COMMENTARY: WHAT'S THE FUTURE FOR AFFORDABLE HOUSING IN LYONS
By Amy Reinholds
At the end of March, homeowners who wanted to learn more the licensing process for short-term vacation hosts in residential zones in Lyons attended an overview meeting at Lyons Town Hall, but several questions from homeowners went unanswered. A conversation with Town staff on
Friday confirmed the required steps and answered many of those questions for homeowners on residential properties in town who want to rent space in their homes short-term to tourists.
Until the short-term rental ordinance was added to the Town of Lyons municipal code at the start of 2018, the only way for residents on residential-zoned properties (R-1 and R-2) in town to legally rent space in their homes for short-term, nightly or weekly periods of time (including on websites like AirBnb and VRBO) was to apply for a conditional use review to run a Bed and Breakfast business. The Bed and Breakfast conditional use review process required several steps including public hearings before the Lyons Planning and Community Development Commission and the Lyons Board of Trustees. No homeowners applied for the Bed and Breakfast conditional use reviews for R-1 and R-2 properties. (Bed and Breakfast businesses with six or fewer units are allowed by right -- without the conditional use reviews -- on A-1, A-2, and Estate zoned land, if the homeowners have a business license and the rented units are in the main house. Lodging businesses are also allowed by right in commercial zoned land, including the CEC zone. You can see a list of these kinds of lodging businesses at www.lyonscolorado.com/explore/lodging.)
But a new process makes it much easier for homeowners on R-1 and R-2 properties, who didn't have a use by right before, to rent out rooms to vacationers in the homes where they live. Now all a residential homeowner must do is complete a Town of Lyons Short-term Rental Application, with a new application fee, and pay an annual license fee for a Town of Lyons Short-term Rental License. One of the points of confusion at the March 29 meeting for residential homeowners was whether an additional Town of Lyons business license was also required annually. Both Lyons Town Planner Paul Glasgow and Lyons Code Compliance Officer Ian Greer have confirmed that an additional Town of Lyons Business License is not required. Here are the total fees that must be paid for short-term vacation rentals: a $100 license fee, plus a $75 new application fee for the first calendar year ($175 total), and a $100 license fee plus a $50 renewal application fee for following years ($150 total). Waivers of the $100 license fee are granted for short-term rentals of rooms that meet accessibility requirements.
The Lyons Short-term Rental ordinance prohibits short-term rentals in campers or RVs, and other non-compliant structures like sheds, and in accessory dwelling units (ADUs) that are covered by the www.townoflyons.com/566/Accessory-Dwelling-Units ordinance, and in homes that the property owners do not use as their principal residence.
Residential homeowners need to come in to fill out paper applications (available at Town Hall or by printing out the application on www.townoflyons.com/ShortTermRentals). Greer said he is working with Arielle Hodgson from the Lyons Community Relations and Programs department to make the Lyons Short-term Rental application available online soon, to make it easier for homeowners to apply.
Greer said that the Town of Lyons has received about eight short-term rental license applications so far, and Glasgow and Hodgson are working on getting the properties licensed. According to the application, applicants should allow 45 days for the application to be processed. Greer said he is researching short-term rental advertising websites (like AirBnb and VRBO), attempting to compile a list of properties that are currently running short-term rentals from their residences unlicensed. He will be sending out a letter to those property owners within the month, advising them that the Town staff believe that they are running an unlicensed short-term rental from their residence. The goal is to get all of the rentals licensed, and to begin enforcement on any short-term rentals that do not conform to the short-term rental ordinance (for example rentals in ADUs and RVs and in homes that property owners do not use as their principal residence).
For homeowners to obtain the required license from the Town of Lyons, short-term rentals must meet the following standards:
1) The proposed short-term rental must be the principal residence of the homeowner, and the homeowner must occupy the premises of the short-term rental for at least nine months per calendar year.
2) The homeowner must self-certify that design and safety standards are met and acknowledge that the premises can be subject to a request for a pre-arranged inspection by appropriate building, fire, and zoning officials.
3) The homeowner must obtain a Colorado sales tax license and collect, report, and pay sales tax (or a contract from a third-party agency like AirBnb or VRBO to collect, report, and pay sales tax on the homeowner’s behalf). Also, because ballot question 1A passed in the April election, the required fees include a $2 per night occupation tax for lodging, like many other municipalities have (although lower). The fee raises the costs that a vacationer pays by a small amount, and funds raised will help cover the added impacts of tourists, so the Town of Lyons doesn’t have to take money away from what is needed to cover services for all of our year-round residents.
4) The homeowner must submit the required application form, safety certification form, and associated fees. Submitted short-term rental license applications will be reviewed for compliance, in accordance with the Lyons Municipal Code, and a decision on the application’s approval will be made within 45 days, according to the Town of Lyons website.
These changes apply only to short-term vacation rentals in the Town of Lyons. People who own homes outside Lyons town limits are subject to the specific regulations for their county (Boulder or Larimer).
Residents who are interested in short-term vacation rentals often face another point of confusion with the Town of Lyons ADU ordinance, which allows small carriage houses to share utility connection fees with the main house (saving homeowners $20,000 to $40,000 in construction costs). Homeowners of ADU properties must rent for periods of 30 days or longer (for example, at least a month-to-month lease), and cannot use their properties for short-term vacation rentals, because the policy is intended to increase the number of lower-cost residential rentals for people who work in town. Therefore, a property owner who has an ADU cannot apply for Lyons Short-term Rental Licenses. You can read the ADU ordinance at www.townoflyons.com/566/Accessory-Dwelling-Units.
I care about this connection between short-term vacation rentals and housing that local workers can afford. If there were no restrictions on the use of ADUs after all the incentives that save homeowners money, property owners who wanted to maximize profit would run a business that brings in $200 a night from vacationers, instead of building community by renting to longer-term tenants who live and work in Lyons. Even the current ADU regulations being enforced give more advantages to homeowners who now have new ways to save and earn money, over renters who have limited income to spend on monthly rent.
Greer said he and other Town Staff have been compiling a list of properties that they believe are currently maintaining illegal ADUs. They range from detached accessory structures (garages and sheds) that have been converted into dwelling space, to basements or additions that are now being used as ADUs. Greer will be sending out letters to property owners on the list (expected later, after the short-term rental letters are completed), advising them that the Town of Lyons believes that they are maintaining an unpermitted accessory dwelling unit on their property. The Town goal is to bring all of these properties into compliance with all adopted Town of Lyons Building and Zoning Codes and to begin enforcement on dwelling units that do not meet requirements that allow them to be permitted.