Published in the January 24, 2019, edition of the Lyons Recorder.
COMMENTARY: What’s the future of affordable housing in Lyons?
An update on short-term rentals and their effects on long-term rentals
by Amy Reinholds
Short-term vacation rentals have been allowed in residential zones in Lyons town limits since the beginning of 2018, but so far only eight are licensed. Lyons Town Planner Paul Glasgow and Lyons Code Compliance Officer Ian Greer presented an update on short-term rentals at a workshop before the regular Jan. 22 Lyons Board of Trustees meeting.
Their presentation showed that in 2018, eight applications were processed and one was pending, and in 2019, those eight licenses are being renewed (five licenses have been issued, one is pending, and two are awaiting fee payment). Town of Lyons Short Term Rental Licenses, like Town of Lyons Business Licenses, must be renewed every year. Renewal notices were sent by email to the 2018 licensed homeowners.
All the legal licensed short-term vacation rentals in the Town of Lyons are listed at www.lyonscolorado.com/explore/lodging. I’m glad we have this link to refer to friends and family for the licensed rentals in town limits.
Until the short-term rental ordinance was added to the Town of Lyons municipal code at the start of 2018, the only way for residents on residential-zoned properties (R-1 and R-2) in town to legally rent space in their homes for short-term, nightly, or weekly periods of time (including on websites like AirBnb and VRBO) was to apply for a conditional use review to run a Bed and Breakfast business. The Bed and Breakfast conditional use review process required several steps including public hearings before the Lyons Planning and Community Development Commission (PCDC) and the Lyons Board of Trustees. No homeowners applied for the Bed and Breakfast conditional use reviews for R-1 and R-2 properties. (Bed and breakfast businesses with six or fewer units are allowed by right — without the conditional use reviews — on A-1, A-2, and Estate zoned land, if the homeowners have a business license and the rented units are in the main house.)
But the new ordinance put in place last year makes it much easier for homeowners on R-1 and R-2 properties, who don’t want to go through the Bed and Breakfast conditional review, to rent out rooms to vacationers in the homes where they live. Now all a residential homeowner must do is complete a Town of Lyons Short-term Rental Application at www.townoflyons.com/ShortTermRentals, with a new application fee, and pay an annual license fee for a Town of Lyons Short-term Rental License. The costs are a $100 license fee plus a $75 new application fee for the first calendar year ($175 total), and a $100 license fee plus a $50 renewal application fee for following years ($150 total each year). Waivers of the $100 license fee are granted for short-term rentals of rooms that meet accessibility requirements.
The Lyons Short-term Rental ordinance prohibits short-term rentals in campers or RVs, in other non-compliant structures like sheds, in accessory dwelling units (ADUs) that are covered by the www.townoflyons.com/566/Accessory-Dwelling-Units ordinance, and in homes that the property owners do not use as their principal residence. I care about the connection between short-term vacation rentals and housing that local workers can afford. If there were no restrictions on the use of ADUs after all the incentives that save homeowners money, property owners who wanted to maximize profit would run a business that brings in $200 a night from vacationers, instead of building community by renting to longer-term tenants who live and work in Lyons. I like that Trustee Jocelyn Farrell has said that even the 30-day minimum time period for renting ADUs should be bumped up to 90 days or longer to encourage more of a community vibe in our residential neighborhoods instead of a hotel lodging environment. Glasgow told Farrell that he will bring forward her comment to the other issues the trustees sent to the PCDC to review.
In August 2018, a letter was sent to property owners of all short-term rentals identified in a search, notifying them licenses were required to legally rent their homes as short-term vacation rentals. Glasgow and Greer also reported that in November 2018, a letter was sent through certified mail to property owners of the remaining property owners of non-compliant short-term vacation rentals, stating that if they are operating an unlicensed short-term rental as of Jan. 1, 2019, “fines and/or penalties may be assessed.” About half of those certified letters were returned to sender, so another form of official notice is now required for those properties.
After outreach to make everyone aware, and sending out letters, they saw the numbers of listings for unlicensed short-term vacation rentals websites like AirBnb and VRBO go down. “There were 25 and now there are 15 listings” within the town limits,” Greer said. “Although some people might have taken them down and will relist them later,” he added. Glasgow said he and Greer plan to start issuing the violations by end of January. “If they are working with us and have submitted an application for a license, we will try to resolve those issues and not fine them.” The first fine will be $175, which is the same cost as if they would have purchased a license in 2018. Additional fines will continue every 21 days until the fines are paid. The Town of Lyons Short Term Rental ordinance gives the town the authority to administratively determine the fees.
“I’m glad there is enforcement,” Trustee Mark Browning said. “I don’t think there is anyone who runs an AirBnb in Lyons who doesn’t know by now that it has to be licensed.”
Greer said that a lot of the legwork for researching the unlicensed vacation rentals in the first year needed to be done in person, and may continue to be. It’s not easy to tell just by looking at websites where the properties are located or if they are in the main house or in ADUs, which are not allowed. He said one unlicensed short-term vacation rental in particular in Lyons Glen townhomes was difficult to determine the property owners to notify, because two homeowners had the same first name as the host identified on the vacation rental website.
