Short Term Rental Requirements
A short term rental (STR) is a rental accommodation that is not a pet boarding facility. A short term rental means any dwelling unit or individual room in a dwelling unit, including but not limited to, a single family home, a detached accessory dwelling unit, a multiple family residence, or a unit within a hotel, motel, inn, bed and breakfast, hostel, vacation home, condo, time share, guest house, cottage, or any other dwelling that is offered for rent, provided that the offering through any means, including but not limited to, an online hosting platform, is for a period of less than six months .
The Code further defines "hosting platform" to mean any person or entity operating in the business of facilitating a transient occupancy to include (but not limited to) a real estate broker or travel agent, an entity that collects rental fees, posts advertisements, receives service charges, facilitates payment, provides damage protection or insurance services of any type, offers property inspection services, or provides cleaning or other services for a dwelling unit offered as a short term rental.
Once a location is established as a STR, the location must be registered with the City to pay the STR License Fee and the Business Improvement District (BID) fee. A one-time license fee of $100 is charged for a STR to be licensed. The STR must pay an annual BID fee from the STR License Fee to the appropriate BID fund. For example, if the STR is in the Downtown BID area, the annual BID fee will be $103.00 annually.
Short Term Rentals Need Licensing & Permits
When registering a short term rental unit through the Colorado Springs City Planning Department, a general business license must be obtained. After the resolution of the class action lawsuit, and the new laws, application for a license must be done online. The application process includes application fees and renewal each year. Also, a sales and lodgers tax registration through the Colorado Springs Business Registration Department is required.
A short term rental license will be valid for the lifetime of the current City Zoning and Business Licensing Codes, absent the property being substantially altered or a change in ownership of the short term rental unit. It is important to remember that the local zoning code is expected to change due to the recommendations within the Colorado Springs Short-Term Rental Working Group report. Also, existing local code may change, and these changes are likely to increase the burden on homeowners to comply with the regulations. For example, Code may require submission of materials detailing use of the property, and in some cases may even require a ballot initiative to be circulated and voted on. In addition, enforcement of rules will require voluntary compliance by owners and managers.
Short Term Rentals – Zoning Considerations
Zoning laws in Colorado Springs are more restrictive than the rules for short term rentals of the property. Colorado Springs puts restrictions on short term rentals based on the zoning designation of your property. The city has three zoning classifications that pertain to short term rentals: Single Family Residential (R1), Multi Family Residential (R2, R3, R4) and Commercial (C1, C3).
R1 residential zones permit short term rentals only if you own and occupy the home or live in the home for at least 180 days out of the year. Only a few neighborhoods have this zoning designation, mostly around the Broadmoor and Rockrimmon.
If you live in an R2 multi-family zone, the rental you operate must be located in a building that contains two or more units and your unit cannot be rented on a short term basis for more than 90 days a year. In addition, there must be no more than two active city licenses for short term rentals within that same neighborhood. In addition, you must reside in the property a minimum of 180 days out of the year.
Similarly, if you own and rent out a property in an R3-three family zone you cannot rent it out for more than 90 days a year, there can be no more than two active city licenses for short term rentals within that same neighborhood, and you must reside in the property a minimum of 180 days out of the year.
If you’re looking to buy a short term rental in Colorado Springs, you’re probably better off focusing on properties in commercially zoned areas. The city permits unlimited rentals for properties in commercial zones.
Short Term Rentals – Safety & Health Considerations
Given the significant number of properties served by the City, the nature of short term rental guests tends to warrant close attention to safety and health. We suggest clients familiarize themselves with regulations that require certain items or conditions, for example: for fire safety, remove flammable materials (such as bedding, sofas, curtains, blankets), keep heat sources away from flammable materials, maintain smoke/carbon monoxide alarms, and provide a fire extinguisher, among others; ensure kitchens have exhaust fans vented to the outside; provide adequate sanitation facilities and restroom access; and keep drinking water, if provided, safe from contamination.
Short term rental falls under the scope of Colorado’s Accommodation Lodging Regulations. Section 25-28-102, C.R.S. The purpose of these regulations is to provide safe and sanitary accommodations and facilities for the public consistent with the requirements set forth in the regulations. Id. These regulations are overseen by the Colorado Department of Health Care Policy and Financing (CDHCPF) in cooperation with the local county or city health department or agency. Whether a specific property is required to be licensed depends on its location – i.e. the county or city, the number of units being rented, and whether food is being served.
