Please be aware and get involved! Proposition HH in Colorado

[Virginia Franzese]

If you own property, particularly any property that is not your primary residence, please be aware and get involved! The passing of this proposition will nearly quadruple property taxes for short term rental properties. 

The  would classify homes that are rented for more than 90 days a year on a short-term basis — defined as less than a month per booking — as commercial lodging properties. The property tax assessment rate for lodging properties is 27.9% compared with the 6.765% rate used this year for residential properties.

On Tuesday, proposition HH passed through the committee with a vote of 4-2.  With passage through this committee, the bill will now be introduced to the Colorado Legislature in January. We are hearing that the legislators pushing this bill are hoping to fast track it and SWIFTLY pass it early in the session.

"Why Proposition HH Spells Trouble for Colorado Property Owners" by Todd Ruelle

As Colorado residents, we take pride in our state's natural beauty and vibrant communities. We also value our rights as property owners and understand the importance of responsible governance. However, Proposition HH, if passed, could jeopardize the well-being of Colorado property owners and have far-reaching consequences for our state.

At first glance, Proposition HH may appear to be a noble effort to address the issue of housing affordability. It seeks to impose rent control measures in certain areas, with the intention of making housing more affordable for residents. While the goal is admirable, the approach taken by Proposition HH is deeply flawed and could ultimately harm the very people it aims to help.

One of the most concerning aspects of Proposition HH is its potential to stifle investment in rental properties. When property owners are subjected to strict rent control measures, they have fewer incentives to maintain and improve their properties. This can lead to a decline in the quality of rental housing, making it a less attractive option for tenants. In the long run, this could exacerbate the housing problem by reducing the supply of quality rental units.

Furthermore, Proposition HH could discourage new investment in Colorado's real estate market. Investors may be hesitant to put their money into properties when the government can arbitrarily dictate rental prices. This reduced investment can have a negative impact on property values and the overall health of the real estate market, affecting property owners who rely on the value of their homes for their financial security.
Another concern is the potential for unintended consequences. Rent control policies have been shown to lead to a shortage of rental housing in other cities and states. When landlords are unable to cover their costs or make a reasonable profit, they may choose to exit the rental market altogether. This could further limit housing options for Colorado residents and potentially result in higher rents for those not covered by the rent control measures.

Moreover, Proposition HH could infringe upon property owners' rights to manage their investments as they see fit. Property ownership comes with the responsibility of maintaining and managing one's assets. Rent control measures that limit an owner's ability to set rental prices interfere with this fundamental right.

While the idea of addressing housing affordability is important, Proposition HH is not the right solution for Colorado property owners. It may have good intentions, but it risks creating more problems than it solves. Rather than imposing rigid rent control measures, we should explore more effective ways to address housing affordability, such as increasing the supply of affordable housing through incentives for developers or providing targeted assistance to low-income renters.

In conclusion, Proposition HH threatens the rights and financial well-being of Colorado property owners while potentially failing to achieve its intended goal of making housing more affordable. It is imperative that we consider alternative solutions that promote responsible governance and preserve the rights of property owners. Let's work together to find a more balanced approach that benefits all Colorado residents.

[JD Martin]

Quote from @Virginia Franzese:

Quote from @JD Martin:

Quote from @Virginia Franzese:

Quote from @JD Martin:

That seems like a pretty steep property tax increase for sure, but parts of the argument against it here are definitely ingenuous.

1. The part about not maintaining the property because of high tax rates. No one in the STR business is going to let the property go to hell because that would ruin their business. Unless of course the property is already in a bad area, in which case there's no incentive to maintain it in the first place.

2. If the point of this policy is to address the issue of properties being removed from LTR or owner occupancy from STR, it's going to have exactly that effect despite the flowery language about rent control. If properties that are taxed that high can't make a profit, they are going to revert to their highest and best use naturally, which sounds like rentals or owner occupancy. That's going to increase the supply of these homes. Conversely, it's liable to increase the value of remaining STRs and increase their nightly rates since the supply will have been constrained.

For most of the STR owners in CO, we are not "businesses". The vast majority are individuals such as myself who STR their HOMES when not in use. As such, many of us will simply shutter our doors, the homes will largely sit empty, and no tax revenue will be generated.

