Short-Term Rental Questions

As before, we from INC hope that we can haves a fuller discussion of the subject in public than has yet occurred. The following questions are provided so that the neighborhoods can be informed as the question and answer period has not allowed sufficient time for answers to the following questions. We sincerely thank Keith Howard for the following questions. Responses in red are from Nathan Batchelder, MPALegislative Analyst | Dept. of Excise and Licenses

From: “Batchelder, Nathan D. – Excise and Licenses” <Nathan.Batchelder@denvergov.org>

Subject: RE: Short Term Rental Questions & Concerns

Date: February 17, 2016 at 2:36:02 PM MST

To: Keith Howard <KeithHoward06@comcast.net>

Cc: “Palmisano, Lucas W – City Council Operations” <Lucas.Palmisano@denvergov.org>, “Espinoza, Rafael G. – City Council” <Rafael.Espinoza@denvergov.org>, “Sandoval, Amanda P – City Council Operations” <Amanda.Sandoval@denvergov.org>, “Loucks, Stacie D. – Mayor’s Office” <Stacie.Loucks@denvergov.org>, “Barge, Abe M. – CPD Planning Services” <Abe.Barge@denvergov.org>

Hi, Mr. Howard – thanks again for your follow-up email. I’ve attempted to answer your questions below in RED:

Nathan Batchelder, MPA

Legislative Analyst | Dept. of Excise and Licenses

City and County of Denver | 720.865.2809
Nathan.Batchelder@Denvergov.org

From: Keith Howard [mailto:KeithHoward06@comcast.net]
Sent: Tuesday, February 16, 2016 12:22 PM
To: EXL Short-Term Rentals <STR@denvergov.org>
Cc: Palmisano, Lucas W – City Council Operations <Lucas.Palmisano@denvergov.org>; Espinoza, Rafael G. – City Council <Rafael.Espinoza@denvergov.org>; Sandoval, Amanda P – City Council Operations <Amanda.Sandoval@denvergov.org>
Subject: Re: Short Term Rental Questions & Concerns

Dear Mr. Batchelder,

Thank you for these responses to the questions I sent earlier this month. I appreciate this as a distinct improvement in the level of discussion of the STR subject. There is more to say and to argue, of course, and I may send additional questions and observations at a later time. Also, as indicated in my first email, I will share this whole email exchange with others. The factual information and draft text amendment language will be of interest to many.

Please allow me to point out a couple of gaps you could usefully fill in. My original question # 4 contained two related queries. You’ve answered the second one (no physical posting of STR properties,) but you’ve neglected the first (public availability of license.) I still think it’s important to know how neighbors and other interested people can find the details of STR licenses. Can you please add that information to your reply?

Excise and Licenses is still exploring this idea of whether or not a “database” of STR licenses would be available for review and in what format. This idea has come up at some of the other town hall sessions, and it’s something we’re still gathering feedback and input on from the community. Your input on this proposal is equally valuable, and it’s something we continue to discuss.

The red-line version of the draft text amendment is mostly cut-and-dried. But for the definition of “primary residence” the red-line version refers me to DRMC Chapter 33. I believe I’ve found Chapter 33, but for the life of me I don’t see any definition of “primary residence” there. Am I missing something obvious? I doubt that I’m the only person who is curious about this definition. Thank you in advance for finding the relevant DRMC passage, and for providing a correct (functional) citation.

Currently, there is no definition of “primary residence” in our municipal code – that will still need to be codified via the licensing ordinance. The licensing ordinance language is still being drafted by Excise and Licenses, but the definition of primary residence will likely be defined as a primary residence in Denver demonstrated by various forms of documentation, including your driver’s licenses, voter registration, state I.D. card, tax documents, utility bills, or any other proof or documentation that demonstrates the STR unit in operation is the primary residence of the licensee. The ordinance will likely have language that a person can only have 1 primary residence in Denver.

