The Avon Town Council on Tuesday discussed the ethics of allowing short-term rentals in town while reviewing an application to expand the town's short-term rental overlay.
The applicant is The Kestrel, formerly McGrady Acres, a free-market townhome development located at the end of Eaglebend Drive, next to Post Boulevard, across the street from unincorporated Eagle County. The 24-unit luxury development applied to be included within Avon's short-term rental overlay.
At the center of the discussion were two questions: What do short-term rentals do for the resort economy? Do they help or hurt locals in a challenging housing market?
In Avon, short-term rentals are managed by the town in two ways: Zone districting and individually permitted licenses.
Short-term rentals are not included within Avon's regular zone designations. When the town approves an area for short-term rentals, it is added to the town's short-term rental overlay, a secondary map that is, in essence, laid on top of the town's regular zoning map.
Avon's short-term rental overlay was established in 2009.
Units in Avon can only be rented out short-term if they are included in the short-term rental overlay and licensed by the town. Being in the overlay does not automatically mean units are allowed to operate as short-term rentals; the overlay merely gives developments the ability to apply for licensing to contain short-term rentals. Town staff manages short-term rental licenses.
Within Avon, there are three types of short-term rental designations: Unlimited, which allows a unit to be short-term rented year-round; limited, which allows a unit to be short-term rented for up to six weeks per year; and resident-occupied, which permits year-round short-term renting of part of a home while the unit owner lives in another part.
Avon's short-term rental regulations also differ between units inside and outside of the town core. Developments outside of the town core on the short-term rental overlay are allowed to have a maximum of 15% of their units operate as unlimited short-term rentals.
The Kestrel was not initially included in Avon's short-term rental overlay because at the time, the town only looked at existing properties when it was establishing the which areas would receive designation.
"There wasn't an intent to include it or exclude it," said Eric Heil, Avon town manager.
The Kestrel is located outside of the town core and so would be subject to a 15% cap on full licenses only, meaning up to three of its units can be unlimited short-term rentals.
"At this time, we have a couple of people who are interested in doing a partial short-term rental, but it's a luxury property, so everybody doesn't want it," said Andrea McMillen, representing The Kestrel.
The development is self-contained, with one way in and out.
"It's not adding to any neighborhood problems that way," McMillen said.
Which units are permitted the short-term rental designation would be determined on a first-come, first-served basis, McMillen said. (The Kestrel contains one deed-restricted unit, which, like all deed-restricted units in Eagle County, is not permitted to have short-term rentals.)
The Kestrel HOA will require short term rentals to host for a minimum of three days. "We don't allow one night or anything because nobody wants parties," McMillen said.
After working extensively with The Kestrel and reviewing its application materials, town staff recommended that the council approve including the development in the town's short-term rental overlay.
"We find it is fitting for this type of resort development to have short-term rentals," said Jena Skinner, Avon's planning manager.
Council member Lindsay Hardy spoke out against approving The Kestrel's application to join Avon's short-term rental overlay.
"I believe short-term rentals, they are a cultural shift from community to commodity," Hardy said. "Overtourism is putting a strain on local services, and I do believe additional short-term rental licenses will put an additional strain that we cannot accommodate."
"As long as working locals are sleeping in cars, I will not vote "yes' to expand unlimited short-term rental licenses or zoning expansions anywhere within our town," Hardy said.
Hardy said she believed the application did not satisfy one of the criteria required for the council to approve the application, which dictates that "the rezoning is not likely to result in adverse impacts upon the natural environment, including air, water, noise, stormwater management, wildlife and vegetation, or such impacts will be substantially mitigated."
"If one unit is consistently rented, let's say, 300 days a year, it now needs more cleaning people, it now needs more maybe plumbers, electricians, or teams to help keep this home turned over constantly," Hardy said. "For every additional cleaning person that we need in town, we need to be able to house them."
Council member Ruth Stanley and Mayor Tamra Nottingham Underwood said the 15% limit on short-term rental units made them more comfortable approving the short-term rental overlay update.
A short-term rental unit in Avon is taxed differently from other units. Short-term rentals must collect and remit to the town 10% of the price paid for the rental. Eight percent of that is sales tax and accommodation tax, which goes toward the town's general fund, while the 2% short-term rental tax is earmarked for the town's community housing fund.
"So, in effect, it would work toward mitigating some of the issues that Lindsay has brought up," said Council member Gary Brooks.
Heil elaborated on the conundrum that short-term rentals pose to mountain communities like Avon.
"We're a resort community. The majority of our budget comes from the resort economy, and the majority of our funding to pay for all of the things we do comes from that resort economy," Heil said.
With only two hotels in Avon, "most of our (visitor) lodging is short-term rentals," Heil said.
"My opinion, when I look at this, is, whether you allow it or not, at $2.5 to 5 million, the cheap units you're starting out at a $15,000 a month mortgage payment," Heil said. "If you don't allow short-term rental, they're not going to be available to local workforces the way I see those economics. And then, if it's a second home, is it better to see it vacant most of the year, or is it better to allow it to be used and have additional lodging opportunities for visitors?"
The council approved the application's first reading 5-1, with Hardy casting the dissenting vote. The council will review the application again on May 27.
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