A recent lawsuit about short-term rental regulations in Summit County is bringing attention to an issue that’s stumped many of Colorado’s mountain towns: where to draw the line on hotel alternatives.
The ecosystem of the towns that serve the state’s ski industry – such as Summit County’s Breckenridge, Frisco, Keystone and Silverthorne – relies on the cash flow of tourists, the labor of seasonal and year-round workers who often can’t find affordable housing and the contributions of homeowners trying to pay their mortgages and taxes.
Some residents make ends meet by renting their homes on Airbnb and Vrbo, while others want to maintain the sanctity of their neighborhoods by curbing those rentals.
Last month, Summit County homeowner Todd Ruelle, alongside nonprofit Summit County Resort Homes Inc., filed a lawsuit against the county’s board of commissioners over its latest round of regulations on short-term rentals in the its unincorporated areas, arguing that “certain aspects of this regulatory regime go too far.”
The complaint’s list of grievances include “severe limits” on the number of short-term rental bookings for each homeowner, caps on the number of short-term rental licenses, “prohibitions” on transferring those licenses to homebuyers and occupancy limits within households.
“The number of short-term rentals in Summit County over the past decade has increased by the thousands,” Commissioner Tamara Pogue said in a statement. She’s named in the lawsuit as a defendant, alongside Commissioners Elisabeth Lawrence and Joshua Blanchard.
More than a third of the county’s total housing inventory is made up of short-term rental licenses, with 12,000 spread between its towns and unincorporated areas, Pogue said.
The board has tried to “strike a balance” between residents who want to end short-term rentals entirely and homeowners who want no regulation, she added.
The issue of short-term rentals has taken on increasing importance in many other communities around the state, particularly in the High Country. And other counties, similar to Summit County, have put regulations into place.
• In Routt County – home to ski resort Steamboat Springs – its unincorporated areas are largely not allowed to operate short-term rentals, with the exception of zoned commercial areas and issued permits for guests ranches or bed and breakfasts.
• Eagle County, which encompasses Vail, Eagle and Avon, is currently in the process of proposing a short-term rental licensing ordinance, with its board of county commissioners planning a potential vote this fall. Because several of the county’s cities already regulate short-term rentals, the new ordinance would apply to unincorporated Eagle County. The county estimates that around 5,000 short-term rentals operate within its boundaries, with 1,000-2,000 in the unincorporated area.
• Last year, Pitkin County – where Aspen and Snowmass Village are located – put a short-term rental licensing program into effect for its unincorporated area. Its rules for rentals include a four-night minimum stay and 120-night (roughly four month) maximum stay.
• Grand County, which includes Winter Park and Hot Sulphur Springs, requires short-term rental operators in its unincorporated area to secure one-year permits, which need to be reapplied for annually. It mandates the maximum occupancy for rentals as 16 people, and charges permit fees based on the maximum advertised occupancy at $100 a head.
• Ouray County began regulating its short-term rentals in its unincorporated area five years ago, with the city of Ouray using its own rules. The county mandates rental permits for operators, with a cap of 100 that’s already been reached. For now, hopefuls can join a waitlist.
Summit County lawsuit
Summit County defines short-term rentals as “dwellings or rooms rented for less than a consecutive 30-day period,” according to its website. In February, an update to the county’s related regulations went into effect, placing caps on short-term rental licenses that would cut the number of those properties across four areas.
The county doesn’t plan to revoke licenses, but aims to hit those goals through “voluntary actions” in which short-term rental operators let their licenses lapse into inactivity.
In developing regulations, “we took every impact, including financial ones, into consideration,” Pogue said. “I believe the regulations are fair and reasonable and protect the interests of the community.”
Matt Arentsen, attorney at Brownstein Hyatt Farber Schreck, explained that plaintiff Summit County Resort Homes is an organization put together “by Summit County homeowners to protect their rights, and the rights of all responsible Summit County homeowners, to use their homes as short-term rentals.”
The group is made up of almost 90 members who own “property in at least one of 21 neighborhoods across unincorporated Summit County,” according to the lawsuit. Members average more than 35 short-term rental bookings annually.
Attorney Arentsen acknowledges that Summit County Resort Homes’ members were actively involved in the county’s legislative process in developing its newest regulations. “But when the county ultimately imposed arbitrary license caps and booking limits on short-term rentals, they felt they were left with no option but to defend their rights in this litigation,” he said in a statement.
Arentsen points to a “false narrative” that’s taken hold: That short-term rental owners “are wealthy second homeowners” whose properties are creating a workforce housing shortage.
Instead, many Summit County Resort Homes members “face serious financial hardship if the county’s limits and prohibitions on short-term rentals are allowed to stand,” he said. “Some local workers — the very persons the regulations are intended to help — even stand to lose their only homes.”
Given demand within the county, the lawsuit says that “nearly all (Summit County Resort Homes) members bought their Summit County properties with the intent to rent out their homes as STRs at least part time.”
Ruelle bought his residence in unincorporated Summit County in 1980, and has “regularly rented his home” as a short-term rental since 1990.
He hosts around 65 bookings in an average year, so the county’s booking limitations “will cost Mr. Ruelle tens of thousands of dollars in lost rental income,” the lawsuit says.
The county commissioners began looking into the impacts of short-term rentals around six years ago, developing new requirements, like the necessity of short-term rental permits, over time, according to the complaint.
But back then, the permit system notably “imposed no caps on the number of properties that could be used for STRs and no booking limits.”
The county transitioned from permits to licenses in 2021 through Summit County Ordinance 20, but it still didn’t place caps or booking limits on rental properties in the county’s unincorporated areas, the lawsuit details.
Later, the development of Summit County Ordinance 20-B established “overlay zones” in unincorporated Summit County that are either “resort areas” or “neighborhood areas,” with different short-term rental rules for each. The lawsuit argues that county commissioners put more undue restrictions on the neighborhood overlay zones, leaving the resort overlay zones unaffected.
In 2021 and 2022, the county issued two separate moratoriums on new short-term rentals. It linked the first 90-day moratorium to the housing crisis forcing workers out of the community and the potential “loss of housing stock to short-term vacation rentals.”
This year’s update to regulations – County Ordinance 20-C – served as the final straw for the plaintiffs. Their complaints about this particular statute include its short-term rental licensing caps in neighborhood overlay zones and its limits on the annual number of rental bookings.
The lawsuit argues that the county’s “rapid-fire accumulation of restrictions on the use of private property resulted in arbitrary STR regulations, as prior provisions were not given time to take effect.”
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The plaintiffs are asking the court to declare several facets of Summit County Ordinance 20-B and 20-C unconstitutional, thereby voiding them, such as the differences between the overlay zones of resort and neighborhood areas and the cap on bookings.
They’re also looking for the court to declare that the bans on license transfers and license caps are unlawful, so “homeowners who have been renting their properties as short term rentals may continue to do so unimpeded.”
In addition, the complaint seeks a permanent injunction barring the board of county commissioners from authorizing the enforcement of those provisions, an award covering expenses like attorneys’ fees and costs, and any other relief.
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