I am puzzled about one provision of the STR limitation language. It is 11.8.9.1.H of the red-line version: “[A Short-Term Rental] Shall not be subject to a maximum number of guests per night.” I strongly object to this. A limitation on the maximum occupancy of an STR (presumably related to the physical size and capacity of the dwelling) would seem to be one of the most obvious measures for limiting potential harm to neighborhood amenity and stability. What is the licensing proposal’s rationale for its failure to limit maximum occupancy?

You are correct that under the current proposal in the text amendment, there is no defined maximum on the number of STR guests per night. From studying and observing STRs in Denver (and across the nation) we’ve seen STR hosts typically require their own guests maximums. We find these hosts have invested substantially in their STR units, and they typically don’t want to put their units under any risk for damage or harm by renting out to a very large group of individuals. The STR market is competitive, and we’ve found hosts are proactively making their own occupancy requirements and other rules in order for guests to enjoy their stays.

Additionally, tracking and enforcing a guest limit could be extraordinarily difficult, if not impossible, for the City to administer. Keeping track of the number of guests on any given night on any given STR in Denver could prove to be a tremendously difficult task with limited resources available. However, we will still have the ability to track and monitor complaints that are fielded to DPD, 3-1-1, and other city agencies surrounding any licensed (or unlicensed) STR unit. If a licensee violates any local or State law, Excise and Licenses will have authority to levy penalties, fines, or even suspend or revoke STR licenses. Additionally, the language in the text amendment describes the STR use purely as accessory to a residential use, and the accessory use must be incidental and subordinate to the primary use. This language helps avoid STRs from being used purely for events, parties, or other large commercial gatherings that are rented to multiple people at a time. Because the text amendment is being drafted by CPD, I’m copying Abe Barge – the author of the text amendment on behalf of CPD – in case there are any additional questions related to the text amendment itself. He can clarify details of the text amendment much better than I can, so I’ll defer to him for any questions on the text amendment and the zoning piece of the proposal.

Lastly, our proposal requires the host to be the “primary resident” of their unit, and the intent behind this restriction is to limit any unwanted neighborhood impacts by tying the unit to a person’s primary residence. Under the current proposal, only a person’s primary residence can be operated for an STR. A primary resident will likely avoid renting to large groups of individuals that you referenced.

Finally, your responses frequently refer to E&L regulations for licensing and supervision of STRs, but you don’t offer any draft E&L language. Acceptable functioning of the licensing scheme will be dependent on workable regulations and effective enforcement. One gathers, also, that the STR Advisory Committee will be created and defined by E&L regulation. How can citizens (or City Council members) judge the prudence of the STR legalization/regularization without at least a draft of the necessary regulations? When will the definitions, rules, policies and procedures be available for study and comment?

Our licensing ordinance is still being drafted internally, but it will simply be a legal translation of the framework and regulations that we’ve already proposed. That same regulatory framework proposal can be found on our website. The ordinance itself is simply a technical, legal document to be approved by City Council, but our proposed regulatory framework and license requirements are already posted for review, and we’re presenting details of the regulatory framework at our town hall meetings as well as on our website. If you have any specific questions about these proposed regulatory requirements, I’m more than happy to continue discussing them with you in further detail. If it’s helpful, I’ve also attached the one-page information sheet that describes all of our proposed regulatory requirements. Our licensing ordinance will simply be a legal interpretation of these requirements for the purpose of legally enforcing the requirements. Finally, our ordinance language will be posted for review once the draft is completed and ready to be introduced to the formal legislative process. As of right now, we’re targeting mid-April for the ordinance to be introduced to Council committee, with formal Council consideration in late May / early June.

Again, I hope this information is helpful, and I would encourage you to attend the Town Hall session this evening (North High, 6:30pm) to learn more from our presentation, and to discuss the proposed regulatory requirements with other Denver neighbors and residents.

Best,

Nathan Batchelder

Best regards,

Keith Howard

On Feb 12, 2016, at 9:49 AM, EXL Short-Term Rentals <STR@denvergov.org> wrote:

Hi Mr. Howard –

Thanks again for forwarding your questions and concerns to the STR email inbox. As mentioned in an earlier email to you last week, staff from both Excise and Licenses and CPD wanted to take the time to provide as much information as possible to your questions, so apologies for the delay in response. Please see our below responses to your questions in RED, and please do not hesitate to contact us if you have any other questions or concerns.

