William Crow Jewelers
RTD
The Growing Pains Of Short-Term Rentals In Denver
by Chris DeGusto
The methodology dedicated to handling Denver’s short-term rental (STR) industry is fairly new, as the governing structures used today are from a 2016 city ordinance. Ongoing efforts to find a perfect solution in an imperfect situation — one that makes everyone happy — have been difficult to find. Denver is faced with rapid growth, and this expansion has fallen upon current and future residents to placate.
Almost anyone who has heard of STRs has an opinion about them due to a personal experience of some kind. Yet, multiple people in the Mile-High City have declined to tell their story, and most who elected to share spoke in hushed, prudent tones with lowered eyes. They shot frequent glances around and recounted their anecdotes incompletely.
“I was told not to [speak on the record],” said Rebecca after a pause. “I was told that there could be retaliation. I don’t know what’s going on. I don’t know, I just think this is much bigger than it appears.”
Rebecca declined to provide her last name. She chose not to elaborate on her remarks, define what she believed retaliation would entail or from whom it could come. A large portion of those who spoke to the Glendale Cherry Creek Chronicle would not divulge any information at all but acknowledged they were affected in some way.
Denver’s STR conversation has many sides. The business side has provided crucial financial benefits for some. Others have lost faith in their neighborhood’s economic value. But a report released in April by the Denver’s Economic Development and Opportunity Department exhibited that STRs have not had a significant impact on the cost of housing. According to the report, only one percent of Denver’s housing supply is an STR, and revealed weak correlation to local rent increases.
Still, like Rebecca, some are more concerned with how STRs affect daily life in their community.
Sophi told the Chronicle that people have mistakenly tried to enter her home in the middle of the night on multiple occasions, as recently as this month. Intruders on her property were supposed to be at the STR next door where they were staying.
“The dogs woke up and were barking and trying to figure out what was happening — I thought somebody was breaking in,” said Sophi. “I am often alone in the house. It’s not a great feeling to be next to a really drunk [group of] guys or to have people trying our door. I think once you get that many people together who are not all with it, that’s a safety issue.”
Others have expressed similar safety concerns but declined quotation.
Rebecca and Sophi share a home in Denver’s Washington Park neighborhood next to a “mega-mansion” of roughly 2,000 square feet. According to Sophi, the property has often hosted bachelor parties where the guests’ goal is to “drink as much as they can and smoke as much as they can.”
As an STR property manager, David Pardo’s “bread and butter” are “big and noisy parties.” Pardo, who has been an STR host for over five years, has managed a combination of properties ranging from one-bedroom apartments to larger townhouses. In an interview with the Chronicle, he said that over 1,600 groups of guests have utilized his properties. Some of these sites have specifically catered to events such as bachelor and bachelorette parties, and Pardo estimated that he has hosted over 100 of these gatherings. These homes are located in areas of commercial use where local zoning laws do not prohibit the operation of business, and downtown, where noise is already generated from local bars and nightlife.
According to Pardo, the vast majority of his guests have not broken any rules established by both the hosting platform and himself. Most of the harm Pardo has experienced caused him personal logistics problems but hasn’t affected close-by residents in any fashion.
“All the neighbors of my properties know exactly what’s going on. They have all the contact info,” said Pardo. “We’ve got all the noise awareness systems, sensors, cameras — we know what’s going on because we don’t want our guests to have a [negative] impact. We build that into our system. That’s not a requirement that the city has. That’s a requirement that I have for myself. It’s personal practice for the sake of my business.”
Not all STRs are in stride with legality. Denver’s 2016 rules state that an STR can only be operated from a primary residence. In June a couple was charged with felonies for running an STR outside of their primary residence.
Denver’s Office of Excise and Licenses spokesman Eric Escudero said in a recent email correspondence with the Chronicle that Denver is not anti-STR and explained how the city has investigated potentially illegal STRs.
