August 23, 2022 was the Trifecta of short term rental regulations in Summit County as leaders of three jurisdictions met to either discuss or implement new regulations. Here is a summary of what happened and where we are with STR regulations at this time.
Summit County Unincorporated
The Summit County Commissioners met to work on designing their rules to regulate short-term rentals in unincorporated Summit County. Currently they have placed a moratorium on the issuance of any licenses in what they deemed “neighborhood zones” in unincorporated Summit County. This nine-month moratorium began in May and should end in February. This time in between is for them to create the regulations. The conversation amongst staff and the commissioners clearly pointed to creating caps for the amount of short-term rentals in neighborhoods. Commissioners were not ready to commit to a number, nor were they willing to consider that one number would fit all neighborhoods. They are still gathering stakeholder information and put out a survey to the public. The results of the survey can be found here. The survey is still open for feedback.
Here are my thoughts: The Summit County Commissioners actions have created massive uncertainty in the real estate market since the moratorium applies to about one-third of our properties in Summit County. Entire neighborhoods such as Summit Cove, Dillon Valley, Wildernest, and Peak 7 are subject to this moratorium. We are seeing properties in these neighborhoods sit on the market longer with price reductions, and buyers are just not transacting because of the uncertainty of what final property rights will be granted to these properties. The survey (take a look for yourself if you don’t believe me) is leading and divides opinion with one choice for negative and many choices for uncertain or positive. Therefore, the negative choice is always going to be the highest choice. The Summit Daily then reported that most respondents are “against” short term rentals, but the survey was designed this way. Plus, it’s all opinions without any facts showing how STR’s help or hurt the community. Feel free to take the survey yourself and provide your opinion.
Until the rules are done and passed, properties within the neighborhood zones in unincorporated Summit County will see downward pricing pressure and longer days on the market. I have literally lost ~20 leads who inquired about purchasing a property in a Summit County unincorporated zone to do a STR, and when I told them about the licensing situation, they decided to stop their search. (Properties in zones that can be rented are more expensive.) If you own one of these properties and have a STR license, you can operate with business as usual, and you should continue to do so. If you are thinking about selling, you should be prepared for a lower price than we have seen in the last few years along with longer days on the market. You may want to wait until February to see the final rules which will bring certainty to the market.
Frisco Town Council met in a work session to discuss potential short term rental regulations. For the past few weeks I have been one of the people who have been talking with Frisco government staff and providing them information on the real estate market. Both me and the other individuals who are working with the staff were under the impression that staff was going to recommend that they not place a cap on short-term rentals, but instead monitor the market since it is changing so rapidly. At this session, the housing director, Danelle Cook, at the beginning of her presentation stated that she understood that the Town Council wanted to move directly to the conversation of what the percentage cap should be without discussing whether there should even be a cap. So the conversation moved pretty quickly to what the caps should be. Town staff recommended 22%, 792 total licenses, which is only slightly above the current number of licenses issued in Frisco (775) which is 21.5%. (That leaves 17 licenses available as of the date of that meeting.) They did however recommend that locals, whose long-term primary residence is the property with a short term rental license, would be exempted from the 22%. The issue here is getting the locals to change their license to an exempt license. They estimated around 117 licenses are held by locals.
Only one town council member, Andy Held, questioned the 22% number stating that it was pulled out of thin air and there’s no basis for it. The other five town council members supported the 22% cap. If approved, the town would have 792 short-term rentals in a town of 3,600 units. The ordinance will be drafted and presented at the new Town Council meeting on September 13th. They will be taking public comment and public input. If any of my contacts or clients would like to get information directly to the Town Council you can either send it to them directly, or get it to me, and I will provide it to them.
Here is the Town’s statement on the matter.
Unfortunately, all the work and information we provided was not carefully considered, and Town Council instead went directly to placing a cap on the number of short-term rentals in Frisco. Everybody on the Town Council agrees that putting a cap on short-term rentals is not going to solve the problem of long term housing for locals. Just like Breckenridge, when faced with this argument, Town council member Andy Aerenson said, “well, we’re just trying to protect the neighborhood character.” This is exactly what happened in Breckenridge when the original intent of the legislation was to protect locals’ housing, and then when proven it wouldn’t, the Town Council continued to move forward and relied on a different, and very subjective and amorphous argument, that can’t be proven by definable goals and metrics. Nobody can argue with protecting the character of a town, but we’re all going to disagree how that’s going to look.
Staff suggested that an economic impact study be done. It would cost around $40,000, and results would take 6 months to one year. Most council members were not in favor of waiting that long even though Held pushed for this option so they could know what they were trying to regulate. Ultimately, the sentiment seemed that they could just implement the 22% and then change it later if needed.
If you own a property in the town limits of Frisco and want to apply for a STR license, here is the link.
After spending hours watching people regulate property rights, it was time to witness the Breckenridge Town Council pass their final reading of their short term rental regulations. The ordinance goes into effect on September 27th, 2022. The final version is certainly an improvement over the original blanket 2200 cap. A detailed gerrymandering map has been created defining zones. Different zones have different percentage caps on the number of short-term rentals that can exist in the neighborhood. Good progress was made to allow obvious areas, designed for ski rentals, to operate as short-term rentals, and this is evidenced in Zone 1 having 92% allowable STR’s. There will be 349 STR licenses in Zone 1 available on September 27. As of August 12th, there were 59 owners in Zone 1 on the waiting list for permits. Their permit applications will be processed first. That means there could be as many as 299 new permits available on September 27th.
There are some big losers in this regulation however. People with homes that fall into Zone 2 or 3, if they do not have a short-term rental license, will not get one for years. Homes that are in Zone 2 and 3 that do have a short-term rental license and look to sell, will not have a transferable license. The value of their property has been diminished greatly because of this regulation.