Again, we sincerely appreciate you taking the time to forward these questions and concerns, and thank you for your valuable input and feedback.

Best,

Nathan Batchelder, MPA,

Legislative Analyst | Dept. of Excise and Licenses

City and County of Denver | 720.865.2809
Nathan.Batchelder@Denvergov.org
From: Keith Howard [mailto:KeithHoward06@comcast.net]
Sent: Monday, February 01, 2016 1:13 PM
To: EXL Short-Term Rentals <STR@denvergov.org>
Cc: dencc – City Council <dencc@denvergov.org>
Subject: Short Term Rental Questions & Concerns

1 February 2016

Denver CPD:

On January 23^rd I attended a meeting of the INC Zoning & Planning Committee. Staff of Denver CPD presented the STR Licensing Proposal information that is now reproduced on www.Denvergov.org/STR. Although a number of questions occurred to me, I had no opportunity to ask them. This was partly due to the structure of the meeting, about which I will comment later. But, first, here are some questions that seem pertinent to me. I would like to understand the workings and ramifications of the proposed STR legalization/regulation, as well as to point out some incentives that may thereby be created. Thank you in advance for answering in writing, so that your definitive replies may be shared with other interested people.

When will the text of the Ordinance and the actual language of the zoning text amendment(s) be available for study? Will this material be published in time for the Community Town Hall Presentations Denver CPD has announced (2/3, 11, 17 and 25)? The definitions of “licensee” and “principal residence,” for instance, are fundamental to the STR licensing scheme. If the relevant texts are not yet available, why are the Community presentations being held now?
The draft zoning text amendment is now available for public review at www.DenverGov.org/textamendments. Because ordinances and zoning text amendments tend to be overly technical for most members of the public, we are focusing outreach on the key principles and requirements that will be included, rather than the specifics of implementation. However, we welcome any comments you may have on the specific zoning amendments. The purpose of the town hall meetings is to important feedback that might need to be implemented in ordinance language to make our licensing framework more effective and responsive to the community. As we get further along in the public review process, the text amendment and ordinance language will also be available on the City’s SIRE website as is done with all bills at the start of the official legislative process.
Is CPD proposing that STRs be permitted in ALL residential zone districts? If not, which residential zone districts will continue to exclude the STR lodging use?

The proposal is being made per direction from the City Council Neighborhoods and Planning Committee. It would allow short-term rentals in all zone districts where residential uses are currently allowed. This includes commercial districts, mixed-use districts, downtown districts, residential districts and some industrial districts where residential uses are currently allowed.

Permitting STRs in residential zone districts will benefit a relatively small subset of all residential property holders in Denver. But the proposed Council action will take away the majority’s assurance that a neighbor cannot legally operate a hotel. As a reference point, what is the total number of residential dwellings in the City of Denver?

There are about 285,000 residential dwellings in Denver.

An STR license, in addition to being a valuable business asset, will also be an official action, and hence a public record, like a liquor license. Where and how will members of the public find this information? Will physical posting of STR-licensed properties be required? If not, why not?

Physical posting of STR-licensed properties will not be required. This is aligned with existing permitted uses such as home-based businesses and accessory dwelling units which do not require physical posting.

CPD’s STR PowerPoint alludes to regulatory processes including revocation and show-cause hearings. It’s likely that most citizens are unfamiliar with such processes. When will E&L publish the relevant rules and procedures?
This is an issue for the STR Advisory Committee to take up in its work post ordinance adoption. The STR Advisory Committee can be useful in devising these types of information pieces and guidelines – not only for show-cause procedures, but also for additional education, awareness, or other communications to the public and STR hosts in the future.
The Licensing Proposal document states that STRs will be allowed in rental property, with “permission from the landlord of property owner.” Will documentation of such permission be required for STR license application, and in what form? If landlord/owner permission is withdrawn at any point, will the STR license cease to exist? Will operation of an STR without landlord/owner permission be grounds for immediate eviction? What other City ordinances, or other statutes, are relevant to this question and/or may need to be amended?