A Lodging Occupation Fee of $2 per night (approved by Town of Lyons voters) is also required for short-term vacation rentals, as well as hotels and motels, in the Town of Lyons. Browning asked if AirBnb will collect those fees on behalf of the short-term-vacation-rental hosts going forward. “We hope so,” Glasgow said. He reported that the company that hosts listings of vacation rentals didn’t want to talk to town staff but instead to the town attorney. Trustees also discussed with Greer and Glasgow that the process could require the homeowners to put their Lyons Short Term Rental License numbers on their AirBnb listings. Several of the eight licensed short-term vacation rental hosts have already been submitting their monthly tax forms directly to the town, Greer and Glasgow told the trustees, and some already don’t rent out their spaces this part of the year, so their fees are $0 in January. Forms are available at www.townoflyons.com/592/Short-Term-Rentals.
Glasgow also said that the Lyons Fire Protection District gets a notification whenever a Short Term Rental License is issued, so they know that someone other than the homeowner’s family is staying in the space.
Going forward into 2019, Glasgow and Greer identified several issues to be addressed, and the trustees asked them to get recommendations from the PCDC. The following four issues were the biggest priority:
1) One issue is whether short-term rentals of buildings with one or two rooms, or rented by one party, can be allowed in commercial districts as a smaller-scale option than a hotel/motel license. Greer and Glasgow found that there are three current short-term rentals in commercial districts (314, 324, and 318 Main Street) that have been licensed in the past with business licenses but don’t work with the Short-Term Rental code that was created for residential zones. They are similar in nature to hotels because there is no principal homeowner who lives on site. Lodging businesses are allowed by right in commercial zoned land, including the CEC zone, but they would typically require a hotel/motel license, which involves state processes. Glasgow said that conversion of these small properties to a motel or hotel requires a substantial upgrade. The PCDC will be asked to look into whether there could be an alternative classification for commercial short-term rentals on these small, two- or three-room properties.
2) Another issue is short-term rentals in Agricultural zones in the Town of Lyons. Indian Lookout Road is the basically the only Agriculturally zoned area in the Town of Lyons. Glasgow said one resident in this zone has requested to do short-term rentals in a detached ADU, which is not allowed. However, the Agricultural zone allows a campground, or a rezoning as a PUD. “Rather than modifying the Short Term Rental zone, we should think of this outside that code,” Glasgow said.
Trustee Mark Browning said he didn’t want to see tap fees waived for a detached ADU and then have it be a short-term vacation rental.
3) Greer and Glasgow found some residential homeowners had detached accessory buildings without kitchens, so they weren’t full ADUs, but they still wanted to rent them out as short-term vacation rentals. Their recommendation was to keep the Short Term Rental code as is and not allow short-term vacation rentals in this kind of separate structure, although developing it into an ADU for long-term rentals should be encouraged instead. “It would be interesting to hear what the public sentiment is,” Trustee Barney Dresitadt said. Farrell said, “I have already heard short-term vacation rentals wouldn’t be acceptable… in R-1 zoning. But maybe in Agricultural or in Commercial it would be OK.”
4) Greer and Glasgow also saw several issues with attached ADUs, separate apartments in the same building as the main house, with kitchens. For this situation, they are recommending retaining the current Short Term Rental restrictions that a stove must be removed so that it is not a full kitchen. They also suggested that if there is no passage between the apartment and the main house that “interconnected smoke detectors” between the two living units could be mandatory instead of requiring tearing out drywall and adding an entryway between the units. Again, this issue is being sent to the PCDC.
Trustee Farrell had asked Glasgow whether it costs a homeowner with this kind of attached living unit more to apply to make it an ADU or to apply to make it a short-term vacation rental. The answer wasn’t clear during the discussion, but later I asked Greer and Glasgow what it would cost a homeowner on an R-1 zone in each situation. They explained that homeowners who wanted to use such an attached space for short-term vacation rentals would have to make sure there was no stove (and remove one if it existed) and then pay the annual license/application fees ($175 the first year and $150 each following year). However, for this kind of attached ADU, they wouldn’t have to change anything or pay anything if they wanted it to be an ADU for long-term renters. (Attached ADUs do not require conditional use reviews.) So in this case, it’s easier and free to just rent an attached apartment to a long-term tenant.
I agree with Trustee Wendy Miller who said “For those properties with a kitchen, there should be a way to incentivize the owners to rent it out as an ADU instead of a short-term rental, to encourage more long-term rentals.”
I also agree with Browning, who said that the purpose of the Short Term Rental ordinance was not to attract more short-term rentals but to make sure the ones that existed were licensed. And, I will add, the licensed short-term vacation rentals pay the lodging occupancy fee to the Town of Lyons.
This column is a commentary (opinion column) in the Lyons Recorder. For a history, you can read previous columns from both Lyons-area newspapers at lyonscoloradonews.wordpress.com. If you have any questions, comments, or complaints about this column, please contact me directly at areinholds @hotmail.com.