After more than two years of meetings and community input on the issue, Denver City Council passed regulations for short-term rentals in 2016 to create a fair operating environment, assess the impact and ensure safety requirements. The regulations allow the rental of a primary residence for 30 days or less and require the collection of a 10.75% lodger’s tax from guests. While nearly $2 million in tax has been collected so far, some applicants who should not have been issued permits have them and many more who should, have not yet registered.
Between Jan 1. and Aug. 21, the Department of Excise and Licenses issued almost 2,000 short-term rental business licenses — but that is only 68% of the number of homes advertised online during that same time period. While this is a better adoption rate than other cities such as Portland and San Francisco, there is clearly still a ways to go.
The auditor’s report said the “city cannot fully assess the effectiveness of its short-term rental processes and procedures for licensing and enforcement.”
The audit found that a majority of lodger’s tax license and identification numbers on licenses were invalid. People were found sharing the same number, multiple licenses were issued to one person, or in some cases more than one address was registered to the same license.
A more systemic approach to collecting and analyzing data could give the city a better idea of how the “sharing economy” lodging affects neighborhoods and housing affordability, according to Denver auditor Timothy O’Brien.
“If the Department of Excise and Licenses does not track and analyze the data, officials should work with City Council to determine who is responsible,” Auditor O’Brien said. “A central goal in the ordinance is to determine the impact on neighborhoods and affordable housing, and some agency needs to be working on it throughout the process.”
“These discrepancies between the law and enforcement could lead to public confusion on how to stay in compliance, as well as the risk of perceived inequity,” Auditor O’Brien said. “This could put Denver at risk of legal action.”
The Department of Excise and Licenses responded that it “appreciates the auditor recognizing that we are in the early stages of implementing a new program and that we have made several steps forward.” It said it was in the processing of evaluating its strategies and will continue to review and adjust its practices.
For more information about Denver’s Short-Term Rental Certification process, www.denvergov.org/str, explains it step-by-step.