Excise and Licenses inspectors will have the authority to conduct investigations into whether or not a tenant has permission from the landlord or property owner to operate a STR – otherwise defined as “proof of premise”. Our department will be able to request proof from either the tenant or the landlord that such permission does exist, and that proof may come in a contract, agreement, or any other sufficient form of demonstration that the tenant does, in fact, have proof of premise (permission from the landlord or owner) to operate at STR. Whether or not a tenant is evicted for conducting short-term rentals without landlord permission will be a matter for individual landlords. Fines or license revocation may occur where a tenant has improperly certified that they have landlord approval.

The Denver Housing Authority owns and/or administers approximately 11,000 rental dwellings. Can Denver CPD please ascertain what DHA’s policy will be concerning STR use of those dwellings?

We will work with DHA to determine its individual policy on STRs. In most other cities, housing agencies have forbid or severely limited short-term rentals in dwelling units that are designated as affordable. Additionally, private HOAs also have authority to forbid or prohibit STRs through covenants and other restrictions.

What is an Affidavit of Certification, for the purposes of the “online application”? Is this a form of self-certification, or will applicants be required to document the assertions they are affirming?

STR operators will be able to apply for an STR license through our automated, online application system. Applicants will self-certify by simply clicking a box online to certify under penalty of perjury that they meet the requirements to operate an STR. This is similar to online certifications that occur today in many other industries and environments, where one certifies under penalty of perjury that the information is true and accurate. Because the application will be online via self-certification, there are no requirements to submit any additional hard-copy documents. However, if an investigation occurs on an STR license, our inspectors will have authority to request any documentation to prove the licensee meets the requirements set forth in ordinance.

We are proposing this online certification model to create a simple, streamlined, and easily-accessible licensing system to achieve as high a rate of compliance as possible. From researching STR licensing in other cities, we’ve found that when faced with extra-ordinarily cumbersome processes including in-person applications, on-site inspections, and other additional layers of requirements, hosts choose not to participate and continue operating illegally, which is something we want to avoid.
The Licensing Proposal seems to provide neither prior notice of an STR application nor any means to support or to protest such an application. Is this the intention of the Ordinance? In what manner, if any, may neighbors object to the annual renewal of an STR license? Why is the proposed STR licensing process so different from the process for the licensing/permitting of group homes?

The proposal does not provide a process for protesting an allowed short-term rental. Similar to other allowed uses, there is no mechanism to deny a use that meets applicable limitations and requirements. Excise and Licenses and/or Neighborhood Inspection Services will follow up on complaints regarding unlicensed short-term rentals or short-term rentals that are in violation of applicable limitations and requirements.

Group living uses, such as residential care, have a number of compatibility and spacing requirements that are not part of the proposal for short-term rentals. The Zoning Permit with Informational Notice (ZPIN) process that applies to uses such as residential care helps ensure compliance with the more detailed standards and provisions. The proposal for short-term rentals is also intended to create a streamlined process for applicants (who are residents rather than operators of facilities such as residential care) to license their short-term rentals. In cities with more complex requirements, compliance rates have been low. Additionally, Excise and Licenses only performs notification to surrounding neighbors or properties when there is a public hearing conducted for a particular license. Since our proposal does not include public hearings for every new STR license or renewal, we are subsequently not proposing any formal notification. However, the Director of Excise and Licenses has the ability to suspend and conduct a show-cause hearing on any STR license at any given time.

City Council and CPD appear to be hypnotized by the online STR platforms, and the Proposal leans very heavily on Internet infrastructure to accomplish its regulatory objectives. Indeed the PowerPoint states “STRs are still a new, dynamic industry across the nation.” However, I see nothing in the proposed ordinance that requires an STR licensee to use an online booking platform at all. Have I missed something? Individuals and institutions that own or control property in residential zone districts may wish to offer short-term lodging for a variety of purposes. Their reasons might well be economic, but philanthropic objectives could also come into play. Might not a person, or a Church, establish what would amount to a hostel for the benefit of displaced persons, refugees, unemployed veterans, itinerant Buddhist monks, family reunion visitors, migrant workers, or any other purpose? There would only need to be a resident manager to act as applicant/licensee. Advertising might simply be by word of mouth or church bulletin. Such establishments may not be a “new, dynamic industry,” but won’t the proposed STR Ordinance in fact allow them?

