How Denver Uncovered Nearly 1,700 Short-Term Rentals in Just 1 Month

50%+ compliance with over 3500 short-term  rentals identified in their jurisdiction  

$1.1 million in revenue in 1st 8 months from new permits and business licenses

1,672 new non-compliant short-term rentals identified within the 1st month

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Challenges

By 2014, the City and County of Denver recognized a burgeoning unregulated short-term rental problem under control, with the number of listings having grown to 3,500. The city only had direct communication with approximately 330 of these rentals, and knew it needed to get better control over short-term rentals to ensure they were safe, and to minimize their impact on neighborhoods.

Some of the key challenges associated with unregulated short-term rentals in Denver were increased noise, trash and parking issues. The city needed better visibility of these listings and to establish contact with hosts to better manage the problems they caused. To help pay for these solutions, the City of Denver needed hosts to register and pay their required taxes.

Denver was also facing a shortage of affordable housing and there were concerns that short-term rentals were contributing to this problem. According to Luke Palmisano, Legislative Aide at Denver City Council, “We were ... concerned about affordable housing, we have rising costs in Denver and a shortage of supply. So we were concerned that somebody might purchase a five or ten unit apartment or condo building, and then rent out all those units as short-term, which would effectively take those units off the housing stock in general with the affordable housing in specific”.

After a two-year consultation period, the City of Denver passed a new ordinance in June 2016, allowing short-term rentals under certain conditions. The city needed a cost-effective solution they could utilize right away to manage short-term rentals.

Objectives

Denver needed to get better control over short-term rentals, but knew it had to be done fairly to not adversely impact tourism and host property rights. Short-term rentals were seen as a way to increase tourism-related income around the city as visitors look for new accommodation options, and even offer the potential to revitalize neighborhoods.

Short-term rentals were bringing people to neighborhoods they would not have otherwise visited, which was a great boost for local merchants. Carrie Atiyeh, from Visit Denver mentioned short-term rentals can “help highlight a lot of our unique neighborhoods because there are a lot of really great ones across the city”. Short-term rentals provided a new way to direct tourism income to different parts of Denver. The proliferation of tourists into residential neighborhoods was seen as a benefit for the city.

Abe Barge, City Planner in Denver, also mentioned “the mix of lodging opportunities and lodging availability helps Denver attract major events which benefit everyone including the tourism sector and hotels”.

Furthermore, Ashley Kilroy, formerly the Executive Director Department of Excise and Licenses, indicated that the City of Denver saw short-term rentals as ‘an opportunity to promote business and opportunity for employment and income’.

While short-term rentals make up approximately 1% of the housing stock, the city knew regulations were needed to limit how they were affecting the affordable housing stock in the city. In coming up with a regulatory plan for how to regulate short-term rentals, city officials felt it was important to strike a balance between the needs of visitors and residents. City Officials found that enforcing these regulations without a clear understanding of where short-term rentals were located was going to be a challenge. Host Compliance has been contracted to help with the identification of short-term rentals and enforcement initiatives of the city.

Solution

Host Compliance has helped Denver address both of its main challenges. The first is the ability to identify nearly 100% of the short-term rental properties, enabling them to be more effective with the enforcement of regulations. The second challenge which Host Compliance has addressed is how the City of Denver monitors short-term rental compliance, as well as systematic outreach to non-permitted and/or illegal short-term rental operators.

Host Compliance has been instrumental in how the city manages the short-term rental market. This has improved communication between the City of Denver and rental hosts, and strengthened the required tax base to provide the services required to manage safety, noise and parking. Denver is now better able to support all stakeholders in their community, using a proven and cost effective solution from Host Compliance.

It is now easier for short-term rental providers to understand the local rules and to comply with them. From the City of Denver’s perspective, they now have an easier way to communicate with short-term rental hosts, and to improve manage compliance levels and monitor trends over time.

Outcomes

Within the first month of working with Host Compliance, the City identified 1,672 previously unregulated listings. After Denver started sending out notices of violation, many hosts either got permitted or removed their listing.

Within only four months Denver has reached a compliance rate of over 52%, which is better than the compliance rate achieved by any other comparable sized city in North America. This success is attributed in part to Host Compliance.

According to a report released by Denver Auditor Timothy O’Brien, imposing regulations and taxes on these previously unregulated short-term rentals led to the generation of nearly $1.1 million in revenue in the first eight months of 2017. Better enforcement has also been well received by the hotel industry.

Dominic Vaiana, Deputy Director of Operations for the Department of Excise and Licenses at the City of Denver, indicated that "EXL is still in the process of assessing and monitoring its STR program in accordance with our strategic plan, in which we prioritized educatings hosts and the community of the new licensing requirements and making it easy for hosts to get licensed over enforcement mechanisms. Because of that strategic decision, it appears that Denver has the highest compliance rate of any city in the country, including those that have been licensing short-term rentals for a much longer period of time." 

The City is pleased with the progress they are making in resolving this problem, and the high-compliance rate they have already achieved compared to other cities. City officials have successfully turned the challenge of short-term rentals into an opportunity. With proper management using Host Compliance, the City of Denver can ensure safety, cleanliness and control with short-term rentals, in a way that benefits stakeholders from across the city.