LEAD — As the city of Lead gets ready to monitor active short-term rentals within city limits, commissioners have started the conversation about how much the city will charge property owners in application fees.
Earlier this year city officials passed a resolution that requires short-term rental owners to fill out an application with the city in order to operate. At that time the city agreed to give property owners a 90-day grace period to register their businesses for free. So far, city officials say only 22 of the anticipated 100 or more short-term rental owners, have complied with the application requirement.
In order to effectively track just how many Lead properties are being rented for short periods of time on sites such as Air BnB and Vrbo, Lead City Commissioners approved a contract with Deckard Technologies, Inc., which operates a short-term rental tracking system called Rentalscape. The contract is for $3,500 for the first year, in exchange for information about short-term rentals. The company promises to use publicly available data to identify properties that are active short-term rentals. It also promises to provide information about the aggregate revenue from actively listed properties; the average number of nights booked per person and the average number of nights booked per reservation; provide information about the rental platforms property owners use; provide average daily rates that are charged; and any booking trends during the reporting period. Additionally, the company promises to identify by address when certain short term rental ordinances have been violated, such as when listings advertise more available occupancy than the maximum allowable number, or when properties that are advertised as short-term rentals only allow long term rentals.
The $3,500 fee is for the first year of using the software, and all subsequent years will cost the city $2,500, a fee that is based on $25 for each property identified as a short-term rental. According to the contract the company estimates it will find about 100 short-term rentals within the Lead city limits. The contract states the fee will be adjusted up or down, based on the number of properties identified as short-term rentals.
“For what they’re doing and what we’re getting, it’s a good deal,” said Commissioner Roger Thomas.
The contract approval came just before city officials started their preliminary discussions about how much to charge short-term rental owners for city applications. The plan, officials say is to assess the cost of Rentalscape back to the short-term rental owners, as well as any additional staff time used to process applications, conduct inspections, or provide extra law enforcement.
Commissioner Colin Greenfield advocated for charging the same amount that the city charges contractors for licenses to work in Lead — at least $100 for the first year and $50 for subsequent years. While he said he does not want to charge any more than the city needs to cover costs, he also wants to charge a uniform fee for all license holders in the city.
“I agree with that,” Thomas, who suggested a $150 application fee and another $150 fee if a city inspection of necessary. “We can drop that price if it needs to be. We can make it flexible to fit what we need. We’re not trying to make a lot of money off of this, but we need to make sure we’re paying all the expenses.”
Katrina Hutchison, who operates a short-term rental in Lead, spoke out against city officials assessing fees before they know how much it costs them to administer the application and monitoring software.
“It bothers me to hear you say you want to charge a fee for something but you don’t know how much you’ll need,” she said. “It looks like you’re putting the cart before the horse. Even $150, it’s still a lot of money for some people. I hope you’re cognizant of how many are out there. You may be talking too soon about this.”
Additionally, Hutchison said it is unfair to assess a fee to pay for law enforcement, since resident tax dollars pay for the same law enforcement presence as temporary visitors.
“I think we have a good idea of what numbers we have right now,” Greenfield said. “It’s not that it’s completely blind. There is a possibility of unforeseen costs. I agree with you. We pay our taxes also. The police officers and staff are here to do whatever job is asked of them. If it creates an exorbitant burden to the city, we might need to charge more. We shouldn’t charge an extra amount because we are going to have the police officers who are out there working, when they are out there working anyway. I don’t think it should be any less than what we charge any other business to operate in the city.”
While Thomas advocated for the higher fees, saying that it is easier to come down that it is to go up, Everett disagreed. “In my experience, once you set a fee you generally don’t lower it,” Everett said. “The extra use for city services, right now the taxpayers are paying for all city services. This is an additional situation that we have with vacation rentals that we are now starting to deal with. This is an additional burden to them. I personally have had four or five calls about rental properties and violations of the ordinance. There is a little more of a burden placed on that department. I think it’s fair to say some of the costs should be put back into that budget for however we decide to do that.”
The city commission did not take any final action on the fees, as Everett stated the agenda item was for discussion only. However, city officials plan to vote on a proposed fee structure at their next meeting, Aug. 1.
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