Crested Butte VRBO Impact

The town of Crested Butte like many other ski towns is looking at the impact of homes being marketed, leased and purchased for the opportunity to generate income via short term rentals. Some are asking what is the Crested Butte VRBO Impact?

Challenging property owners rights and changing any opportunity for visitors to enjoy the charm of renting a single family home in Crested Butte would be a mistake. Crested Butte is a resort town and we cater to second homeowners and their family, friends, clients, and yes their tenants. (whether short-term or long-term renters). We have families that “summer” in the Crested Butte area and we have second-homeowners who spend time here in the peak summer and winter months and rent their home when they are away. The value of the homes in historic downtown Crested Butte is tied to the vacation rental income opportunities for the homeowners. The town of Crested Butte profits from the 3% real estate transfer tax in the town of Crested Butte, as well as the pillow tax and sales tax collected on rentals. The businesses prosper from the families who rent these homes and eat out, shop, hire fly fishing guides, and spend money here (additional sales tax). The make-up of who is sleeping in the homes in town is ever changing and many visitors love the opportunity to rent a home in town or anywhere in our area. There are also many locals who leverage their home to earn some additional income to support their families. As stated, Crested Butte is a resort town – our economy is based on tourism. Visitors to our community like renting Vacation Homes. Vacation rentals are a good thing.

Duncan L. McArthur, Governmental Affairs Director for the Colorado Association of Realtors recently published the following article:

CAST Report Discusses VRBO Issues – The Colorado Association of Ski Towns (CAST) completed a report on the Vacation Rental by Owner (VRBO) issues this past June. (The report refers to the issue as Vacation Home Rentals or VHRs). The following are excerpts and paraphrases from portions of the report. While I have obtained a copy of the report, I have been “asked” to not release any copies.

Overview –VHRs are a large and growing market across the United States which is gathering an increasing share of the travel/lodging market with over 2.1 million rentals listed in the top three hosting sites on the Internet in 2014. The report attributes a portion of the increase to the unequal taxing structure to the traditional travel lodging businesses. This is comparable to the rapid growth in electronic commerce with organizations such as Amazon’s business growing at an exponential rate. As in retail sales, when one portion of an industry is taxed but not another, the untaxed portion of that market will outpace the growth of other portions of that market.

The so-called “Sharing Economy” or the sharing of information electronically over the Internet has contributed to the rapid rise in the market for VHRs and the nature of the market is increasing. Originally used to rent excess capacity such as an extra bedroom, is now catering to families and tourists and for special events or for particular seasons. “They were occupied by their owners or rented long term but are now investor owned and rented for the highest rates achievable as frequently as possible for maximum profits”.

The Internet hosting sites are functioning as real estate brokers for these properties but without many of the services that traditional real estate brokers provide. The sites leave compliance with local regulations up to the landlord and guests, make no representations as to the quality or whether the properties meet minimum safety standards, take a commission or service fee but generally do not collect sales or lodging taxes and are not limited to commercial or business zones.

Rocky Mountain Region –VHRs have become an alternative to traditional lodging in the tourism industry throughout the tourism based economies in the Rocky Mountain region especially in the resort areas. The growth in the number of sites listed on the Internet hosting sites has outpaced the growth in listings in much of the rest of the country. “Home Away reported in 2014 that Park City and Winter Park made their list of top 10 destinations for the largest increase in new vacation rental listings. Crested Butte was one of the top 10 in terms of destinations, showing the largest increase in travel demand”.

The numbers of VHR units in each of the ski resort towns that are members of CAST have increased to a level of 1% to 52% even through the recession and the period of flat housing starts. The table below illustrates the numbers of VHRs compared to housing units.

Community Concerns – The concerns most commonly voiced about VHRs are the ensuring of safety, that the licensing and regulation processes are adequate and that the taxing are fair not only for revenue development but to competing businesses. “The top five issues of concern, in order, are:

Loss of free-market rental housing previously rented to the workforce on a long-term basis;
Collection of lodging/sales tax;
Community character;
Neighborhood change; and
Vision/plans for the future.

Issues related to the tight and expensive housing markets, preservation of resident neighborhoods and character, and ensuring a fair playing field with other lodging businesses in terms of tax payment and regulations are the top concerns among participating CAST communities. The top five issues of concern, in order, are:

Loss of free-market rental housing previously rented to the workforce on a long-term basis;
Collection of lodging/sales tax;
Community character;
Neighborhood change; and
Vision/plans for the future.”

Many community members are concerned about the potential for prohibitions against short-term rentals. In spite of the concern about prohibition, most communities have been moving to the legalization of VHRs. These community member concerns about prohibition include:

Local residents who want to occasionally rent their homes or spare bedrooms short term to help pay mortgages.
Realtors with listings they want to be allowed to sell to investors or second homeowners who want to rent their units short term.
Public officials who recognize the contributions that VHR’s make to their bed base and tax revenue.

The report goes on to discuss “Best Practices” for establishing regulations for VHRs while discussing the situation in various member towns. It ends with recommendations for potential practices that include:

License Check for Housing Compliance
– Require sign off by housing agency/department in charge of administering workforce housing on VHR’s license/permit applications.

Tracking System Crosscheck
– Provide addresses and photos of restricted workforce housing to staff that license and track VHR’s.

Allocate VHR Revenue to Housing
– To fund replacement housing and units needed by growing workforce, allocate tax revenues into an affordable housing fund. A proposal to do this in under consideration in Nashville.

Replace Lost Housing Units
– Develop goals and plans for workforce housing development that take into account loss of housing through conversion into VHR’s.

Additional information regarding considerations for buying a home that you plan to rent in my Book – The Complete Guide to BUYING Your Mountain Dream Home

How can I help you? The Crested Butte area offers a wide variety of properties including ski in/ski out single family homes, ski-in/ski-out condominiums, lake and river frontage properties, golf course property, and true fine mountain homes on acreage. To see featured properties or search the MLS – visit www.ChrisKopf.com. If you considering Selling your Crested Butte home and are interested in finding out what your existing property is worth – call me. How is the Crested Butte Real Estate Market doing? Click this link to see my monthly Crested Butte Real Estate Market Reports I appreciate the opportunity to earn your business and be your Crested Butte Real Estate Agent.