Short-term home rentals (“STRs”) are big business in the Colorado front range, both in places where they are currently allowed and those where they are not. In many cities, people are renting their residences on apps like VRBO and Airbnb, even when prohibited by the zoning code. One such city, Lakewood, Colorado, is attempting to deal with this issue head on by adopting ordinances to directly regulate STRs. However, Lakewood’s proposed ordinances have a stricter bite than the regulatory schemes of other cities in the area such as Denver.

The proposed changes would amend Lakewood’s zoning ordinances, which currently only allow short term rentals to be provided by “lodging facilities” that are located in specially zoned areas. In contrast, the new rules would allow certain residences to be rented for periods of less than 30 days, subject to some significant caveats. Interested Lakewood residents would need to apply for a license to use their home as an STR. These licenses will only be granted by the city under certain conditions. The STR must be a single-family home, it must be the applicant’s primary residence and it must have at least two dedicated off-street parking spots. Additionally, before the applicant may apply for a license, they must first provide every neighbor within a 250 foot radius of the proposed STR with advance written notice of their application and they must provide the city with proof that the proposed STR has been inspected by a licensed home inspector who has identified any hazardous conditions and that such hazardous conditions have subsequently been remedied. Finally, assuming that the applicant has been able to jump through each of the other hoops, the license will not be granted unless there are no other STRs within a 300 foot radius

Collectively, these proposed zoning changes are likely to allow STRs on a more limited basis than those in cities with more permissive STR rules. For example, Denver already has a zoning scheme that allows STRs, but its rules do not include the same number of restrictions. While Denver only allows STRs at a person’s primary residence, there is no restriction limiting STR’s to only single-family homes. Further, Denver does not require neighborhood notices for each license application, dedicated off-street parking spaces, in-person home inspections or 300 foot set-offs between STRs.

On August 23, 2021, the Lakewood City Council voted to table the proposed STR ordinances in order to implement a number of amendments that have not yet been reviewed by the public.  However, interest within the community remains high and the City Council hopes to move forward with some version of the ordinances soon. Given the number of STRs that are currently rented in Lakewood outside of any legal framework, it will be interesting to see the effect that the new ordinances have on the total number in the city. We will be following this development with interest to see how it plays out.

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Photo of Mike Davidson Mike Davidson

Mike Davidson counsels clients throughout Colorado and across the country regarding corporate structuring, capital raising, and real estate acquisition and disposition matters. In particular, Mike helps clients with determining organizational structures, assisting with private placement and borrower side debt financing transactions, and drafting…

Mike Davidson counsels clients throughout Colorado and across the country regarding corporate structuring, capital raising, and real estate acquisition and disposition matters. In particular, Mike helps clients with determining organizational structures, assisting with private placement and borrower side debt financing transactions, and drafting and negotiating joint venture, partnership, and purchase and sale agreements.