Aspen City Council limits short-term rentals, imposes fees on home construction and eases path for affordable housing


Aspen City Council limits short-term rentals, imposes fees on home construction and eases path for affordable housing

The Aspen City Council this week approved strict regulations limiting short-term rentals and easing the process for developing affordable housing, concluding seven months of work to rein in a real estate market frenzy that has homes selling for as much as $6,000 a square foot.

“Are we a community or a commodity?” Aspen councilor Rachel Richards asked at the end of a marathon meeting Tuesday night. “Is Aspen just for as many people as possible to come in and make as much as they can as quickly as they can and then leave us in the dust? The dust is our community.”

Aspen’s city staff spent 5,600 hours in the past seven months meeting with residents, business owners, developers and real estate brokers, scripting legislation that will replace moratoriums approved last December that suspended short-term rental permits and all new home construction. 

The new legislation, which the five-member council approved unanimously in meetings on Tuesday and Thursday, will reduce the number of short-term rental permits, limit the number of annual home demolitions, rezone residential parcels to allow for higher density and impose fees on residential development to pay for workforce housing. 

“This is the most aggressive any community in the country has been with tying climate policy to land use policy and lowering the barrier to affordable housing development,” said Phillip Supino, Aspen’s community development director.

An array of local residents, business owners, brokers, builders and developers lined up Tuesday night in opposition to the regulations, pleading with the council to delay action to allow more study. 

The new regulations are an attempt to squeeze more fees from residential development to pay for affordable housing, much as commercial development pays to house employees required for new hotels, restaurants or office space. The mitigation fees could reach $500,000 per home for new construction and redevelopment. Those fees are based on a report showing how residential development in Aspen creates more employees than most other industries. 

“You’re about to do something you haven’t done before,” said Chris Bryan, an attorney with Garfield & Hecht, a law firm that is involved in litigation with Aspen and has hired a consulting firm to scrutinize the city’s studies detailing the number of employees created by home construction. 

Bryan said it was likely the mitigation fees will be legally challenged. 

“I know everything you are doing is coming from good intentions,” he said. “I would really recommend you proceed cautiously and humbly and slowly with this. I don’t think it’s ready yet and I don’t think you want an unbaked cake.”

The real estate market in Aspen has reached new levels of irrationality in the past two years, with the hyper-wealthy selling and buying homes for astronomical prices. In the first five months of this year, 94 Aspen homes sold for a total of more than $1 billion. Sales are setting records, with some properties selling for more than $6,000 a square foot. 

Aspen’s elected leaders on Tuesday approved an ordinance limiting short-term rentals and two ordinances on Thursday that limit demolitions and ease the path for adding affordable housing to residential neighborhoods. 

New regulations cut the number of overall permits for short-term rentals. Permits will be issued to individuals, not companies and permits will not transfer when a home sells. The new ordinance reduces permits outside downtown zones with hotels and condo lodging by 25% and raises STR fees by 15%. Last year, with new rules requiring business and sales-tax licenses, the city issued 1,319 STR licenses. The new law would reduce the percentage of Aspen homes used for short-term rentals to 8%, from 11%.  

“Renting on a short-term basis allows me to keep Aspen as my home,” said attorney Stephanie Holder, who has a permit for a condo she owns in the city. “Short-term rentals have become a boogieman for reasons I cannot understand.”

Just about every community in Colorado is cracking down on short-term rental properties, which local leaders argue have shifted homes typically rented by local workers to lodging for visiting vacationers. 

“Short-term rentals have changed the dynamic for any sort of workforce housing for working class people in any community,” Richards said.

The council also is studying a potential measure for the November ballot that could impose a 13% tax on short-term rentals, which would raise about $10 million a year for housing and other infrastructure in the city. 

The Aspen councilors Thursday capped the number of permits allowing for home demolition at six per year for all owners and two for owners who have lived in their homes for at least 35 years. Last year there were 15 scrapes, the first year that demolitions exceeded 10.

To get one of those demolition permits, the new construction will have to meet progressive building and fire codes that divert waste from the landfill and meet high standards for energy efficiency. Many builders warned the council that limiting scrapes would lead to more renovations, which do not have to follow the tighter rules around waste and energy-efficient construction.

The third ordinance amends building codes to make it easier for developers to build triplexes and four-unit properties for affordable housing on any single-family homesite in the city. Another part of that ordinance increases housing mitigation fees paid by owners who renovate or build new homes.  

Aspen is not alone in the nearly 50-year-old commoditization trend. People started buying homes in cool mountain towns to make money in the 1980s, squeezing those early pioneers who moved there for a lifestyle and proximity to outdoor fun. For nearly half a century, end-of-the-road Colorado villages like Aspen, Crested Butte and Telluride have navigated the commodity-versus-community clash with all sorts of fees, caps and regulations meant to protect affordability and local culture. And nothing has really worked, with real estate prices climbing as demand grows and the supply of new homes stalls under the regulation.  

“Aspen didn’t just become a commodity yesterday. I made that statement in the ‘80s,” said Bill Stirling, who was Aspen’s mayor from 1983 to 1991 and now runs a real estate firm.

All the council members acknowledged that they will adjust many parts of the new legislation as the rules are installed.

“We will learn a lot from the implementation of these and they will be able to be adjusted,” said Aspen Mayor Torre, who goes by only one name. “The important thing here is that we are doing something and we are moving in the direction the community has supported. I’m excited that we are taking steps forward.”

Two councilors, Ward Hauenstein and John Doyle noted that the limitations on new construction likely would prevent them from ever redeveloping their own older homes in the city. Councilman Skippy Mesirow, who works as a property manager for a short-term rental company, said the councilors’ moves to restrict personal gains demonstrates “putting community first.”

Mesirow said the new rules would not immediately transform the town but would “create the conditions for a much larger shift.”

“Although it’s not perfect, this makes meaningful change for our environment, for our community and for our affordable housing,” Mesirow said. “It’s been quite a journey.”

Supino, whose team developed the regulations — and this week’s 551-page agenda packet for the city council — told the council on Tuesday that the bold regulations will have unexpected impacts. He suggested future amendments and adjustments could help offset unforeseen issues.

“Our land use code is an evolving document; a living document. Every time it evolves there are unintended consequences,” Supino said, noting how no one could have predicted decades ago that homes would be selling for recent prices. “We don’t believe that consequences ought to prevent council from taking action tonight.”

By: Jason Blevins I  The Colorado Sun  I July 2022

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