Recently, the city of Glenwood Springs enacted a moratorium on what are defined as Accessory Tourist Rentals (portions of a dwelling unit being rented while the homeowner also resides at the property) and Short Term/Vacation Rental.
A recent letter to the editor by Leslie Selzer opines that the moratorium was long overdue citing issues such as possible use by drug dealers and sex offenders, writing “current homeowners face increased property assessments based on inflated real estate prices…,” and allowing persons to own property and shift the cost to the neighborhood.
There is also mention of turning a residential property into a commercial enterprise.
These opinions need examination of fact. To start with, where is there a Colorado statute or Glenwood Springs ordinance that says a home offered for short term rental is legally termed a commercial enterprise? There are none. Renting for greater than 30 days is not considered commercial, so why would less than 30 days be considered commercial?
For some reason, though, permittees of Accessory and Short Term Rental do pay a 3.7 percent use tax to the city in addition to sales tax, while owners of long-term rentals pay zero use tax and sales tax.
I am not an expert on drug dealers and sex offenders coming into Glenwood and using short-term rentals. I suggest a consultation with our police department for the facts. Certainly, a drug dealer or sex offender could use a short-term rental, a long-term rental, hotel, or be a home owner here, as well.
With respect to shifting costs to the neighborhood, what is cited is unclear. He is envious of persons being able to buy property and then using Airbnb or VRBO to help supplement their costs of ownership.
Here is an examination of facts. Recent data show that U.S. renters are now paying 39 percent of their income for housing and that over 33 percent of homeowners are paying greater than 30 percent of their income on housing (which is the financial world’s suggested limit on responsible housing costs).
So, what is wrong with people (e.g., seniors, young adults) supplementing their income by renting out portions of their home while they reside there, or renting their home while they are gone on vacation or business? This supplemental income also allows homeowners to improve their property, thus adding to neighborhood character.
But again, what costs are being shifted to the neighborhood? Selzer goes on to examine 16 Airbnb properties located downtown and suggests these somehow “cost the neighborhood.” He said most of the 16 accept 10 or 11 guests.
This is simply not true. None of the 16 downtown properties I examined on Airbnb allowed more than eight. One house accepted eight and one house seven, but the average on Airbnb was only 4.3, which is totally consistent with the normal use of the house by a homeowner or long-term renter. I am willing to look at other data if available.
Now, an issue mentioned that we can agree upon and should be looked at closely during the moratorium period by officials and citizens alike is the possible effect of long-term renters being either forced out due to a conversion to an Airbnb/VRBO property, increased rental costs due to Airbnb, and increased property taxes due to a possible Airbnb effect of increased property values.
There was an article published in the Wall Street Journal on Oct. 22, 2017 that cites a study by UCLA professor Dr. Edward Kung on the effect of Airbnb on rents and property values for homeowners. He looked at 100 metro areas that had fairly large increases (10 percent in one year) in Airbnb listings and found that there was an extra 0.4 percent yearly increase in monthly rental prices and a 0.6 percent increase in the property value due to the Airbnb effect over and above the normal economic factors.
From 2012, when housing prices bottomed out, until 2018, U.S. housing prices have increased about 30 percent while here in Glenwood that figure is approximately 44 percent.
So, if Dr. Kung’s study is somewhat accurate and could be applied to Glenwood, we may conclude that about 4 percent out of that 44 percent is caused by the Airbnb effect. That is somewhat significant, I agree.
Dr. Kung further suggests: “Policies should try to stop the conversion of properties from long-term rental units to short-term rental units. But regulators should not restrict home sharing for people who would not have made their homes available to long-term renters anyway, such as: owner-occupiers; using Airbnb to share unused rooms or rent their home while they are away; or vacation-home owners, who intend to use their house for part of the year.
“For these people, home sharing allows them to more fully utilize their homes by generating an additional income stream. The challenge is to fully understand the intent of the homeowner.”
Hopefully, in the next four months we can have dialogue based on facts, not emotions and fear-mongering, and work on a solution that is both fair to neighbors of rental properties and, at the same time, protects property rights of homeowners who want to supplement their income by utilizing these platforms.
Curt Peterson resides in Traverse City, Michigan, and has property and family ties to Glenwood Springs, as well as being a regular visitor to the area.