In July 2014, the city adopted a 3 percent cap on in-town vacation rentals to preserve the integrity of two of Durango’s oldest neighborhoods.
A year and a half later, just six vacancies – one of them pending – remain in Established Neighborhood 2, which lies between 16th and 32nd streets and allows a total of 17 rentals. Established Neighborhood 1, the area east of East Third Avenue and north of First Street, is maxed out on vacation rentals.
Real estate agents, property appraisers and rental owners say the impacts of the cap are still difficult to read – particularly because no ordinance can efficiently or easily eliminate all illegal rentals – and the city still plans to re-examine how the cap is applied in future meetings.
“I understand the balance of maintaining the character of the neighborhood and being able to provide more options to homeowners,” said City Councilor Christina Rinderle, also a real estate agent who owns a rental home on East Second Avenue. “I also think there is room to expand. I’ve heard from several residents where Durango is their home, but they travel for work, and it’s expensive to have a home they maintain with no one in it. We plan to look at it again.”
Rinderle said she believes the cap mainly targets those investing in a home for the purpose of renting it, but she doesn’t favor a cap on one-room rentals like Airbnb offers.
Though some city officials agree this should be re-examined, the cap applies to rentals allowing a stay under 30 days, which not only includes entire houses but single rooms available for rent.
Still, like any other city code, rental permits are difficult to proactively police. A simple search on Airbnb shows dozens of rooms marketed in Durango.
In fall 2014, the city planning department began monitoring advertisements of unpermitted vacation rentals online and identified dozens. In October 2014, the city brought its first case against a rental owner just three months after the cap passed. It resulted in a $200 fine, which city officials admitted was a small amount for the work invested in bringing the owner into compliance.
In 2015, code enforcement issued 10 citations to vacation rental owners, Code Enforcement Officer Steve Barkley said. Of them, six were letters to cease and desist. Four were taken into court.
“It’s ongoing for sure,” city Planner Scott Shine said. “People send us non-permitted listings. We send out letters every week to rentals we know are not permitted. If they don’t come into compliance, we can issue a fine.”
Despite the uncertain read on non-traditional lodging options, lodgers tax revenue is on the rise – in 2015, the city collected $975,000, reflecting a 7.4 percent increase from the $908,035 collected in 2014. And there is no cap or regulation on vacation rentals outside city limits.
In November, La Plata County officials announced plans to conduct an audit of rentals advertised on websites VRBO and Airbnb in 2016. That study is due to occur sometime in the second or third quarter of the year, and it could offer insights on the impact of the cap.
“More growth is going to happen outside town,” said City Councilor Keith Brant, who owns Durango Premier Vacation Rentals. “My company is having less growth in town because of it.”
The cap may have created some diversion of vacation rentals to the county, which would naturally mean a depletion of lodgers tax going to Durango, but Shine said in-town real estate will always be in high demand, regardless.
“There was a bit of a rush, initially,” Shine said of rental owners seeking permits after the cap was in place. “EN1 filled up within a year. EN2 is getting close to full.” Prior to the cap, EN1 and EN2 zones each had only about three registered rentals.
But Chris Bettin, a property owner who markets both permitted short-term and unpermitted long-term rentals within city limits, predicts the cap could potentially lessen the desirability of purchasing homes in town, unless the buyer wants the property for personal use or long-term renting. Bettin owns a real estate brokerage in Durango and estimates about 40 percent of Durango area buyers are second-home buyers interested in vacation rental use.
“There are still second-home buyers from out of town who will compete with the community members for in-town home purchases, and they just won’t rent out the property,” Bettin said. “There are people who can buy those properties just for personal use, but in these cases, the community will not benefit from the economic multiplier that owner or renter occupants provide.”
jpace@durangoherald.com
