Westminster city council could regulate allowing residents to rent out their homes on short-term rental services like Airbnb and VRBO, councilors agreed during their March 6 study session.

According to Andy Le, a spokesperson for the city, the item will be voted on in May or June this year. Councilors directed staff to begin researching rules other communities have regarding short-term rentals a year ago, at a March 2022 meeting.

Operations and Community Preservation Manager Aric Otzelberger said in 2022 that cities adjacent to Westminster — Arvada, Wheat Ridge, Thornton, Boulder, Northglenn, Denver and Broomfield —  have formed their own licensing process for those services.

At the March 7, 2022 meeting last year, Otzelberger said some common regulations councilors could consider include primary residence requirements – those renting out the property must be the owner and not renters themselves – levying taxes on the transaction, licensing fees and occupancy limits, typically two occupants per bedroom.

Otzelberger said the city completed a survey in early 2019 that asked residents if the city should regulate short-term rentals. More than half of the 629 responses – about 52% – said the city should. 

On the other hand, 67% said the city should not prohibit short-term rentals. 

Rentals in Westminster 

According to the March 6 meeting’s agenda, there were 210 short-term rental properties in Westminster in 2022, which is 0.4% of the 53,893 residential units in the city. 

The average nightly rate was $186, which generate about $4.2 million in taxable revenue. A potential accommodations tax would yield $300,000 for the city.

Westminster's proposed ordinance is phrased to allow one short-term rental license per applicant, rather than regulating short-term rentals based on the primary or principal residence of the owner. 

“One perspective shares concern about the preservation of residential neighborhood character and what unlimited license potential might mean in relation to large investors. The other perspective sees a limitation on licenses as infringing on private property rights and freedom,” the agenda reads. 

That’s because two U.S. courts have offered different rulings regarding the requirement. 

In one ruling, the Westminster memo says, the Fifth Circuit U.S. Court of Appeals ruled that a city cannot ban non-resident owners from renting their homes. Meanwhile, the Third Circuit Court of Appeals upheld a New Jersey city's ordinance that limits short-term rentals to the primary and principal residents. 

Westminster's memo said that question might only be settled by the U.S. Supreme Court.

The city would also receive a 7% accommodations tax that's already in place for the rentals. Westminster would charge a license renewal fee of $200.

The ordinance does not contain a license cap on how many short-term rentals can be allowed in the city, but the council can add one in the future, according to the memo. Some Colorado Mountain communities have those caps, and Wheat Ridge has a two percent cap for the total number of units within single and two-family dwellings in each of their four city council districts.

For Westminster, putting a 2% cap would allow 1,077 licenses. 

Additionally, the draft ordinance has an occupancy limit of eight persons per property, except for children under 13.  The draft ordinance does not contain parking requirements.