You are correct that there is no requirement for an online listing. A license number would be required on any posted advertisement (whether online listing or a flyer in a church). Short-term rentals would also be limited to a single party (i.e., a short-term rental host could not legally conduct short-term rentals to multiple parties at the same time). We will look into additional specific language to help address potential use of short-term rental licenses for unintended purposes.

The exclusion of lodging uses (except true B&Bs) from residential zone districts is long-standing and important feature of the Zoning Code. Thus, STR legalization will be a notable, even radical, departure. Under such circumstances, it is reasonable to provide an effective mechanism for reevaluation of the proposed new permission at some later date. The proposed Denver STR Advisory Committee is perhaps intended to assuage such concerns. But the description of the Committee makes it clear that this is a completely empty gesture – meaningless window-dressing. For such a Committee to be credible as a safety valve, the STR Ordinance must include a hard sunset date, and the Advisory Committee should sit during the whole term of the Ordinance. The Ordinance should define the membership of such a Committee so as not to over-represent the group/interest of the STR business. I suggest a four-year limit on the Ordinance, after which it would need to be re-enacted, modified in the light of experience, or simply allowed to expire. Why is a hard sunset date not included in the proposed Ordinance?

Excise and Licenses is committed to establishing an STR Advisory Committee to continue evaluating, researching, and discussing STR issues if the ordinance is adopted by City Council. The STR Advisory Committee can include, but not be limited to residents, RNO representatives, city officials, city agencies, STR licensees, platforms, guests, tourism officials, etc. This STR Advisory Committee can meet as frequently as monthly, bi-monthly, quarterly, or whatever the committee feels is most appropriate. We are absolutely committed to keeping the STR Advisory Committee running in perpetuity if that’s deemed necessary. Because this industry is fluid and dynamic, an STR Advisory Committee can be invaluable to our department to analyze and research issues as they continue to evolve, and we have no intentions of terminating that committee any time soon because of its value to our department. If there are any policy or administrative changes the advisory committee may feel need to be implemented, our Department can certainly take those recommendations or changes to Council, even before a proposed sunset date. Generally, we would advise against putting in a specific, hard sunset date in the ordinance, as it gives our department – and the STR Advisory Committee – more flexibility and responsiveness to adapt and remain flexible to situations.

Finally, I would like to point out that the City Council and Denver CPD, in developing the proposed Ordinance, are acting to benefit a very small special-interest group. These residential property holders — a tiny minority — are motivated by self-interest, and they are liberally backed by big money from outside Denver. AirBnB and the other platforms can easily afford lobbyists to tell their story loudly and persistently. I think it is absurdly unfair and entirely inappropriate for Denver CPD to organize “Community Meetings” where a small minority is enabled to monopolize the time available for public comment. I suggest that proponents of STR legalization be given a strictly limited portion of the meetings, say, no more than three or four advocates of that point of view. This would make it possible to hear from more members of the majority of neighbors who do not intend to engage in STR use of their properties.

Any and all STR community meetings are open to any member of the public. Additionally, a third party independent facilitator is managing the public comment portion of our town hall meetings. As with community meetings on other topics, we intend to engage in open dialogue with a variety of stakeholders. Most short-term rental hosts are also residents and neighbors, and we encourage comment from all of our Denver neighbors – hosts and non-hosts alike. Therefore, we are hesitant to purposefully separate participant comment by affinity as we move forward into the public comment period.

We sincerely appreciate you taking the time to contact us with your questions and concerns. Additionally, we encourage you to attend one of the upcoming town hall sessions to learn more about our proposed licensing framework, and to hear more from neighbors around the City on this important issue. Those remaining dates and times are listed below: