Vbro and Airbnb are fun ways to travel, but how do they affect your community?
Vacations and short-term rentals have become new and profitable in the last decade through services such as Vrbo and Airbnb. However, according to city and county officials, keeping home inventories at sustainable levels requires a balance between vacation locations and long-term stays.
The city of Durango had previously planned to maintain this kind of balance, but La Plata County is still solving it, said county spokesman Ted Holteen.
City planner Dan Armentano said vacation rentals make up about 1.5% of the total housing stock in Durango.
Mike Segrest, deputy manager of the county, said that about 2% of homes in the county’s unincorporated area are vacation rentals.
According to census data, there were 28,581 homes in La Plata County in 2020, of which about 915 were vacation rentals.
Vacation rental company Airbnb has exploded in popularity since its inception in 2008. While Airbnb and such services are convenient services for travelers, their presence can break into the availability of housing and is taxed on housing charges rather than commercial charges. Guests unfamiliar with the places they are visiting can be annoying to their neighbors.
The biggest problem for local governments is the commercial and housing tax rates. According to Durango Mayor Kim Baxter, the hotel pays a sales tax higher than the housing tax. According to Segrest, the housing tax rate is about 7% and the commercial tax rate is 29%.
“Therefore, they compete directly with hotels, but the competition is not equal,” Baxter said. “This is a problem that the legislature must address. It cannot be addressed at the local level.”
She said it wasn’t a critique of the vacation rental business model, but a critique of how property taxes are structured.
This issue was exacerbated by the increase in “short-term” bookings during the COVID-19 pandemic. According to Baxter, short-term rental contracts are considered to be within 30 days in Durango. However, people have signed a period of 2-4 “30 days”.
She said a “short-term” rental of up to four months would invalidate the entire purpose of the short-term rental and violate the law.
“We need to ensure that impacts on the wider community do not adversely affect our quality of life,” Baxter said. “And our quality of life means that people can afford to live here and have high-paying jobs.”
Short-term rental opportunities remove potential housing units for others who don’t live in the community, sometimes up to a quarter at a time, she said.
La Plata County is working on tracking vacation rentals, but the only data revealed so far is from companies that are surveying regions across the country to find properties advertised as vacation rentals. ..
The problem is that it is not 100% accurate or verifiable and cannot be used to perform an action.
Holteen said some second-tier homeowners may not be aware of or consider tax and home inventory issues.
Segrest said the authority to impose reporting requirements for vacation rentals, as he understands, must come from the state legislature. The La Plata County Commissioner asked staff to make vacation rentals a topic of discussion, perhaps in the third or fourth quarter of this year, to find a viable alternative to reporting requirements.
Durango has caps on the number of vacation rentals allowed in different zones of the city, preventing rentals from becoming “virtual hotels,” Armentano said.
He said the city code was updated near the end of 2020 to address the issue of vacation rental owners overtaking mixed-use business and residential properties.
“One of the things we noticed was that there were some properties that were actually dominated by the number of vacation rentals used, the number of permits issued, and the total number of residential units.” Armentano said.
The city has decided to cap the number of vacation rentals that can be allowed to operate from these locations.
Armentano provided the Jarvis building near 10th Street and Main Avenue as an example. There are 22 residential units, 16 of which are allowed vacation rentals, he said. But that’s not necessarily what the city of Durango is trying to encourage.
“We wanted a multipurpose building with residential units to be used almost entirely for residential use, rather than a de facto hotel,” he said.
After seeing how vacation rentals can be expensive, the city tightened the industry’s zoning limits in 2014 and 2020.
According to Armentano, a total of 22 vacation rentals are allowed in the Established Neighborhood 1 (EN1) zone and a total of 17 vacation rentals are allowed in the EN2 zone. EN1 moves up and down north of Main Avenue, and EN2 includes a residential grid in downtown.
According to Armentano, there are 39 vacation rental units in downtown Central Business District.
Chris Bettin has set up a vacation rental collective based in Durango. The collective operates in 15 different states and is one of the top 50 vacation rental companies in the world. Bettin, a former member of the Durango City Council, said the city is at the forefront of understanding the need to limit vacation rentals.
At the same time, Mr. Bettin said he advocated a slightly looser limit.
“It’s a very limited use in Durango,” he said. “… the total density is limited to 3% in these two neighborhoods (EN1 and EN2).”
He said that balancing vacation spots and housing is important for maintaining a balanced community. Cities depend on tourism costs, but at the same time, when all the homes in the community become accommodations, it is no longer really a community.
Bettin wants the city to allow vacation rentals in more areas while maintaining density limits. He said Durango’s vacation rentals are in wealthier areas and it is fair to give the more “modest” areas the opportunity to host vacation rentals.
Baxter said vacation rentals “are working pretty well” in Durango, except for her only concern, property tax discrepancies.
Senate Bill 20-109, which classified short-term assets as “non-resident” for tax purposes, was introduced on January 15, 2020, but was rejected by Congress.