On Thursday, Aug. 27, the Boulder City Council will determine the fate of two ordinances that seek to regulate and tax short-term rentals of homes within the city.
One ordinance will codify rules and regulations for any Boulder homeowner wishing to rent their home on a short-term basis on sites like Airbnb and VRBO. Those regulations could include home inspections and license requirements. The other ordinance would put forth on the November ballot a question to raise about $400,000 through a 7.5 percent tax on these short-term rentals.
Some homeowners say the regulations go too far and may even threaten their ability to rent their houses, apartments and condos. City Council heard concerns from more than 40 short-term renters in the city upon the ordinance’s first reading several months ago. Thursday’s vote will bring out of the woodwork even more renters who question the feasibility and fairness of the proposed regulations.
And it’s a large group — homeowners in Boulder who rent out their living spaces for days or weeks at a time. The number of listings on Airbnb, for instance, increased from 31 in 2008 to 1,800 last year. Granted, Airbnb started in 2008, but the statistics show that it’s too popular for City Council to ignore any longer.
Renting out your home is technically illegal in Boulder because renters are not subject to the same taxes and regulation that hotels and other short-term dwelling establishments are. So the regulatory ordinance, first and foremost, legalizes the practice. There has long been a majority on Council that the practice should be legalized; the discussion has always been about how much regulation needed to occur.
“My best guess is we will probably pass something this year that will legalize short-term rentals, but there will definitely be restrictions on them,” Mayor Matt Appelbaum told Boulder Weekly earlier this year.
The proposed regulations on short-term rentals were approved at the first reading in June. These rules would be codified on Thursday, if approved.
The first ordinance would do the following:
Renters would have to meet all the requirements of a rental license, and obtain said license. Long-term renters in Boulder already have to acquire this license, which stipulates standards on lighting, ventilation, heating, fire safety, cleanliness and occupancy.
And short-term rentals would only be allowed on the renter’s main property, and the renter would have to live in the unit at least 275 days per year. This regulation is meant to prohibit serial renters or big spenders from coming in and renting out multiple units, in which they do not live, on a short-term basis.
The ordinance would also allow for short-term rentals on spaces one step removed from the main living quarters, like rooms, attached dwelling units and second floor apartments.
And, short-term rentals would be prohibited in permanently affordable housing units.
The second ordinance, meanwhile, will put a 7.5 percent tax on short-term rentals. The tax is similar to the hospitality tax that hotels in Boulder have to pay. Voters in November will be asked if they want to increase taxes by $400,000 annually through this tax if the ordinance passes.
Meanwhile on Wednesday, Boulder City Attorney Tom Carr said that the Council Agenda Committee (CAC), which consists of Appelbaum, Suzanne Jones and Tim Plass, requested that an alternate ordinance be placed before Council that would completely ban all short-term rentals in the event that the second ordinance, the tax measure, fails.
Aside from that, there are concerns about the logistics of both ordinances. Starting with the tax issue, some short-term renters think it’s unfair to tax a homeowner who already pays taxes on his or her property.
“I have an issue that I already pay taxes to live in my house, and I pay school taxes,” says Benjamin Buren, a longtime Airbnb renter in Boulder. “The people who are coming to stay in my house are adding a great revenue stream to this town. I don’t feel overly comfortable being taxed again.”
Buren also says he takes exception with the proposed tax rate, saying it “seems rather high to me.”
“We want to make it fair to hotels, but I don’t think we’re on the same playing ground,” he says.
But Henry Parry-Okeden, co-founder of the Boulder-based short-term rental site InvitedHome, says the tax is fair, and common in many of the resort towns that his company operates in.
“I actually think it’s fine,” Parry-Okeden says. “We view it not as a tax to the homeowner, but as a tax to the guest. If you go to a house, you’ll see the price is broken up very clearly. We add that on top of the charges because that’s the same way a hotel does it. A lot of that tax revenue goes to the town to support things that benefit tourists. The owner shouldn’t perceive that as a tax to them.”
One of the gray areas of the ordinance is just how Boulder will collect these taxes, which are collected by the renter. Parry-Okeden says there are always those who try to skirt the rules and collect the tax, without reporting it or passing it along to the city.
But there’s also no real way for Boulder regulators to know just how often someone is renting out their space, and thus how much in taxes they owe, Buren says. Meanwhile, the current ordinance will discourage people from following rules because of all the hoops they’ll have to jump through, he says.
“It’s going to encourage people to not follow rules,” Buren says. “They’re set too strict right now. Airbnb has no obligation to turn over information to the city. The only way the city can regulate it is to send people out and act as Airbnb [users] and make sure they’re following the rules.”
Parry-Okeden says that in some towns, city regulators will go through all the Airbnb, VRBO and other listings and contact the owners of those units for taxes owed. Airbnb just announced it would collect taxes upon each booking in its largest operating city, Paris, on behalf of the owner. The company has done that in other cities like Philadelphia, Chicago and San Francisco.
“There’s definitely ways for the government to regulate this,” Parry- Okeden says, adding that in towns like Breckenridge, Vail and Aspen, where short-term rentals have been allowed and regulated for years, the wrinkles have already been ironed out.
“[Regulation enforcement] varies from location to location,” he says. “A lot of them [resort towns] have been operating with them [rentals] for so long that they’ve kind of determined their way of handling things. … In a town like Boulder that maybe hasn’t figured all those things out, there may be some give and take until they find the best solution.”
Buren says the other main aspect he and dozens of other short-term renters in Boulder take issue with is the proposed regulation on the housing unit’s maintenance.
“The other aspect is having to get my house inspected by four to five different entities that say I’m up to [the] code that I already have to adhere to just by owning my house,” Buren says. “The city’s going to spend an inordinate amount of money to inspect them.”
The city’s plan is to spend about $150,000 to $350,000 on inspections, though, the city says in its review of the ordinance that “the range is large due to not knowing for certain, at this time, what the scope of regulatory allowance may allow,” and that that information might not be known until 2017.
It’s just another part of the give and take Parry-Okeden says Boulder will have to endure before it figures out the balance of how it wants to regulate short-term rentals. The ordinance on Thursday has eight amendments attached to it that will be discussed.
The first amendment refers to Boulder’s so-called “sabbatical exception,” which allows homeowners to rent their homes without a license if they leave the country for up to 12 months. The city recommended that the exception is eliminated, thus requiring short-term renters and those who rent while out of the country to obtain a permit.
Another amendment seeks to upend the whole ordinance in a way. It would limit the amount of short-term rental licenses distributed to 1,000, while eliminating the stipulation that the units have to be owner-occupied.
Councilwoman Mary Young recommended an amendment that would simply limit each person to one permit; thus eliminating the owner-occupied restriction.
The last notable amendment would grandfather in those who have been renting their units for short-term stays for a long period of time. Those who can prove that they have a history of this wouldn’t be subject to certain aspects of the tax and regulation.
To read more about why Boulder homeowners say short-term rentals help them afford to live in town, read BW’s original report, “High density, low confidence” from April 30 on boulderweekly.com.
