City looks to charge more for short-term rental license, clarify primary residence requirement

Potential customers search an Airbnb screen for lodging places. (BusinessDen file photo)

Denver’s primary residence requirement for short-term rental hosts — which has led to four felony charges — may be getting more clarity.

The city is looking to update its regulations for rentals through sites such as Airbnb to spell out some of the things city staff look at when determining whether a unit is someone’s primary residence.

Changes going before Denver City Council also would have hosts pay more for their required short-term rental license.

Council’s Business, Arts, Workforce & Aviation Services Committee was briefed on Wednesday about the proposed changes, which resulted from regular meetings of a city-established advisory committee that includes local hosts, guests and representatives of Airbnb and neighborhood groups.

Denver began requiring licenses for those renting out units on a short-term basis at the start of 2017. The regulations state that individuals can rent out only their “primary residence,” a measure intended to ensure that short-term rentals do not drastically drive up housing prices or reduce the supply for long-term renters.

The city defines a primary residence as “the place in which a person’s habitation is fixed for the term of the license and is the person’s usual place of return.”

In March 2019, the city began asking individuals suspected of violating the primary residence requirement to sign an affidavit. Denver’s district attorney subsequently charged four individuals with a felony for allegedly lying on the affidavit. The office has since dropped one of the cases. The other three are still pending.

The measures being considered by City Council would not change the city’s specific definition of primary residence. But they would spell out some factors that staff will look at when considering whether something is a primary residence.

“We’re hoping that expands people’s opportunities to go into that application with a little more confidence,” Erica Rogers, a policy analyst with the Denver Department of Excise and Licenses, said at Wednesday’s meeting.

Those factors are:

• + Whether the applicant claims any other residence for domestic, legal, billing, voting, and/or licensing purposes;
  + Whether and how often the applicant returns to the short-term rental or other places of habitation;
  + Whether the address listed on an applicant’s legal documents or tax assessment records is different than the address of the short-term rental;
  + Whether an applicant’s business pursuits, employment, income sources, residence for income or other tax purposes, leaseholds, situs of personal and real property, and motor vehicle registration indicate that the short-term rental is the applicant’s primary residence;
  + Whether the amount of time the short-term rental has been, or will be, rented within the calendar year indicates the short-term rental is or is not the applicant’s primary residence;
  + Whether the applicant is actively deployed in the United States military; or
  + Whether any other relevant information discovered by the director or submitted by the applicant indicates that the short-term rental is or is not the applicant’s primary residence.

The proposed measures also would have hosts pay more for their license.

Currently, there is no fee for applying, but hosts pay an annual licensing fee of $25. The city wants to add an application fee of $50, and then up the annual licensing fee to $100.

City staff said this is expected to result in annual revenue of $325,000. The Department of Excise and Licenses estimates it currently spends $434,700 annually to enforce the short-term rental regulations, based on the cost of four staff members and compliance software.

“This will still remain one of the most affordable short-term rental licensing fees in the country,” Rogers said.