Judge dismisses challenge to Breckenridge rent caps | Courts

A federal judge on Tuesday dismissed several claims by a group of Breckenridge property owners who argued that the city’s short-term rental license limits violate their constitutional rights.

Breckenridge passed a pair of ordinances in 2021 and 2022 that capped the number of short-term rental licenses at 2,200, divided into four zones in the city. An earlier study found that nearly 14% of Breckenridge-area residents had their leases terminated because landlords converted their units to short-term rentals.

In January 2023, a group called Colorado Property Owners for Property Rights registered with the state, purporting to represent 300 residential property owners in Breckenridge. They filed a lawsuit in October, alleging that the city treats short-term rentals arbitrarily, treats property owners differently based on where they live, and violates the state’s ban on rent control.

In a July 9 order, U.S. District Judge Nina Y. Wang largely granted Breckenridge’s motion to dismiss, concluding that the city had to show the regulations had a rational relationship to a legitimate purpose, and Breckenridge had done so.

“The STR restrictions in the ordinances are at least reasonably related to noise control, parking, and waste disposal,” Wang wrote. “Even if, as Plaintiff argues, the ordinances are ineffective or the City Council (used) unreliable methods to determine STR zones, such considerations cannot affect the Court’s analysis.”

Lawyers for the city did not immediately respond to a request for comment. Lawyers for the plaintiffs also did not immediately respond to questions about Colorado Property Owners for Property Rights’ membership, other activities of the organization and the percentage of its members who are Colorado residents.

In its 2021 ordinance, the city council explained that there had been a “steady and dramatic increase” in the number of short-term rental licenses, totaling 3,945. Some of those were “exempt” licenses, meaning those for apartments or hotel units staffed by staff to respond to complaints, but most were “nonexempt.” The ordinance set a limit of 2,200 nonexempt licenses.

The regulation gives three reasons for the new policy:

• A “serious and worrying” reduction in the number of workers’ apartments as homes are converted into short-term rentals

• Changing the “character of the area”

• Noise, improper parking and trash from short-term rentals

Breckenridge “did not base its decision to limit the number of STR licenses to 2,200 or base it on any substantial research or analytical data supporting a limit on the number of licenses,” Colorado Property Owners for Property Rights argued in its lawsuit. “Defendants’ actions in enacting the ordinances were irrational, arbitrary, and capricious, and were not rationally related to an appropriate legislative purpose.”

In moving to dismiss the complaint, Breckenridge maintained its argument that the restrictions on short-term rentals constitute a “reasonable method” of mitigating the negative impacts listed in the regulation.

Wang agreed that the city did not violate the plaintiffs’ right to equal protection under the law by treating similarly situated property owners differently without a reasonable basis. The concerns expressed in the ordinance, she said, were reasonable policy bases.

Moreover, Wang did not believe that the Breckenridge regulations constituted an unconstitutional burden on interstate commerce because, as the plaintiffs argued, they were intended to favor Colorado tenants who rented apartments on a long-term basis at the expense of out-of-state visitors who might use short-term rentals.

“Neither Plaintiff’s allegations nor his arguments point to any provision of the Order that clearly distinguishes between intrastate and out-of-state interests,” she wrote.

As for the plaintiffs’ claim that restrictions on short-term rental licenses have forced some landlords to keep their properties as long-term rentals at lower rates — effectively violating the state’s rent control ban — Wang declined to address that issue. She returned the case to state court, where a Summit County judge could analyze the application of Colorado law.

The thing is this Colorado property rights case against the City of Breckenridge.