Controversial short-term rental ordinances considered Monday by City Council Monday

Changes in regulations for homeowners who build additional dwellings on their properties was discussed Monday at a work session of the Colorado Springs City Council.

The council is considering an amendment to an ordinance defining and establishing standards for accessory dwelling units, or ADUs, a subject that has generated strong support and opposition.

ADUs are second homes or dwellings built on, or attached to, an existing lot. They are often referred to as mother-in-law units. The units can be rented out by the homeowner or property owner.

The controversy relates to whether ADUs should be limited to lots zoned for two or more families, special uses and intermediate businesses, or expanded to single-family lots.

“Five council members don’t want the ADUs to be detached from existing homes,” said council President Richard Skorman. “They want them attached to homes.”

The council discussed the matter for 90 minutes but did not reach a decision.

If the council approves the proposed amendment, nearly 70,000 more lots could qualify to have ADUs.

Supporters said the amendment would ease the city’s lack of affordable housing by providing more available units and ease urban sprawl by filling in empty areas within the city core.

Opponents said the amendment would negatively affect the character of established neighborhoods. A similar criticism was made about an ordinance the council adopted earlier this year to regulate short-term rentals, also called Airbnbs, which are existing dwellings rented primarily to travelers or vacationers.

Public meetings have been held on ADUs, and the council discussed the matter during a March work session, which some council members were still unclear about what the ordinance proposes, the impact it would bring and how it would be enforced.

Also on the council’s agenda, and generating much more discussion, was an update on enforcing short-term rentals, referred to as vacation homes or Airbnbs, used for visitors.

City staff told the council that new regulations, requiring licensing for all vacation home operators, aren’t being universally followed.

“Many of them are paying the lower residential tax rate instead of the higher commercial tax rate,” said Councilman Wayne Williams. “That’s four times less than what they should be paying. “It ought not be cheaper to break the law than to follow the law. So when we look at evasion of taxes, the evasion benefit is somewhere probably in the $10,000 range.”

“The vast majority of enforcement issues are folks with no permit,” said Councilwoman Jill Gaebler. “That’s what we expected based on what we were seeing in other cities. And because of that, I agree there’s a lot (of businesses) trying to fly under the radar.”
Council members discussed the possibility of hiring a third-party firm to enforce the businesses, assess fines for noncompliance and collect any unpaid taxes.

The city said it has issued 679 permits for those units and recently sent 340 letters to people believed to be out of compliance.

Of the 340 people who are licensed to collect sales tax on those dwellings, 59 still need permits to operate, 237 now have active permits and 44 letters were returned, or the units no longer qualify or changed ownership.

The city is investigating 170 cases of possible noncompliance by the units, including 28 generated by neighborhood residents. The cases allege that the units are operating without a permit.

Most of the units are northwest and southwest of downtown.

The council asked city staff to bring recommendations for further action to a work session next month.