“After collecting evidence that shows people are operating an STR that is not their primary residence, Denver frequently sends out an affidavit to suspected illegal STR operators giving them one last opportunity to come clean,” according to Escudero. “If they lie on the affidavit attesting their STR is their primary residence, they could be charged with the crime of influencing a public servant.”
To mediate the STR conversation and push the industry in Denver toward more effective operation, Denver’s Short-Term Rental Advisory Committee (STRAC) has orchestrated the rollout of a dual-phased plan. The first section is focused on updating current language and defining terms such as “primary residence” in a clearer fashion as 2019 concludes.
The Committee’s mission is to “provide guidance and recommendations to Excise and Licenses policies pertaining to the STR licensing program.” They have hosted meetings that encouraged public comment, and members of the Committee include STR hosts, industry stakeholders, residents of the neighborhood and elected city officials.
Hosts of STRs must also obtain licensure to operate lawfully. Denver currently has a 78.3 percent compliance rate, one of the highest in the nation according to the most recent data from the Office of Excise and Licenses. In the same data set is the compliance rate of other major cities: Nashville, 59 percent; New Orleans, 58 percent; San Francisco, 42 percent; Austin, 18 percent.
And while complaints about STRs are the most common to the Office of Excise and Licenses, this data has shown that Denver has displayed positive trends. STRAC provided data at their October meeting as well; complaints about STRs to the 311-information hotline have gone down from 92 in 2018, to 72 as of October 2019.
Phase two of STRAC’s plan is set to roll out as 2020 hits its second quarter. Their proposed plans included finding the best practices and legal parameters for property management requirements, as well as working with other cities to draft effective new language centered around platform accountability.
Industries that have thrived due to STRs have taken a hit. Joyful Soul Cleaning’s owner Kayla Darling has operated her business within STRs. She has been able to create jobs for many others in part due to rental properties and joined the conversation with the hopes of changing peoples’ hearts and minds but told the Chronicle that she has lost business due to the decrease in rental properties.
“It’s definitely important to me that our voices are heard, so that we can say, hey we want to work with the city, we want to work with the communities to make [the STR business] a positive experience for everyone that we can,” said Darling. “But then also, we don’t want half of to go away.”
According to the Office of Excise and Licenses, the number of unique property listings has dropped 21 percent since last October, and 158 applications for licensure withdrawn since April. Additionally, the total number of active licenses has gone up 24 percent. This provides evidence that more residents have looked to follow compliance rules, but less have listed their homes as an STR.
One thing is clear: the growing pains of Denver’s STR industry can only be cured with efforts from all sides.
“Please, in all of this just consider that there’s a very large portion of [STR] hosts that want to help,” said Joe (who declined to give his last name). “I’m trying to assume some of the responsibilities, and some of it is — we simply don’t even know [about complaints]. I’ll tell you this. There’s change coming from the host community. We’re taking more responsibility, we’re stepping up.”
Slums Of The Future?
The Long-Term Viability Of Fast-Delivery Denver Apartment Buildings
by Luke Schmaltz
Although the official Colorado state bird is the Lark Bunting, it has seemingly been replaced across the greater Denver metro area by the crane. For the past several years, the Mile-High City skyline has become increasingly dotted with these towering industrial effigies — as long-standing, recently demolished structures are replaced with mid-rise odes to blandness. These rapidly erected residential buildings have earned disparaging nicknames from journalists and pedestrian critics alike such as fugly, McUrbanist, fast-casual architecture, contemporary contempt, LoMo (low modern), blandmarks and spongebuild squareparts.
A New Development
In 2015, Denver adopted the International Building Code (IBC) which allows for podium-style mid-rise residential buildings to be primarily constructed of wood rather than concrete and steel. The new code meant that a two-story concrete base known as a “podium” could be vertically succeeded by up to five levels of wood-framed construction. This, in turn, opened the door for a host of money-saving dynamics such as unspecialized labor, cost-effective raw materials and quicker completion timelines.