 I'm sorry, but this argument makes no sense. If you are talking about short term rental taxes, virtually all of that will just be paid through hotels if there's no STRs available. If you are talking about property taxes, you're going to pay those no matter how you are using the home.

Beyond that, I suspect most true STRs in Colorado, like most states, are purchased and put on the market solely for business purposes, not as wealthy homeowners renting out their own personal vacation home.

In any case, I'm not the enemy here and you don't need to convince me one way or the other; I own my own STR. I'm just pointing out that of these are the arguments you're going to use, you're going to be crushed by anyone with a modicum of logic and arguing ability.

Here is the data, JD, along with commentary from Richard Mason who is spearheading our lawsuit to strike down the 35 booking limit we are already facing:
https://drive.google.com/file/d/1JuBD9WQIeb2sgRLa6W7nlKYIR-X...

I have a suspicion that Bill 6 is coming to light because of a number of FALSE NARRATIVES surrounding private vacation rentals (STRs). Through a substantial amount of effort last year (700+ hours), I analyzed each of the FALSE NARRATIVES below as Summit County leadership was considering their third rewrite of STR regulations in just over a 1-year timeframe. All of the detail for my analysis is available here: Summit County - Vacation Rental Regulations (STR) - Homeowner Research and Analysis
"STR's are the primary reason housing and rents are unaffordable in Summit County!" - FALSE

• This FALSE NARRATIVE is addressed on pages 2 through 6 in my analysis above.
  
• St. Louis FED data shows that Summit County housing prices were just keeping up with price escalations in Boulder and Denver counties... both of which have had traditionally VERY STRICT STR regulations.
  
• Four peer-reviewed academic papers reveal a negulalable impact to home and rent prices related to short-term rentals. (pages 5-6)
  
• A recently completed paper done by Michael Seiler, professor of real estate and finance at the College of William & Mary. His analysis showed a 2.7% decline in contracted long-term rental prices after a COMPLETE BAN on STRs. On a $1,500 monthly room rental in Summit County… that equals $40.50. It’s a small price to pay for the MUCH HIGHER wages paid to service providers working in the short-term rental space compared to the large CORPORATE employers in the County.
  
  • A short overview of his academic paper can be seen here: The housing crisis’ Hamlet moment: to Airbnb or not Airbnb?
    

"STR license applications continue to increase within Summit County" - FALSE

• This FALSE NARRATIVE is addressed on pages 8 through 11 in my analysis above.
  
• At the time this claim was made in the spring of 2022, the rate of STR license applications were actually falling. In reality, the data shows that increases in the rate of STR applications can be TRACED TO THE COUNTY'S OWN ACTIONS of overregulation.
  
• Currently, over 20% of STR licenses in Summit County are UNUSED and act as "placeholder" or "insurance policies" against future County overreach.
  

"39% of home sales result in a Vacation Rental License" - FALSE

• This FALSE NARRATIVE is addressed on pages 12 through 14 in my analysis above.
  
• At the time this claim was made in the spring and summer of 2022, the actual NET gain in licenses was 12% with most of those being "placeholder" or "insurance" unused licenses.
  

“Large corporations are buying up Summit County housing in order to market it as an STR” - FALSE

• This FALSE NARRATIVE is addressed on page 17 in my analysis above.
• A simple pivot of ownership and STR license data reveals that the biggest owner of properties is a timeshare company, the second is a private Colorado investor, with the rest of the top 20 being a mixture of private investors or LLC's with the majority holding 3 or 4 properties.
• Two owners in the top 20 maintain "placeholder" licenses on their French Creek long-term rentals as an insurance policy against County overreach.

https://drive.google.com/file/d/1JuBD9WQIeb2sgRLa6W7nlKYIR-X...

 😄 That's way more information than I'm interested in digesting, especially since I have no dog in this fight, so to speak. I will however make another observation - capitalizing full words and bolding strings of characters doesn't make it more correct or give it more weight; from an online perspective, it makes the poster seem hysterical and a zealot. That's not a good look for someone hoping to propel a logical argument against an issue. 

If you truly have facts and logic on your side, no additional embellishment is necessary and in fact detracts from your position.