Rico adopts short-term rental ordinance and regulations

Rico zoning map. Short-term rental quadrant boundaries added by Ore Cart. New STR regulations do not affect Commercial (red) and Historic Commercial (purple) zones.

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Town-wide STR cap is 16

quadrants STR cap is 4 each

annual STR license application process described

STR license term is 2 years

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CONTENTS

1. STR quadrants & distribution STR dwelling units
2. Reasons for adopting STR regulations
3. STR benefits described in Rico Land Use Code new regulations
4. Status of previously-approved STR special-use permits
5. Proximity, parking, local contact, neighborhood notification
6. STR number per licensee, duration, & transfer prohibition
7. STR license process: application fees, review, lottery, revocation
8. Tax collection

Town of Rico Board of Trustees adopted short-term rental regulations at its June 15, 2022 regular monthly meeting which replace the previous STR special-use permit application and approval process.

Agenda item for this action was titled:

Second reading of Ordinance No. 2022-05 an Ordinance of the Town of Rico, Colorado establishing a licensing process for short-term rentals and amending the Rico Land Use Code to remove short-term rentals from special use permit review.

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The Colorado Demography Office lists 226 total housing units in Rico, according to Town Manager's comments in the Trustees Meeting packet. Seven percent of 226 is 16 short-term rental units (rounded up from 15.82). Divided equally among quadrants, the limit per quadrant is 4 STR licenses.

The Town-wide percentage limit may be amended by the Board of Trustees by ordinance.

Short-term rental dwelling special use permits existing before adoption of Ordinance No. 2022-05 and Rico Land Use Code Short-Term Rental Regulations count toward the Town-wide 16 limit, and the 4 per quadrant limit.

Commercial and Historic Commercial zone districts are excluded from STR quantity limits.

Short-term Rental dwelling units
are allowed in Zoning Districts:

RESIDENTIAL - R
COMMERCIAL - CM
HISTORIC COMMERCIAL - HC
RESIDENTIAL PLANNED UNIT DEVELOPMENT - RPUD
COMMERCIAL PLANNED UNIT DEVELOPMENT - CPUD

1. STR quadrants & distribution STR dwelling units 

Map at top of this report shows Rico short-rental quadrants defined by the new Short-Term Rental Regulations additions to the Rico Land Use Code:

Northwest
north of W. Campbell St 
& west of Glasgow Ave

Northeast 
north of E. Mantz Ave 
& east of Glasgow Ave

Southeast 
south of E. Mantz Ave 
& east of Glasgow Ave

Southwest 
south of W. Campbell St 
& west of Glasgow Ave

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Trustees approved two short-term rental special-use permits earlier in the agenda. Rico Planning Commission reviewed these SRT applications at its June 8, 2022 regular monthly meeting and recommended these for approval by the Board of Trustees:

11 N River St 
464 Silverglance Way

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Addition of these two STR properties at the June 15 Trustees meeting raises the number of existing Rico STR dwelling units to ten (10). These are unevenly distributed among quadrants:

1 Southwest 
1 Southeast 
2 Northwest 
6 Northeast

Note: Status of previously-approved STR special-use permits (below) describes how STR special use permits are “discontinued.”

2. Reasons for adopting STR regulations

   Note: excerpts below from Town of Rico 
STR Ordinance & Land Use Code 
regulations are blue-italic.

- - -

Town’s purpose in regulating short-term rentals via licensing is described in the Rico Land Use Code new regulations:

However, due to the potential for adverse impacts, the Town wishes to regulate short-term rentals to protect the health, safety, and welfare of owners, residents, neighbors, and visitors.

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In Town of Rico Ordinance 2022-05 recitals, Board of Trustees:

. . . recognizes the potential for increasing impacts to the community as a result of a rise in short-term and vacation rentals . . .

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Purposes for adopting the short-term rental ordinance are described in the recitals:

• minimize the adverse effects of short-term rentals on residential neighborhoods and the supply of housing in the Town, in accordance with the Rico Regional Master Plan’s goals of preserving small town character while maintaining livability.
• remove short-term rental dwelling units from the list of Residential Uses by Special Use Permit Review.
• add short-term rental dwelling units to the list of Uses Permitted by Right for Residential (R), Historic Commercial (HC), Commercial (CM), Residential Planned Unit Development (RPUD), and Commercial Planned Unit Development (CPUD) zone districts, subject to the Sections of the RLUC requiring a license and compliance with standards for operation.
• add licensing procedures and regulations for the operation of short-term rental dwelling units.