Specifically, all places of lodging where sleeping rooms are rented in common, to the public, for periods of three days or less, for compensation, must be licensed by CDHCPF or the local health agency. Id. and 6 CCR 1010-2:9. See also below definitions from Regulation 17. III. C. Hours of operation for rules and regulations interpretation: The rules, including hours of operation, refer to Colorado Department of Public Health and Environment Regulation 17 "Regulation Governing Places of Public Accommodation." The Department will also interpret, as applicable, the rules based on those set forth in Regulation 17. The applicant must provide a copy of the short-term rental agreement with the license application.
Places of public accommodation include the following:
A. Lodging establishment – Any house, hotel, inn, motel, apartment house, or other building kept, used, maintained, advertised or held out to the public to be an establishment offering sleeping accommodations to the public for hire.
C. Lodging establishment shall not include: An apartment house which offers sleeping accommodations to the general public through third party reservation services such as VRBO, HomeAway or Airbnb.
D. For the purpose of this subsection 2.104, "for hire" means that a payment is expected, required or solicited in exchange for the sleeping accommodations or lodging, regardless of the method of accepting payment.
Short Term Rentals & Taxes
It may come as a surprise, but you are not exempt from paying taxes simply because you aren’t living in your property full time. In fact, legitimate short term rentals like yours are an easy target for the city’s code enforcement officers. Not only that, but Colorado Springs is also participating in a new tax revenue initiative designed to collect taxes from online short term rental platform hosts.
Guests are required to pay a city lodging tax each time they rent a property (as long as the property is under 30 days). In some cases like Denver, the host is responsible for paying the taxes. This is where it gets confusing for Colorado Springs issuers and hangt out with pas. They look at the tax revenue collection issues and confusion, and guess what? It’s easier not to pay them than set up a massive collection agency!
According to the city’s short term rental page "the City of Colorado Springs intends to register short-term rentals and provide a licensure process for these businesses." And , they’ve given Colorado Springs short term rental companies Broadsoft Solutions and Modern Treasury to start collecting, processing, and remitting local excise taxes on behalf of hosts. We know you don’t want to deal with any red tape and we know there’s nothing worse than surprise fees when you’re in the middle of checking out. But, you don’t have a choice not to pay taxes on your short term rental.
But just like everything else in this short term rental world of ours, getting sorted out with taxes isn’t a cut-and-dry situation. All short-term rental hosts need to report and pay income tax on the rental income generated from their property. Because renting out property to guests is considered a business transaction, it is subject to multiple types of local, state, and federal taxes.
Citizens of Colorado Springs are encouraged to pay an occupancy tax on your properties rented for less than 30 days. In fact, successful short term rental owners may even be eligible for an additional state sales tax referral and reporting relief program designed to ease the burden on short-term space-sharing hosts.
Short Term Rentals – Penalties For Non-Compliance
Enforcement of registration requirements is key to the success of Colorado Springs’ efforts to regulate short term rental properties. Even if the requirements are relatively minimal in Colorado Springs, the city is committed to enforcing them to the maximum extent permitted under the applicable laws.
Penalties for non-compliance vary by municipality. Some municipalities impose steep monetary penalties for non-compliance. Penalties range from $500 to $1,000 per offense per day for violations that remain uncorrected. Other municipalities impose less severe penalties. Colorado Springs is in the latter camp. Under Colorado Springs Code of Ordinances § 7.4.108, if the City determines a short term rental is not meeting the registration requirements, the City will place a notice on the premises requiring the owner to prove within thirty (30) days that the property is registered with the city or that the advertisement for the short term rental has been removed. If the owner receives a notice from the city and does not cure the violation, the city will impose a $300 fine for the next thirty (30) days(§ 7.4.107).
A continuing violation may result in additional fines. Under Colorado Springs Code of Ordinances § 7.4.107, if the owner fails to cure the violation within thirty (30) days, the City will issue a second notice placing the owner in default. The City will then charge the owner $300 per month as a civil penalty for three consecutive months. If the owner fails to comply with § 7.4.107 during that period, the City will revoke the owner’s registration for the property. The registration will be reinstituted if the city determines that the violation has been corrected (§ 7.4.107).
While penalties for noncompliance are not as robust as other municipalities, continued non-compliance may result in a revocation or suspension of the right to operate a short term rental in Colorado Springs.
Future Enforcement
Sometime in 2019, Colorado Springs will be able to access the short term rental databases. The City expects that they will make use of the data and there may be more robust enforcement actions than those taken in the past. See Colorado Springs City Ordinance 18-120.
