Denver cracks down on unlicensed short-term rental hosts — through the platforms

Airbnb and others face daily fines of $1,000 when a home that’s listed by a host who does not have a license from the city is rented.
4 min. read
Denver City Councilman Kevin Flynn at a meeting. (Kevin J. Beaty/Denverite)

Denver City Council voted on Monday to fine online platforms if they help unauthorized people rent out their homes to vacationers and other short-term occupants.

Starting next year, the platforms face daily fines of $1,000 every day a home is rented through a listing on a site such as Airbnb or VRBO by a host who does not have a city license. While the law that council approved on Monday does not spell out how platforms should best comply, city officials say a simple step would be to require hosts to enter their city license number before they could upload a listing.

Councilman Kevin Flynn said he has been pushing for such a change since Denver started licensing short-term rental hosts in 2016. Without getting platforms to cooperate, Flynn said, it was inevitable that people would rent their homes without licenses, competing unfairly with hosts who follow the rules. Flynn added in an interview before City Council's vote that complaints about noisy parties, trash, parking and other problems sometimes associated with short-term rentals have been more common when the hosts are unlicensed. Hosts without licenses face fines of up to $999 per violation under earlier provisions of Denver's short-term rental laws.

The Denver Excise and Licenses department enforces the city's short-term rental laws. Excise and Licenses spokesman Eric Escudero said that since Denver's licensing law went into effect in 2017, officials have been pushing platforms to ban unlicensed hosts from their sites. The city is counting on hosts finding it impossible to stay in business without being able to advertise on platforms and have the platforms facilitate bookings and payments.

"We weren't able to get platforms to take action," Escudero said. "We were left with no choice" but to propose imposing fines.

Under the proposal approved Monday, a company that is issued a citation will have 10 days to appeal.

"Following the exhaustion of their right to appeal, if they refuse payment by the due date, they will be subject to additional fees if Denver turns the matter over to a collection agency," Escudero said.

Denver requires all short-term rental properties to be the primary residence of the owner. Denver is not the only city to have struggled with how to regulate short-term rentals, an industry that is driven by companies that operate internationally. Short-term rentals offer homeowners a chance to earn extra income, but have raised concerns because of the problems they sometimes create for neighbors and the potential they have for reducing a community's supply of long-term, moderately priced housing.

Flynn sits on the Short-Term Rental Advisory Committee that signed off on the proposal to fine platforms and provides policy and other guidance to Excise and Licenses. Sabrina Zunker,  a broker who sits on the committee as a representative of the Denver Metro Association of Realtors, said the legislation that could lead to fines for platforms was part of the infrastructure Denver needed to ensure a fair system and the success of short-term rentals here.

"We definitely want good actors in our city," Zunker said. "Ultimately, we are excited to get this in place and really talk about the future of short-term rentals in Denver."

Other members of the advisory committee include short-term rental hosts, representatives of tourism and neighborhood groups, and Ayisha Irfan, an Airbnb liaison.

Irfan did not respond to an email from Denverite seeking comment. Neither did a spokesperson for VRBO.

Flynn said he did not expect Airbnb, which lists most short-term rentals available in Denver, to challenge the new rules in court, as the company has done when other cities tried to regulate it. Escudero said he expected Airbnb to comply with Denver's law.

Last year Airbnb reached a settlement with Boston over regulations there that the platform had opposed. Under the settlement, Airbnb agreed to ask Boston hosts to share city-issued registration numbers with the platform and to take down listings of hosts that do not register with the city.

"Most businesses want to comply with the law," Escudero said.

Escudero added that 80 percent of hosts in Denver comply with the law, judging by the number of licensed hosts listing rentals on online platforms. Those that don't are responsible for most of the complaints about short-term rentals that his department receives, Escudero said.

As of last week, 1,985 active short-term rental licenses were registered with Excise and Licenses, Escudero said. He added that the pandemic's impact on tourism is evident in license data. In March, when COVID-19 was first reported in Denver, the active short-term license tally was more than 2,500. Last year, Denver collected over $10.6 million in lodger's taxes imposed on short-term rentals.

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