Here in Colorado we are literally the ground zero for vacation home rentals. In Vail, three out of four residences are considered secondary or non-primary. Many of these homes and condominiums are rented to visitors on a transient basis generating direct revenue for their owners and dollars spent in the resort town.
In most major cities including New York, San Francisco and Denver, condominium owners are placing their secondary or primary residences on sites such as VRBO, HomeAway and others providing supplemental income.
In Denver we witnessed the “vacation rental” phenomenon during the Democratic National Convention when available hotel rooms were scarce and homeowners provided transient housing based on the high-demand at rates some would argue were usury.
In Chicago, the City Council after two years of debate has approved a licensing requirement for condominiums which operate as hotel suites and vacation rentals.
The ordinance allows condos to be turned into hotel suites only if owners get prior approval from their condominium association, secure at least $1 million in liability insurance and obtain a two-year “vacation rental license” for a $500 fee. In addition, within a building, the maximum allowable number of rentals is capped at six (6) units.
License holders would be subject to the same safety and operating standards of hotels including but not limited to:
• Guest registration records would have to be maintained.
• Evacuation diagrams would have to be posted inside the entrance door.
• The city’s 3.5 percent hotel tax would have to be tacked onto the nightly rental fee.
• No unit could be rented for less than 10 straight hours.
• Vacation rental units would have to be “cleaned and sanitized between guests” — including dishes, utensils, pots and pans — with linens and towels changed.
• Prohibited from serving alcohol.
• Occupancy would be limited to one guest per 125 square feet of floor area. (Standard hotel rooms measure from 225 SF to 400 SF.)
Based on the “police powers” of local governments to insure “health, safety and welfare,” hotel and transient accommodations including Bed & Breakfasts have to meet basic minimum standards concerning cleanliness, safety and security, and insurance.
It will be interesting to see if municipalities and resort areas in Colorado consider the Chicago ordinance, especially during this time of decreased tax revenues.