Short term rentals are hard to ignore. They advertise in numerous ways from websites to social media platforms to word of mouth. If the City sees a short term rental, there can be enforcement action, as the City has the tools it needs.
Local residents and other members of the public who are interested in short term rentals can help by reporting non-compliant short term rentals to the City using the Form available through the City of Colorado Springs website.
The deadline for short term rental owners in Colorado Springs to submit their registration applications was January 31, 2019. However, those who missed the deadline and want to legally operate their short term rental in Colorado Springs have until April 30, 2019 to apply for a short term rental registration.
Current Status and New Developments
In October 2017, the City Council of Colorado Springs unanimously approved an addition to the existing STR regulations for the city. The approved amendment now requires short term rental owners in Colorado Springs to register with the city and pay a nonrefundable registration fee, which will be applied to the exhibits budget. This requirement will help generate funds to help the city take action against STR properties that are persistent nuisances to their neighbors.
Beginning January 1, 2018, the fee will go into effect for all existing and new STRs for both hosted STRs and unhosted STRs. The fee for "non-hosted" short-term rentals is $900; for "hosted" short-term rentals the fee is $250. The annual fee helps cops regulate the growing population of short term rentals and reminds owners that they have obligations to their neighbors and to the community.
While the Colorado Springs City Council unanimously passed the STR law in 2016, the state legislature did not take up a bill to amend the Colorado Right to Privacy bill and allow for local governments to allow the enforcement rules for STRs.
The recently proposed bill would have overridden the Colorado Right to Privacy bill, which did not permit local governments to implement a fine for violations of short-term rental regulations if said regulations had not been voted on by the citizens and approved. Similar bills to amend the Colorado Right to Privacy bill were killed in 2017 in the state legislature but were approved by the city council of Colorado Springs. City residents, activists and Council members implored the legislature to pass the bill to allow the city council to include a fine in their local STR law as a defensible way to end the STR debate.
With the defeat of the bill, the state’s STR laws were left vulnerable to the negative effects of some STRs. Residents of Colorado Springs told lawmakers that some hosts have been renting out hundreds of units in the city and monopolizing the STR market and hurting local hotels and motels.
Additionally, lawmakers learned from COMPASS that Colorado Springs was ranked No. 1 for the most licensed short-term rentals in Colorado by April 2017, with 1,250 listings on Airbnb and 750 listings on VRBO. However, the Colorado Springs’ City Code defines short-term rentals as rental units booked for periods shorter than 30 days and the new STR law counters that definition by allowing persons to book a STR for up to six months under the city’s new rules.
One reason the STR law is so important to the City of Colorado Springs, aside from the immeasurable increase in revenue the city will accrue, is that it gives the police more tools to effectively deal with problem STRs. After six complaints for a STR, the city’s executive director has the option to suspend the business license of the STR’s owner, putting an end to the problems that STR is causing for its neighbors. It may seem harsh to force STR owners out of their homes, but should the rules be followed in the first place, the complaints would never happen, making the rules an effective tool for keeping the peace and protecting Colorado residents.
Additionally, the city can revoke the STR business license for an owner that has received more than three citations for violating the city ordinance or the STR regulations.
While the short-term rental craze has hit the state of Colorado very hard and STR laws are constantly evolving to meet the new demands of the industry, Colorado Springs residents can rest easy with their new STR regulations in place and the fee associated with short-term rentals going into effect in 2018.
Short Term Rental Resources
Available Resources for Property Owners
Local and state departments are good starting points when seeking information about short term rentals. The City of Colorado Springs has a website dedicated to FAQs. The FAQs clarify that most types of STRs require a license, including STRs that are rented more than once.
The City of Colorado Springs Department of Planning & Community Development provides additional information and assistance. The department reviews and issues STR licenses. A link to the "Short-Term Rental Permit Application Instructions" provides additional detail on the process. It is recommended that property owners explore these links in order to save time and better understand the requirements for applying for a STR license .
The Colorado state legislature was considering proposed legislation that would have imposed a statewide standard on STRs. However, the bill was postponed indefinitely following its committee hearing in March 2023. Currently, there is no mandate on STRs from the state, but legislators are expected to revisit the issue next year.
Property owners may look to industry groups for additional information. The Short Term Rental Alliance of Colorado provides information and various resources that cover different aspects of short term renting in Colorado. The U.S. Travel Association offers information on several legal issues, including tax assessment on STRs.