Denver residents operating short-term rentals (STRs) will have until Dec. 31 to become licensed by the city as part of ordinance 0262, which became effective on July 1. Defined as residential rentals of fewer than 30 days, STRs and their operators will be provided the rest of the year to become compliant with the city’s first online business license.
A May 16 Colorado Public Radio story on the topic estimated there were 1,700 Airbnb units on offer in Denver at that time. Other leading STR providers VRBO and HomeAway also have strong Denver presences. Peer-to-peer transactions within the STR space allow individuals to rent a portion or the entirety of their home or property.
According to Dan Rowland, Citywide Communications Advisor at City and County of Denver, as of Aug. 19 there were 26 STRs registered citywide. Rowland could not say how many licenses were in process, but said the city was granting new licenses daily.
Stacie Loucks, executive director of Denver’s Excise & Licenses department, says her department’s goal from the beginning “has been to create a licensing structure that is easy to understand and reflects the tech-savvy nature of STR users. This new online application offers a simple and effective way for hosts to get licensed and be in compliance with the city’s new STR ordinance.”
The license, which can be completed entirely online, is a first for the city, with Denver officials claiming it as the only one of its kind in the U.S.
“This is the way of the future,” says Rowland. “There is a new proliferation of people doing peer-to-peer transactions, with more customers looking for this and more hosts coming on board.”
Councilwoman Mary Beth Susman noticed the trend towards these types of transactions in 2014 and began to study them, calling them “an orbital shift in the way we think about social and economic exchange.”
She quickly realized a licensing process would need to be put in place to govern the legitimization, regulation and taxation of this movement, with a priority being placed on ensuring neighborhoods remain safe and functional.
“We wanted to protect neighborhood safety,” says Susman. “This gives a sense of security to everyone involved.”
Rowland agrees. “Having this process in place will help build trust between hosts and neighbors, providing peace of mind that there is a licensing process to keep people accountable.”
The ordinance allows operators to rent their primary residence for less than 30 days at a time, with primary residence being defined as that on your driver’s license, voter registration or utility bills, or as Susman says, the “place you normally return to at the end of the day.”
The primary residence piece is important according to Rowland, for “neighborhood protection and the preservation of residential character” in the hope of avoiding the creation of “hotel streets” throughout the city.
City Park West homeowner Calvin Smith rents part of his home out on Airbnb and has already completed the online licensing process. In becoming licensed, Smith wanted to be sure that everyone involved with his STR felt safe and secure.
“We wanted neighbors to be comfortable that they knew guests and I are doing the right thing,” says Smith, adding that he “didn’t want guests to think we weren’t on the up and up.”
If potential operators don’t own the property, they must obtain written documentation from the landlord or property owner allowing the operation of an STR.
Potential operators will also need to check to verify that their STR is covered under insurance and if the residence is part of a homeowners association, operators must verify that STRs are allowed. Everyone seeking a license must also be legal residents of the United States.
To apply for the license, operators will need to have their lodgers tax ID, which is free of charge and can be applied for and received digitally. All operators of STRs will be subject to a 10.75 percent lodgers tax, which is the same tax that hotels, motels and bed and breakfasts are subject to in Denver.
Once this has been completed, operators can go through the formal STR application process for $25. They will then receive their STR license and business file number (BFN), which will need to be posted in each listing the operator makes online.
License numbers will be required in postings so that Excise & Licenses can track, monitor and enforce the ordinance, with fines up to $999 and potential jail time possible for those who are not compliant.
While there will be no limit on the total number of licenses granted, each operator may only hold one license, which is good for each calendar year.
Rowland hopes the easy nature of the online portal will play an important role in incentivizing people to become compliant.
“We made it incredibly easy to be in compliance with the city law, with no barrier to get licensed,” Rowland says.
He also notes the online portal makes sense given STR platforms are also online.
Smith agrees that the licensing process was simple, quick and effective.
“The short-term rental application was amazing,” he says. “This took me maybe two hours total over two days and the paperwork was easy to do because it is online. Within a week we had a license in our hand and a code for our business.”
For more information on becoming licensed, visit denvergov.org/STR.
