AURORA | City officials have agreed to allow residents to rent out their homes as vacation rentals using services like Air BnB, but hosts of the increasingly popular short-term rentals must obtain business licenses and pay municipal lodger’s tax, ending a months-long logistical quagmire.
The policy is not final. It’s unclear who would have to comply, and there are no details about how the proposal would be implemented. Still, the first permit has been issued.
On Friday, Nov. 6, the city issued its first vacation rental business license to Saurabh Chawla, an active Airbnb host who was barred from renting out his home on East Dry Creek Place in April after a neighbor complained about the amount of people frequently coming in and out of his east Aurora home.
A city council committee has given tentative approval to the issue, but it’s unclear whether implementing the permit and tax program requires formal city council approval.
The decision means that all vacation rental hosts with an Aurora address will have to apply for a $38 Aurora business license and collect an 8-percent lodger’s tax from each guest they host, according to Trevor Vaughn, manger of the city’s tax and licensing division. The business licenses must be renewed every two years for a $25 fee.
“It’s going to be an allowed home occupation,” Vaughn said.
He added that people who rent out all or a portion of their home to travelers may still be subject to a separate, state lodger’s tax of 4.25 percent.
Had the city not elected to pursue the current plan, Chawla and his wife, Neha, would have had to pay upward of $4,000 for a conditional use permit and attend a public hearing to receive the approval of all residents and Homeowners Associations within one mile of their home.
The Chawla’s re-listed their house on Airbnb early Friday, and Saurabh said that he plans on charging guests $45 per night. That price includes the now-mandatory lodger’s tax, which he will remit to the city on his own — not through the Airbnb website.
Vaughn said that the city has continuously pursued negotiations with sites like Airbnb to get them to agree to charging the required taxes at the point of sale instead of having individual hosts remit the city fees themselves on a monthly or quarterly basis.
“At this point, we are looking for more cooperation form the website providers in collecting and remitting the tax,” he said. “That’s something that we’ve been in touch with Airbnb about, but they haven’t cooperated yet. But I think that would be easier for all parties involved.”
Saurabh said that he’s proud of Aurora’s decision to allow vacation rentals by owners in the city, although he’s not certain how cozy other area Airbnb hosts will be to the notion of having to apply for a business license and charge guests an additional fee.
“Other hosts may not be too happy, but at least it will be an even playing field at that point,” he said.
There were about 40 Airbnb hosts serving Aurora visitors as of July, according to anecdotal data collected by the tax and licensing division. That’s a number nearly 10 times what it was early last year.
Prior to being shut down this spring, the Chawlas had hosted about 55 guests in their Aurora home, according to Saurabh. He said that the majority of their visitors were people looking to stay close to Denver International Airport, students in town to interview at the University of Colorado Anschutz Medical Campus, and younger professionals flying in for job interviews at in Downtown Denver.
Saurabh said that barring any loud or cantankerous behavior, city officials have told him that any future grievances from the next-door neighbor who lodged the initial complaint will be ignored.
“In regard to who’s coming in and out of our driveway, that’s not really that person’s concern,” he said. “We’ve been told that if they do complain it will be ignored unless something crazy happens with loud noise, music or a party. But just with people coming in and out, we’re free to do it.”
Despite Aurora’s new plan regarding Airbnb, a slew of other cities around the state and the country are still wrestling with how to regulate the ballooning sharing economy. Following a months-long moratorium on the practice, Boulder voters approved a 7.5 percent tax on short-term rentals in the city earlier this week. In the metro area, the Denver City Council is in the process of considering its own regulations on Airbnb and other vacation rentals by owner there.