“I do think requiring two years of ownership, prior to getting your [vacation rental] license is a good idea. I think that will cool off the speculative market…”
We are listening here to Town Council member Nicole Pitcher, who works in a real estate office and has some personal experience with our hot and speculative housing market in Pagosa Springs. Ms. Pitcher and her husband Chris — who serves on the Town Planning Commission — own rental property and are currently building a residential home they plan to use as a vacation rental.
She is reacting, in part, to a series of statements we just heard from Council member Shari Pierce. Ms. Pierce was explaining why she could not support any of the recommendations coming from the Planning Commission. Council member Pitcher felt differently.
Ms. Pitcher:
“I agree, that by simply putting some [vacation rental] regulations in place, it’s not like all [the vacation rentals] are going to be converted to ‘long term’ rentals. But I will say that, I’ve seen bidding wars, pitting people who are local residents, working in our community, against investors [from out of town].”
Ms. Pitcher asserted that, with stricter regulations, at least some of the available homes will become long-term rentals.
“So it’s not our ‘answer’ to workforce housing, but I do think there will be some owners who will go. ‘Okay, well, I used to be able to make this margin… But I still have no intention to live in Pagosa… so I’ll take this margin instead…” And it will go to long-term. So I think there is an element of putting these restrictions in place, that will increase our long-term housing stock.
“But it’s not our ‘answer’ to workforce housing.”
Ms. Pitcher then discussed the Planning Commission proposal to increase permit fees for vacation rentals by “at least a factor of 12” when the rental owner does not dwell on the same property. Currently, all vacation rentals within the town limits pay the same annual fee of $500 a year. But many communities in Colorado have drawn a distinction between an owner who lives full-time at the address where the vacation rental is operating — and is thus operating a ‘home business’ — and an owner who lives elsewhere and has thus converted a formerly residential property into a purely commercial business. Increasing the permit fee on non-owner-occupied vacation rentals, by a factor of 12, would put the fee at $6,000 a year.
Council member Pitcher:
“Talking about equity between commercial and non-commercial property, on my commercial rental I pay a 29% property tax rate, versus 7% property tax on residential. That’s not something we have jurisdiction over.”
Correct. Property tax rates are set by the Colorado Constitution, and by state laws.
“So some people are wondering, how can we make that more equitable, using fee structures. And I think we’re getting onto constitutionally questionable grounds, on that. I think we’re talking about putting a tax in place, without going to the voters. So I think the way to do this is through a excise tax on short-term rentals.
“$6,000 is not a ‘fee’. There’s no way we can say that’s how much it costs to administer the program. I think we need to go to the voters and ask, ‘Do you want an excise tax on short-term rentals?’
“And along that same idea, I agree with Councilwoman Pierce. When [the Lodgers Tax] was originally voted in, the idea was that we were going to be promoting tourism. So we’re talking about fundamentally shifting this. And I will say, this is probably one of the biggest items of discussion I get from constituents. People don’t want to be a tourist community anymore, and I don’t think that’s something that we can just turn on and off. But if we no longer want that to be our mission, then I think we need to change what [the Lodgers Tax] was originally chartered for.
“So I think both of those should go to a vote. Are we ready to get rid of the Lodgers Tax and funding for external marketing? And do we want to put an excise tax on short-term rentals?…
“I think protecting against the degradation of our neighborhoods is important. I think that, by having density restrictions in place — I would support that.”
Ms. Pitcher also argued for changes to the current Accessory Dwelling Unit (ADU) regulations. Several new ADUs have been built since the Town started waiving fees for ADU development, but most of the new dwelling units have simply become vacation rentals. As Ms. Pitcher pointed out, that was never the intention when the Town Council agreed to waive development fees for ADUs. The intention was to encourage long-term rentals.
Council member Maddie Bergon agreed that ADU fee waivers ought to be allowed, only if the units will be occupied by full-time residents.
We heard from other Council members sharing various perspectives, and then Mayor Don Volger spoke up.
“We should make some kind of decision tonight. One of the things I keep hearing, or that I’ve heard more than once, is we gotta quit kicking the can down the road. Time to make a decision? I think we’re past the crisis point in many ways, on these issues. And people need information. If they are looking at investing in short-term rentals, or looking at investing in other ways, you know, for other things, then they need some assurances about what’s going to happen, and they need it sooner rather than later.”
But as far as I could discern, no decision was made that night.
Surely, our Mayor means well, when he speaks about providing timely assurances for people who want to ‘invest’ in Pagosa Springs. On the face of it, there’s nothing wrong with that sentiment.
But we’re in a situation where the people who already live here, and who have invested their lives in Pagosa Springs for 10, 20, 30 years, are quickly getting priced out of the community.
The factors that are causing our local businesses to suffer from a lack of loyal employees, and that are causing our local workers and families to suffer from a lack of attainable housing, are many and complex, and the Town Council will not be able to address most of them.
But this same Town Council, at the same August 3 meeting, had voted unanimously to approve a estimated $15.6 million for new pickleball courts and new baseball fields in the proposed ‘Yamaguchi South’ athletic park…
Voting to allocate money to help our struggling businesses and working families… apparently, that’s a lot more difficult.