Council mulls short-term rentals, metro districts

Two proposals considered by the City Council Monday evening may play a role in shaping future residential use, in the case of one of the proposals, and in the other, in shaping future residential development in Commerce City. Both proposals touch on the benefits and rights of residential property owners.

Residential property owners engaged in the short-term-rental market likely will be subject to increased scrutiny and regulation by the city.

For future homeowners, meanwhile, the mechanisms that finance basic neighborhood infrastructure — like parks and streets as well as aesthetic amenities — may look different than they do now. Commerce City’s new developments currently rely on self-funded metropolitan districts to make growth pay its own way. 

Whether or not to regulate short-term rentals is not a new phenomenon. Many surrounding communities already do, and the proposal developed and presented to the council was previously floated by city staff to a previous council a year ago.

The proposal to regulate was met with agreement among council members in the face of growing popularity of short-term rentals by residential property owners. A year ago, there were approximately 99 short-term rentals within the city limits. Today there are 250. 

“That’s a huge increase,” said Mayor Steve Douglas. Douglas said “there are things that we can do to hold them accountable,” citing common nuisances associated with the rentals.

City staff explained that monitoring the rentals is feasible through a third-party vendor, Granicus, at an approximate cost of $25,000 per year. That cost could be covered through fees assessed on homeowners who let out their homes as short-term rentals, staff said.

Council members then returned to the oft-debated topic of metro districts. The districts are used to finance infrastructure and amenities for new development without relying on taxpayers citywide.

For some homeowners who live in the districts, however, they have become a tax burden. The city imposed a moratorium on new districts in November of 2023, effectively pausing new development.

How to move forward while providing the needed infrastructure and amenities is still an unanswered question. 

Some members, such as Susan Noble, wondered if buying a new home should be conducted “the old fashioned way” of including the costs of added infrastructure of a new neighborhood into the cost of the home.

Other members want city staff to explore expanded special districts funded by a wider pool of taxpayers. Member Craig Kim expressed to staff that perhaps it is time to “look into alternative funding sources” regarding infrastructure for new development.

Council member Charles Dukes asked whether louder voices are drowning out those who appreciate what their contributions are paying for.

“Is it possible that there might be residents that like the quality of life that they have within a metro district?” asked Dukes.

Sean Ford wanted to know what data exists on other municipalities in Colorado that do not allow metropolitan districts and how they handle the differential.

“How do they pay for improvements and are they doing as well, worse than, or better without the districts?” asked Ford.

Both proposals are inching toward their conclusion. Regulations for short-term rentals received majority approval and will be scheduled for a final vote.

How infrastructure for new residential development will be funded is still on hold until all avenues have been explored by staff, the council agreed.