The Archuleta County Planning Commission met on the evening of Thursday, February 22, to discuss a couple of issues related to the Short-Term Rental (STR) industry, as it operates outside the municipal boundaries.
The first controversy related to an STR operated by local realtor Chris Mott and his wife Tiffany Mott in San Juan River Village, one of the most densely-impacted subdivisions in Archuleta County in terms of residential homes converted into vacation rentals.
The Motts had purchased an existing three-story house in 2016, and began renting it as an STR, prior to the gradual adoption of STR regulations by the County government — back when Archuleta County was still the Wild, Wild West of Vacation Rentals. Once the County began licensing STRs in 2021, the Motts obtained a permit to continue operating their STR, with no issues raised about building permits. But when the Motts applied to renew their permit in 2022, the County staff determined that a portion of the home had been constructed — at some point in time — without proper a proper building permit.
The STR permit renewal was denied, and according to the Motts, they stopped operating as an STR. Based on some incidental evidence, the County believed that the STR had continued through 2023, without a permit.
Mr. Mott:
“From the day we purchased our property, we have been responsible landlords and Short-Term Rental owners. We live in the downstairs of our home while renting out the upstairs… For approximately five years, we obtained a five-star track record, hosting guests, with zero complaints from neighbors or the HOA. Needless to say, we were shocked to receive correspondence from the County stating that our home along the river was a ‘dubious’ living situation, and instructing us to cease and desist from all short term rentals. Upon receiving this correspondence, I immediately contacted the County, and they stated that our home was lacking the proper permits and could not be [re-approved] for a short term rental.”
As Mr. Mott explained the situation, the County Development Services Department — which issues the STR permits — had determined that the downstairs living room of the house had once been a carport, and had been remodeled into a living room without obtaining County building permits. In Archuleta County, STRs are not permitted to operate in homes lacking proper building permits — in particular, because of possibly unsafe electrical and plumbing systems. Neither the Motts nor the County have been able to locate building permits for the living room conversion, and as a result, the County is requiring the Motts to have the electrical and plumbing systems to be certified in that portion of the home, a process that Mr. Mott stated would cost “hundreds of thousands of dollars” and that the County is estimating at perhaps $20,000.
Mr. Mott:
“To date, we have lost, conservatively, $100,000 in rental income, and have spent between $15,000 and $20,000 on attorneys fees…”
The Motts presented affidavits from various people familiar with the home’s history. Unfortunately, none of the affidavits could confirm that a building permit had, in fact, been obtained for the living room conversion.
Once the building permit issue had been identified, the County denied the renewal of the STR permit. The Motts then appealed the Development Director’s decision to the County Planning Commission.
Following a lengthy back-and-forth involving Mr. Mott, his attorney, the Planning Commission and Development Director Pamela Flowers, it was decided that the Motts will work with the Planning Department to determine the most affordable path to getting the electrical and plumbing systems certified.
It seemed the opposing parties had found a way to move forward together.
But the Planning Commission was not yet done discussing STRs in Archuleta County.
A bit of background before we get into that February 22 discussion.
As far as I can tell, Pagosa Springs tourism has supported a ‘vacation rental’ industry for at least 20 years, but the industry got a dramatic boost with the arrival of online booking platforms like Airbnb.com, VRBO.com, and Booking.com. At one point during the COVID crisis, the STR-tracking website AirDNA was reporting about 1,200 vacation rentals offering lodging within the 81147 zip code.
Relatively few of those rentals were located within the Town of Pagosa Springs, for the simple reason that only about 10% of the community’s residential homes are located within the town limits. Nevertheless, the Pagosa Springs Town Council was considerably more aggressive in regulating the STR industry, than were the Archuleta Board of County Commissioners. The Town Council, prior to the COVID crisis, had already placed a ‘cap’ on the number of STRs allowed, and had required any new STR to be a certain physical distance from existing STRs. The idea was to prevent residential neighborhoods from becoming ‘commercial motel districts’. (Those are my words.)
The BOCC did not begin to license STRs within the unincorporated county until we were deep in the midst of both the COVID crisis and an unbelievably hot real estate market, driven in part by investors purchasing homes and converting them into STRs, to accommodate Pagosa’s surprising COVID tourism.
The BOCC has still not placed any caps on the number of allowable STR permits — not in the county as a whole, nor in any residential neighborhoods. Nor do County policies require a certain distance between STRs.
This has resulted in certain neighborhoods — such as San Juan River Village — becoming, essentially, ‘commercial motel districts’ even though they are zoned ‘residential’.
At least three key controversies have swirled around the STR industry in Archuleta County for the past decade. We’re all comfortable with the idea that the industry has had a positive effect on tourism. But the negative effects are hotly contested.
Are STRs negatively affecting the rest of the lodging industry… that is, the hotels and motels that pay commercial property tax rates, while STRs pay the much lower residential property tax rates? (This situation could change if the Colorado legislature passes House Bill 24-1299.)
Are STRs negatively affecting the quality of life for full-time residents in residential neighborhoods?
Has the conversion of residential homes into commercial motels, by STR investors, negatively affected the availability and price of for-sale and rental workforce housing? Have those investors driven up home prices in a manner harmful to the overall community?