3. STR benefits described in Rico Land Use Code new regulations 

• bring additional visitors to the Town
• allow owners to recoup housing costs
• provide revenues for the Town through the additional tax collections
• diversify the accommodations market

4. Status of previously-approved STR special-use permits 

Properties already-approved for STR special-use permit prior to adoption of Ordinance 2022-05 are required to comply with the terms of the special-use permit. These permits are discontinued if any one of three conditions occur:

Any short-term rental dwelling unit authorized by special use permit prior to the date of these regulations must comply with any conditions imposed on the special use permit at the time: of issuance.

A short-term rental dwelling unit authorized by special use permit shall be considered an existing nonconforming use under Section 208.

Discontinuance and abandonment of the non-conforming short-term rental use exists:

• when the owner of the short-term rental dwelling unit fails to remit lodging tax to the Town for a period of six (6) months,
• upon the transfer of fee simple title to the short-term dwelling unit, whether by the owner or by operation of law,
• or when the owner applies for and receives a short-term rental license under the procedures in Section 456.

   Note: underlines in excerpts above
   added by Ore Cart.

5. Proximity, parking, local contact, neighborhood notification 

Proximity limit
A new STR license will not be granted to properties if an existing STR “immediately adjacent” shares at least 25 feet of contiguous boundary line.

Parking

• Maximum of two vehicles per STR dwelling unit. Owner may request to change this.
• Parking allowed in designated parking areas, such as driveways and garages, or on-street.
• Parking not allowed on lawns or sidewalks.
• Parked vehicles must display a parking permit with the license number of the short-term rental at all times.

Local responsible party

Short-term rental dwelling owners must designate a “natural person” as the “local responsible party” for the STR. The responsible party:

• located within a one-hour driving distance of the short-term rental
• is available twenty-four (24) hours per day, seven (7) days per week,
• immediately respond to any issues arising from the short-term rental.

The designated responsible party may be the owner of the property. The owner shall notify the Town in writing of the designation of the responsible party within five (5) days of such designation or modification of any such designation.

Neighborhood notification

Upon issuance of a short-term rental license, the STR property owner must mail a public notification of the new license to owners of all real property within two hundred fifty (250) feet of any boundary or edge of the subject property or parcel. The STR property owner is required to provide certification of this mailing, including a signed affidavit, to the Town Manager.

6. STR number per licensee, duration, & transfer prohibition 

Number of licenses per person or business

• Natural persons or business entitities may be issued no more than one short-term rental license.
• Owners of an existing short-term rental dwelling unit at date of Town of Rico Ordinance 2022-05 and related RLUC amendments (June 15, 2022) will not be issued a new STR license for an additional short-term rental.

Term of license

STR licenses period is of two (2) years starting on January 1. Licenses automatically expire on December 31 of the second year.

License transfer not allowed

Change in ownership of a property which to which an STR license has been issued requires a new application and issuance of a new license.

7. STR license process: application fees, review, lottery, revocation 

Application and review schedule

1. August 1: applications for short-term rental licenses starting on January 1 of the following year are due.
2. Application fees: $2500 for the first application at a property location, $1500 for a renewal application.
3. Town Manager and Town Planner review applications for short-term rental licenses for compliance with STR regulations in August. If the application conforms with short-term rental regulations, Town Manager will issue a short-term rental license.
4. Town Manager may refer an application to the Board of Trustees if the application raises issues on which the Board’s input is necessary or desirable.
5. September 15 (no later than): Town informs applicants of decision. If STR license application is not approved and the license is not issued, Town Manager will provide the reason(s) for the denial of the license in writing to the applicant.

Lottery

If the number of new or renewal license applications submitted by the annual August 1 deadline is greater than the number of short-term rental units allowed per quandrant or Town-wide by Rico Land Use Code STR regulations, Town Manager will conduct a random lottery. Renewal applications will not be preferred over new applications.

Town will refund application fees to owners of properties not selected by lottery for SRT license issuance, less a $50 administrative fee retained by the Town.

License revocations

Rico Board of Trustees may conduct a hearing to review the operation of a licensed STR property and revoke the license if Trustees determine that the STR property is not in compliance with Short-Term Rental Regulations or any other Town ordinance.

STR license revocation is automatic upon:

• STR property owner’s third conviction in Rico Municipal Court.
• violation of any provision in the Short-Term Rental Regulations with respect to the short-term rental.

Application or re-application prohibitions:

If an STR property owner’s STR license has been revoked within the last two years, application for a new or renewal short-term rental license is prohibited.

8. Tax collection 

A license holder who fails to collect any applicable taxes on a short-term rental, including but not limited to lodging tax, during the license period shall not be allowed to renew the license for the next two-year license cycle. Owners shall present documentation demonstrating the collection and remittance of taxes to the Town as part of the license renewal application.