Two vacation property owners in Estes Park say the tourist town’s new fee on short-term rentals is an unconstitutional and “extraordinary act of government overreach.”
So, Rick and Cheryl Grigsby are suing the town they’ve lived in since 1997 and owned rental cabins in for the past decade. They want a federal judge to declare the new law void.
In early 2022, a study commissioned by the Town of Estes Park determined there was a direct link between short-term rentals and a lack of affordable housing in the mountain town. Rentals decrease the supply of housing and drive up rent prices for residents, it found.
In response, the Estes Park Town Board proposed a $1,390 annual “impact fee” for the town’s roughly 500 short-term rentals, with the money going into a workforce housing fund. That’s on top of the usual $200 license fee. By comparison, an annual short-term rental license fee is $100 in Denver, $119 in Colorado Springs, $190 in Boulder, $260 in Vail and $394 in Aspen.
There was considerable debate before a March 2022 vote, with 150 residents testifying by email, Zoom and in-person, the Estes Park Trail-Gazette reported. Most were short-term rental owners and almost all were opposed. So, too, was Mayor Wendy Koenig.
But the board approved the fee in a 4-2 vote and it went into effect on Jan. 1 of this year.
Thirty days later, the Grigsbys paid the $1,390 fee for two of their rental cabins but refused to pay the fee for a third and demanded a hearing on the matter. Instead, their vacation home license for the cabin was revoked. When they changed their mind and tried to pay the fee one week later, they were told by the town that it was too late, the Grigsbys say.
“If the defendant’s revocation action is not set aside, plaintiffs will suffer a net financial loss of approximately $30,000 and more per year beginning in 2023 due to this small business being shut down,” the couple wrote in their May 26 lawsuit, calling the revocation “irrational.”
Kate Miller, a spokeswoman for the Town of Estes Park, declined to comment on the case.
The Grigsbys say the fee is “arbitrary in its very nature as it impacts only those property owners who rent their vacation homes for 30 days or less but not those who rent their homes for one additional day.” They also take issue with the new affordable housing fund, believing its goals are vague and can’t be accomplished by taking $710,290 annually from rentals.
“I care for everyone and support a sound plan for establishing affordable, accessible and excellent housing opportunities for everyone in need,” Rick Grigsby wrote in a letter to the editor of the Estes Park Trail-Gazette in January. “Yet, it is wise to navigate toward a strong, widely supported strategy built on a firm sustainable foundation; not (this) house of cards.”
The couple is asking U.S. Magistrate Judge Susan Prose in Denver to either declare the short-term rental fee unconstitutional and void or reinstate their license for the third cabin. The Grigsbys also seek an undetermined amount of money and attorney fees.
They are represented by attorney Jennifer McCallum with the McCallum Law Firm in Erie.
This is not the first time that Richard Grigsby has sued the Town of Estes Park. In 2020, he and two others alleged in a lawsuit that the town had spent millions of dollars on a highway project without acquiring voter approval first. That case was quickly thrown out by a Larimer County judge after he determined that no town money was being spent on the project.