A Nationwide Trend
This generic approach to residential development is not unique to Denver, rather, it is a trend rearranging the personalities of inner cities from Seattle to Austin and Minneapolis to Charlotte. The rising costs of land, labor and certain building materials has made wood framing the default method of construction — allowing for the creation of a business model with an attractive bottom line even though the product itself is anything but.
Supply And Demand
According to The Denver Post, area developers had 26,916 apartment units under construction at the end of 2018, with a projected minimum of 12,000 units to be built every year for the foreseeable future. This number is dwarfed by projections from Cary Bruteig, owner of Denver’s Apartment Insights, a data reporting company that expects 2019 apartment construction to render upward of 25,700 units in 2019.
The phenomenon of cheaply resourced, quickly erected residential structures gives rise to the issue of longevity. Will these light-frame, wood fortified dwellings with flat window facades and multi-colored exterior panels maintain their appeal at the same price point into the next decade? A surging demand for affordable housing meets that question with a resounding “yes.” Yet, in the event of a recession or if cheap construction proves to fail the test of time, these aesthetic atrocities may prove to be the 21st Century equivalent of 19th century balloon-frame buildings — which were defined as being poorly maintained, substandard housing for the lowest social rung of tenancy just above homeless. Lest history forget, these structures were reduced to ash in tragic events such as the San Francisco Fire of 1851 and the Great Chicago Fire of 1871.
The Price Of Cost-Effective Construction
While lack of aesthetic appeal and inflated prices brought on by high demand are obvious drawbacks, economically built wood frame construction buildings also carry several subsurface concerns. Structures of this sort are susceptible to moisture being drawn into wall cavities, where it can become trapped and foster wood rot due to humidity and the growth of mold. The latter, in turn, can cause allergic and asthmatic reactions from occupants. Wood framed buildings are also known for attracting termites, having low thermal mass (ability to retain heat), offering poor sound insulation between units, being vulnerable to fire damage and emitting volatile organic and chemical compounds which diminish indoor air quality.
Distractions Abound
In a preemptive strategy to counter this possibility, many developments are attracting top dollar clientele by offering deluxe, high-end amenities. Luxuries such as on-site car washes, dry cleaners, full-range fitness centers, work-from-home office areas, dog runs, complementary weekend brunches and valet trash services aim to disguise the fact that most tenants are living in identical boxes built by unskilled workers laboring at breakneck speed. These overpriced cookie cutter domiciles include few, if any features which discern one unit from another and zero signs of craftsmanship, personalization or style. Many excited tenants, however, are far too distracted by innovative diversions such as goat yoga, Zen gardens, tanning beds, old-school video arcades, bowling alleys and free beer.
High-End On The Rise
An abundance of amenities, perks, on-site attractions, as well as the inimitable allure of being the first tenant in a new apartment, all add to the exorbitant rental prices brought on by a high demand for housing. A new rental in a high-end downtown Denver facility can run pretty high — such as $7,000+ for 1,324 square feet at Union Denver to $15,000 or more per month for a penthouse suite at The Confluence. Of course, not all rates are mouth-droppingly Manhattan-esque, as many units appeal to a more philistine price point such as a studio at The Verve on Delgany for just $1,563 or a studio at the Country Club Towers on Bayaud for a mere $1,855.
A Long-Term Diagnosis
The professional opinion of master carpenter Richard Welker sheds some long-term light on the subject of sustainability. Welker, a longtime Denver resident who recently relocated to Portland, has personally worked on hundreds of wood-frame apartment units. He attests “lumber isn’t what it used to be, but long-term, you can always repair the guts of something that is made of wood. Theoretically, if stringent maintenance protocols are followed, these buildings could last a really long time.” This statement clearly places long-term viability on building owners and managers, and whether they continue to be inhabited long after their new veneer has worn away depends on what, if any, aesthetic taste tenants may have. Plainly put, if people are willing to pay to rent dwellings that are ugly and overpriced, they will continue to dominate the rental marketplace and the skylines of inner city, U.S.A.
