The act of setting precedent weighed on Steamboat Springs City Council members as they deliberated appeals from a pair of residents over their requests for short-term rental licenses that were rejected in recent months.
For the city to collect short-term revenue taxes, a property must be registered under sections of the city’s municipal code, which applies to the more than 2,000 short-term rental units in the city. Enacted in June 2022, the adopted regulations preempted voter approval of a November ballot measure to apply a 9% tax on short-term rental stays beginning Jan. 1, 2023.
Elements of the city code designate where short-term rental units in Steamboat can be operated with limited exemptions for some property owners who could gain legal nonconforming status prior to obtaining a short-term rental license if they demonstrated a residence was used for vacation rentals before the city adopted the regulations.
The codes also include a rule whereby short-term rental licenses, which must be renewed annually, and legal nonconforming designations are considered abandoned if there is no booking recorded within a 12-month period prior to an application being renewed.
The abandonment timeframe is why the owners of a unit at the Sunray Meadows Condominiums saw their short-term rental license rejected by the Steamboat Planning Department after staff determined the owners could not show evidence of lawful short-term rental bookings within the 12 months prior to submitting their application.
In a March email, Steamboat Planning Director Rebecca Bessey told the homeowners that, although there were documented short-term stays at the property within the one-year timeframe, those stays occurred when the property did not have legal nonconforming status.
The homeowners subsequently filed an appeal that was rejected by planning department staff. The decision was upheld by the Steamboat Springs Planning Commission in a unanimous vote in May, before council members heard from Bessey as they considered the appeal Tuesday night.
“The crux of the applicant in this case has really been to suggest that staff took too long to review their license application and therefore were sort of forced to abandon their use,” Bessey told council members. “There is really no dispute between staff and the applicant that there were no lawful bookings within a 12-month period. That is not being disputed, and so we stand by our initial decision that the (legal nonconforming status) has been abandoned and therefore we are unable to provide the STR license.”
Agreeing with Bessey and her staff, council upheld the decision to revoke the property’s short-term rental designation with a 6-1 vote. The property owners did not testify at the meeting.
“If you enter a business, you are sort of charged with understanding what the rules are for conducting that business,” council member Joella West said.
A punishment worth the crime?
Despite rejecting the appeal for the Sunray Meadows property, City Council was divided 4-3 in another vote to uphold a second appeal before them Tuesday night, as council members questioned how the vote might affect short-term rental violation cases in the future.
The appeal came after city staff determined the owners of a unit at the Shadow Run Condominiums had abandoned the unit’s legal nonconforming status and short-term rental license.
The abandonment decision stemmed from another section of the city code whereby owners of short-term rental properties who do not book stays with either Airbnb, Vrbo or Expedia must obtain a sales tax license in addition to a short-term rental license and a nonconforming rental designation.
While the Shadow Court property owners booked a stay in June 2023 within the 12-month period prior to their license renewal application in March, they did so through a private agreement and without obtaining the required sales-tax license.
Bessey explained the owner later paid the taxes due on the booking, including the corresponding late fees, but said the stay was still deemed illegal under city code and the owners’ short-term rental renewal was denied by planning staff.
“The late payment of the tax was not really the consideration for our denial,” Bessey told council members. “It was the lack of the sales tax license at the time of the sale, which was required by the municipal code.”
The owner of the condominium unit and applicant behind the appeal, Sara McCann, didn’t deny making the mistake, but added that she was confused “because my realtor who sold me the condo had told me as long as you have a rental within the 12 months calendar year, it doesn’t matter.”
“I made a one-time tax mistake for a stay in June 2023,” McCann said. “This was rectified prior to the (short-term rental) license renewal deadline and prior to paying my annual taxes.”
McCann also explained that, for much of the 12-month period in question, renovations were being performed on her condo unit, so she could not accept as many short-term rental bookings.
She went on to assert that she understands the city’s goal for providing more affordable and attainable housing in Steamboat, but that for her to rent the property on a long-term basis would not make financial sense.
“I would have to charge $4,300 a month for this small two-bedroom, two-bath condo — with a loft — that does not allow pets,” McCann said. “It’s not exactly a great option.”
Outside of the one June 2023 booking, McCann said she has booked 25 stays through vacation rental websites, adding that she felt the denial of her “short-term license forever” would be too harsh of a punishment and would not be supported by city code.
Council members Bryan Swintek and Dakotah McGinlay joined City Council President Gail Garey in rejecting McCann’s appeal.
McGinlay said the regulations were designed to encourage long-term housing in Steamboat and the financials of McCann renting her condo unit long-term “may not be affordable but could be attainable” for a number of professionals seeking housing in the city.
Garey took a more direct approach to explaining her vote.
“These are the rules. It’s not like there hasn’t been a lot of attention on (short-term rentals) and what was required, and so that is that,” Garey said. “I certainly sympathize with the appellants, but these are the rules and people need to abide by the rules.”
Council members Steve Muntean, Amy Dickson, Michael Buccino joined West in voting to approve the appeal request, noting that McCann has paid the taxes and been consistently renting the property through Airbnb except for the June arrangement.
“Clearly, they are not trying to be malicious — they paid the tax,” Buccino said. “It was just this short little window, and I think we have to have a little bit of grace and latitude with this circ*mstance.”
Muntean said council supported a need to follow city regulations, but that the circ*mstances around the appeal required an exception, not a punishment he felt was worse than the violation.
“If you are always going to follow the rules and there is no room for appeals whatsoever, we should never hear an appeal ever again,” Muntean said. “That to me is just not what we are all about. There’s always exceptions. There’s always going to be exceptions.”
For West, the decision to support the appeal was more complex.
“If we were to essentially make an exception in this circ*mstance, how would we explain that?” West said. “We can’t just make an exception because these are nice people and they clearly made a mistake that resulted in a very drastic result. What grounds can we possibly state that will stand up to other people who may come to us with completely different circ*mstances, where for some other reason they didn’t pay their sales tax or didn’t have a sales tax license, or both — how can we do that?”
Council members ultimately instructed planning staff to propose a resolution in the future that, if adopted, would clarify the precedent set over the appeal cases they heard Tuesday.
City Attorney Dan Foote said future discussions over how to handle the types of appeal situations presented in the cases heard would benefit from explanation … and he left the door open for council to consider changes to the municipal codes and regulations as written.
“It would be helpful if you all gave some … findings or basis (for your) decision because we may find ourselves in a similar situation and we will need to know how to handle those and, conceivably, we could be looking at code change depending on what your grounds are,” Foote said. “There are over 2,000 (short-term rental) licenses and lots of deadlines that come up and lots of opportunities for people to make mistakes.”
Trevor Ballantyne is the city government and housing reporter. To reach him, call 970-871-4254 or email him at tballantyne@SteamboatPilot.com.
