsen said.
“Long-term residents end up paying for the decline in tax revenue that came from short-term rentals,” she said.
Statewide regulations enabling STR crackdown
A new Colorado law — HB23-1287 — gives local governments greater leeway in licensing and regulating short-term rentals that are not part of hotels. The new regulation — which was signed into law by Gov. Jared Polis in June at a Summit County hotel that had been converted into workforce housing — gives county commissioners the ability to force vacation rental services like Airbnb and Vrbo to remove listings for properties that are not permitted or in violation of local rules.
State lawmakers in 2021 studied the possibility of taxing short-term rental homes as commercial properties, which would quadruple the property tax rate and, in a single move, make thousands of short-term rentals not financially viable.
This year the push for commercial taxation “is seeming to have more traction,” said Johanna Richards, the head of the Colorado Lodging and Resort Alliance, a group of short-term rental property owners who united in 2021 as new rules and taxes began stacking up.
“I think there have been a lot of knee-jerk reactions putting regulations in place instead of having balanced conversations about regulations that are effective,” said Richards, who is urging her members to connect with state policymakers to block a commercial tax rate she said would “reshape the landscape of our industry and pose challenges to the livelihoods of many property owners and businesses.”
STR tax in Steamboat generating more than $1 million a month
Voters in Steamboat Springs last year approved an up-to-9% tax on short-term rentals and the tax is delivering more than $1 million a month. No property owners have organized opposition to the tax, said longtime Councilwoman Heather Sloop.
But there is a group circling the tax. The Yampa Valley Housing Authority is working to get its new Brown Ranch project annexed into the city. The 534-acre property, with enough room for more than 1,000 units, was purchased by the authority with an anonymous $24 million donation. But the costs of infrastructure and building are high and the authority wants to ask voters if Brown Ranch can have 75% of the short-term rental tax revenue and lock in that highest 9% rate for the life of the tax.
That worries Sloop. Should the city start making long-term plans on a tax that was designed to slow the growth of short-term rentals properties in the Yampa River Valley.
“I think it’s already working. We see people selling. Families are buying those homes. It’s a kind of change I’ve not seen for the 18 years I’ve lived up here,” Sloop said. “The concern some of us on the council have is that we promised the community we will adjust this based on what it looks like for everyone.”
Summit County in 2021 launched a unique program to convert new short-term rentals into homes for local workers. Its Lease to Locals program offers owners of short-term rentals cash if they leased their units to local workers. The program gives owners $5,000 for a six-month lease of a one-bedroom to a local up to $22,000 for a year lease of a four-bedroom. The program caps the rent the owner can charge at $1,000-to $1,500 per bedroom.
In the first two years the county spent a little more than $1.5 million to convert 111 short-term rental units over to long-term housing for 213 local workers. The project is expected to continue for a third year pending approval by the commissioners. A similar program in Winter Park converted 24 short-term rentals to long-term worker housing last year.
No signs of an Airbnbust in Colorado. Yet.
AirDNA, which studies short-term rental traffic, shows no evidence of a significant downturn in bookings in Colorado’s mountain communities.
- In Aspen, there were slightly more than 28,000 bookings from May through July in both 2022 and 2023, while the average daily rate for those months climbed more than $500 to $1,382 compared with summer 2022.
- Avon bookings climbed to 50,537 from May through July, versus 45,342 in the same span of 2022, while rates dropped slightly to $588 a night.
- Breckenridge bookings climbed to 159,415 from May through July, up from 145,962 last year, while the nightly rate dropped about $30 to $426 this summer.
- Crested Butte saw 43,301 bookings from May through July, compared with 39,453 in 2022, with nightly rates climbing $40 to $503.
- Steamboat Springs bookings were 91,769 from May through July, down about 1,000 from last year with nightly rates down about $100 to $358.
- Telluride bookings were 49,258 from May through July compared with 57,585 in 2022 with nightly rates flat at around $746 a night.
- Vail bookings were 72,593 from May through July, down from 76,352 in 2022, with nightly rental rates up about $55 to $776.
- Winter Park bookings were 42,884 in May through July, up about 2,600 from the summer of 2022 with nightly room rates up $20 to $349.
Toby Babich, the head of Breckenridge Resort Managers who grew up in Breckenridge, said demand is waning and rates are finally dropping after two years of record highs. A slowdown after the exceptionally busy years coming out of the pandemic was expected, Babich said, so it’s difficult to parse impacts from Breckenridge’s new caps and zoning.
“I think the tenor of discussions around short-term rentals over the past 12 months certainly could be resonating in the ears of travelers who wonder if they are not welcome here anymore,” Babich said. “Certainly the regulations and caps could be having an impact on demand. But it’s difficult to get a clear picture.”
After slight declines last winter and this summer, Babich said booking traffic this winter will clear the haze. Another down year means a decline in tourist spending, lodging tax collections, services and worker wages.
“I think everyone is waiting to see the numbers from the winter to really make a judgment call on whether the long-term impacts of the regulations that have been made will have a long-term impact on the tourism industry here,” Babich said.
“So here we are”
Rich Mason spent almost five years building an energy-efficient home in the Peak 7 neighborhood of unincorporated Summit County and rents the home to vacationers.
The data analyst attended all five Summit County planning and zoning commission meetings in the last year and compiled a 28-page analysis for commission members and county commissioners. His detailed research shows about 20% of the 4,600 short-term rental licenses are unused.
He would show up at meetings with other homeowners, hoping to voice concerns about a new 2% short-term rental tax and the limit of 35 bookings a year, which goes into effect Oct. 1. He was prevented from commenting and no policymaker appeared to read his research.
“It was demoralizing,” said Mason, who is among the more than 100 Summit County owners who filed a federal lawsuit against the county commissioners. “We feel like we made every effort to make our views known and we were dismissed at every turn. We tried and tried and tried to reach an agreement and find something more balanced. This was my first experience with local government and it was really tough. So here we are.”
He estimates he’s spent 700 hours on this issue since March and talked with hundreds of homeowners. People are angry and sad, he said.
“There is a lot of heartache over this whole thing,” he said.