Nov 9, 2023 - News

Colorado Airbnb owners fight back as governor pushes higher taxes

Illustration of a key suspended in mid-air by pieces of taught red tape.

Illustration: Aïda Amer/Axios

Colorado's love-hate relationship with short-term rentals, like those listed on Airbnb and Vrbo, is getting even more complicated.

State of play: Property owners are organizing opposition to new taxes and fighting back in court with legal challenges to rental limits and other regulations — a high-stakes fight that impacts one of the state's top economic drivers, tourism.

  • A nonprofit representing roughly 300 property owners filed a lawsuit last week against the town of Breckenridge seeking to overturn two ordinances that capped short-term rental licenses available in town. They argue such policies amount to rent control and violate their rights.
  • 101 homeowners sued Summit County in August to negate similar rules on where rental units are located and how many nights are allowed.

What they're saying: "We want to make Summit County ground zero for this fight and make it a focal point for the nation," Todd Ruelle, a Virginia resident behind the lawsuit who rents out a home in Summit County, told the Colorado Sun.

  • He argues that local property owners helped start the mountain recreation communities and "continue to drive local economies."

What's new: Gov. Jared Polis and Colorado lawmakers are escalating the fight with draft legislation to tax short-term rentals at the same rate as hotels, saying it's a matter of fairness.

  • For those that rent more than 90 days a year, the owners would need to pay the 27.9% lodging rate, rather than the current 6.77% residential rate for stays less than 30 days.
  • The measure advanced through a committee at the state Capitol last week but drew vocal opposition from dozens of property owners across the state.

Between the lines: The governor voiced support for the idea at a recent budget briefing because it would increase property tax collections in communities and reduce the how much money the state provides to local governments by $78 million.

The big picture: This battle is a long time coming. Colorado is the birthplace of the short-term rental fad and the effort to rein in investment-minded property owners.

  • The state's tourist towns, particularly those mountain communities, began adding limits and fees on short-term rentals as a way to maintain affordable housing for the local workforce.
  • The movement accelerated after the pandemic as rural areas saw wealthy newcomers pay huge prices for homes that spiked values more broadly.

The other side: The momentum is switching directions in Telluride after a two-year fight about its new taxes and regulations, some of which were voter-approved, the Sun found. The town is one of the first to ease its limits on new rentals and let a moratorium expire this year.

  • "The only way we are going to solve this problem is to build affordable housing and in order to do that we need to make money," said councilwoman Adrienne Christy, who once supported a short-term rental cap.

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