The city of Denver should make some changes to how it regulates short-term rentals, according to a report the city auditor published Thursday. But overall, Auditor Tim O’Brien said, the city’s effort to get a handle on rentals listed on Airbnb and other platforms is going well.
“I think the city is doing a pretty good job for a new program,” O’Brien said.
New rules that went into effect early this year are meant to establish safety standards, collect tax revenue, and measure the impact of short-term rentals on affordable housing in the city, among other things.
Under those rules, landlords must now obtain a tax ID, a business license and collect and pay taxes. Other cities, like San Francisco, have struggled to get landlords to follow their rules. So Denver set up an online-only registration system to encourage compliance.
And so far, that approach seems to have worked. The city says about 70 percent of its short-term rentals have active licenses. “It appears that Denver has the highest compliance rate of any city in the country,” Ashley Kilroy, executive director of the excise and license department wrote in a letter responding to the audit.
The audit did find some issues with the registration system. Some applicants have received licenses they shouldn't’t have, the auditors found.
"I think it needs to be tightened up,” O’Brien said of the system.
One example: O’Brien’s staff identified 20 cases where an applicant got licenses for more than one address. That violates the city’s primary residence requirement, which was meant to protect affordable housing. The department said it would work to improve its system to prevent such issues in the future.
O’Brien also faulted the Department of Excise and Licenses for not studying its data to draw conclusions about short-term rentals’ impact on affordable housing. In response, the department said that was out of its purview but that it shares its data with other agencies. O’Brien directed the department to work with City Council to determine who is responsible.
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