COLORADO SPRINGS, Colorado — City Council made a sharp pivot this week against short term rentals when multiple members expressed views that property owners who rent out a residential home as if it were a hotel are in fact operating a commercial enterprise in violation of zoning.
This change in policy view came nearly a year after council voted to license these same vacation rentals and collect sales and lodging taxes from the owners.
"This is a business enterprise, no ifs, ands, or buts about it," Councilman at-Large Bill Murray said at Tuesday's regular council meeting. "I think we need to stop and philosophically decide why we want to give these people, this particular business enterprise an exception."
The discussion came up as the board was expected to debate options limiting the number of new short term rental licenses issued for those property owners who do not live in their home for more than 6 months out of the year. One option would have restricted licenses within a 500 foot radius of an existing licensee. The other option would be to spread out the licensees by a distance of five consecutive lots.
However, the density limit ordinance was not ready for a council vote Tuesday. So, the item was added to the agenda to be postponed for two more weeks. During this discussion, Councilman at-Large Wayne Williams informed his colleagues that state law defines short term rentals as commercial property.
"This is not new, this is the law. It's existed for decades," Williams said. "It's been enshrined in TABOR litigation, it's been enshrined in Gallagher litigation as to what that distinction is."
That led to a discussion about whether to simply prohibit all future short term rentals in residential zones.
Andy Pico from Council District 6 said he thought such talk of ban on non-owner occupied short term rentals was out of line.
"I think this is a violation of property rights," Pico said. "I think they have a use by right to rent their houses out as they see fit. I don't think we should be trying to draw a distinction between a long-term rental and a short-term rental."
Ryan Spradlin of the advocacy group Colorado Springs Short Term Rental Alliance said it was a stunning change in policy stance for the roughly 1,000 owners who've already gone through the city's licensing process. He echoed Councilman Pico's sentiment that the ban is an infringement of private property rights.
"It's not their decision who I rent to and how long I rent to them, that's a property rights issue," he said. "Frankly, I don't believe that that's a decision that should be left to City Council."
Members of Spradlin's group had planned to attend Tuesday's meeting but stayed home when a city staffer emailed to say the vote was being postponed.
Members of the homeowners advocacy group Colorado Springs Neighborhood Preservation Alliance received the same message. Founder Mike Applegate said he was surprised by the board's change in stance.
"Shocking, and it felt like we were making some progress and that people were listening on council," Applegate said.
Don Knight from Council District 1 originally proposed an ordinance in October to establish both the density limit and occupancy restrictions on future licensees. That proposal was split and the occupancy restriction passed on a unanimous vote.
The density limit held over until this week, and Knight was disappointed to learn an ordinance wasn't ready for a vote.
"We did kind of a straw poll so we could direct staff what type of resolution to prepare," Knight explained.
He thinks a majority of council members support his view that non-owner occupied short term rentals are businesses.
"They should not be allowed in our single family neighborhoods because they are a business and we don't allow any other business in the neighborhood."
Jill Gaebler from Council District 5 feels like this new posture is pulling the rug out from underneath property owners who've been following the rules.
"I am concerned because these are small businesses and the owners of these properties have invested a lot of money in these units, and we are potentially harming them by adding on regulation," Gaebler said.
Knight and Gaebler said if council prohibits non-owner occupied short term rentals in residential zones, the existing licensees would be grandfathered in. However, Gaebler believes the ban could inadvertently harm the city's tourism industry.
"Tourists come to Colorado Springs wanting this kind of property to rent and if we don't provide them, they may not come here."
Councilman Williams also suggested an alternate proposal to convert short term rental licenses into special use permits. Such a change would require property owners to notify their neighbors and have a public hearing before converting a home into a short-term rental.
That idea bothers Spradlin because it could potentially overturn existing licenses.
"When they start attacking your personal property rights and entrepreneurial protections, that's when you really have to wake up," Spradlin said. "If it can happen to us, it can happen to you."
Applegate from the Neighborhood Preservation Alliance believes investors who buy houses to use as short term rentals are harming home buyers shopping for the same properties in one of the hottest housing markets in the country.
"Someone who is willing to pay a whole lot more than you are because they know what the earnings potential is of that residential property that will then gain money from commercially," he said.
City Council is expected to vote on short term rentals during their regular meeting on Tuesday November 26 at 1:00 p.m.