Colorado Cities Compete for Worst Airbnb Regulations: New at Reason

Arbitrary restrictions of Airbnb around Colorado include limiting short-term rentals to one unit per block face in one city and forbidding second homes from being rented out.

Jared Meyer and Andrew Wilford write:

"There is no one-size-fits-all answer for municipalities in regulating short-term rentals." This conclusion, which comes from the Colorado Municipal League's recent report on short-term rental regulations, may be true. But Colorado cities' policies show that there are countless misguided approaches to regulating the growing home-sharing industry.

On January 1, the city of Denver celebrated the new year with regulations meant to limit home sharing. These restrictions, pushed by the hotel industry, represent unnecessary impediments to residents renting out their homes for some extra money. Unfortunately, limiting property owners' rights is part of a growing trend across the state of Colorado.

Denver's new rules require a $25 license fee, a 10.75 percent business tax on all income gained, and compliance with certain safety and liability insurance requirements. Some of these requirements are common across the United States, but the major problem with Denver's rules is that homeowners are only allowed to rent out their primary residence. Even though most Airbnb hosts rent out their primary residences, second homes are nonetheless an important part of the home sharing industry. Second homes can comprise everything from vacation homes to long-time family homes that owners do not want to sell when work opportunities lead them to another city for a few years. A ban on renting them out is unnecessary and arbitrary.

If Denver follows through on its misguided regulations, the next few months will be expensive for local hosts. The vast majority of Denver Airbnb hosts remained unregistered in the weeks leading up to the January 1 deadline, even when they now face fines of up to $999 per incident.

The second most active city in Colorado for Airbnb is Boulder and Boulder County at large has certainly seen an explosion in growth from Airbnb. Six of seven communities in Boulder County nearly doubled their number of annual of Airbnb guests from 2015 to 2016. Even Boulder, the last city (and largest), increased its visits by over 50 percent. This is great news for Boulder County. Airbnb guests stay more than twice as long and spend almost twice as much money in the community as other visitors. Airbnb's wide footprint in diverse neighborhoods also spreads this travel income around outside of traditional hotel districts.

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