The city councilwoman who led Denver’s effort to regulate short-term rentals says the city is serious about enforcing rules made to maintain affordable housing.
Friday, Stacy and Alexander Neir of Stapleton appeared for a bond hearing before a Denver magistrate. Each was charged earlier this month with the felony of attempting to influence a public servant by means of deceit. The charge stems from their alleged attempt to get short-term rental licenses without meeting the requirement that the owner of a short-term rental property live at the property as their primary residence. They have not been jailed or required to post bonds and are due in court again July 11.
Dan Recht, who represents Alexander Neir, told Denverite the couple had been targeted in an “unjustified and unprecedented prosecution.”
“When the full story comes to light, we are confident the Neirs will be vindicated,” he added.
District 5 Councilwoman Mary Beth Susman led discussions for two years that led to regulations on short-term rentals that Denver adopted in 2016.
“We had to get a handle on it,” she said.
Susman said a main driver was concern that if too many properties were converted to short-term rentals it would decrease the supply of permanent housing, thereby sending prices even higher in a city with an affordability crisis. Across the country, municipalities were late to weigh in with regulations on short-term rentals, an aspect of the sharing economy that began in the 1990s. When regulators did take action, it was often in response to concerns about affordable housing and complaints from neighbors about having strangers — not always well-behaved — constantly moving in and out along their residential streets or apartment hallways.
The year Denver adopted its rules, a study was published by economists at the University of Massachusetts Boston who found that in Boston, where rents at the time had been growing about 5 percent annually in recent years, evidence supported the contention that “home sharing is increasing rents by decreasing the supply of units to potential residents.” A more recent study in which researchers at UCLA and USC looked at national data, also found that home sharing pushes up housing prices, particularly in zip codes “with a lower share of owner-occupiers, consistent with non-owner-occupiers being more likely to reallocate their homes from the long- to the short-term rental market.”
Susman said requiring entrepreneurs to rent only their primary properties was key to keeping people from buying up homes to use for short-term rentals.
“We didn’t want to lose the inventory,” she said.
Denver currently has about 2,700 active short-term rental licenses, according to Excise and Licenses.
While Susman said she was not particularly familiar with the Neir case, she said “I do believe the enforcement was probably one of the best things to happen — to let people know that you can’t do this.”
Brian Egan, CEO of Denver-based Evolve Vacation Rental, said it was important that his industry be regulated, but that he did not see the primary residence requirement as the most effective tool. He prefers a permitting regime.
“Permits can be limited by household, restricted to natural persons, controlled for neighborhood density, and otherwise governed to ensure the best interests of each community are served,” Egan said in an email to Denverite. “The scalpel of the permitting process is a far better tool than the hacksaw of primary residency — particularly as permits can be easily enforced, while residency cannot.”
In the Neirs’ case, according to police detective affidavits included in court documents, Alexander Neir applied in March for a short-term rental license, as required under the 2016 law, for a property at 2145 Eliot in Jefferson Park. A Denver Excise and Licenses technician found that the property was owned by a limited liability company that listed a Stapleton address as its headquarters and Stacy Neir as its agent with the secretary of state. Stacy Neir gave 2145 Eliot as her personal address in her secretary of state paperwork, but she had a short-term rental license for a third property, a unit at 4525 Tennyson in Berkeley.
The excise and licensing technician conducted a Google search and found a YouTube video of the couple, who also are partners in a real estate business, talking about living in Stapleton.
As part of the investigation, an excise and license inspector visited the Stapleton address listed as the headquarters for the Jefferson Park limited liability company, 8920 East Beekman Place. The investigator spoke to a neighbor who said the Neirs lived there and that she saw them and their daughter leaving and entering the home almost daily. She told the inspector they were “great neighbors” and that Stacy Neir was well-liked and a block captain for the neighborhood group.
The inspector also checked on the Jefferson Park and Berkeley properties. The Neirs were less well-known to neighbors there. One Berkeley neighbor, shown a photo of Stacy Neir, told the inspector “she did not think the woman lives at 4525 Tennyson, but has not seen a lot of renters and if the residence is being rented it is not much.”
According to the affidavit, Alexander Neir, at the request of the excise and licensing compliance coordinator, completed a notarized affidavit stating that 2145 Eliot was his primary residence. Stacy Neir did the same for 4525 Tennyson.
Recht, Alexander Neir’s lawyer, said the couple had not yet had a chance to tell their side of the story and that more would be revealed as the case proceeded.
According to the Denver district attorney’s office, investigators established by checking internet listings that the Berkeley address has allegedly been operated as a short-term rental since 2016, and the Jefferson Park property since 2013.
David Corsun, who teaches at the University of Denver’s hospitality management school, said failing to regulate short-term rentals can impact affordability. He said enforcing primary residency can be a challenge, but considers the requirement to be a positive aspect of Denver’s short-term rental regulations that can be overseen with the proper staffing.
If entrepreneurs want to rent multiple properties, Corsun suggests they “open an inn.”