Castle Rock is among the many Colorado municipalities grappling with the rise of short-term rental services like AirBNB and VRBO.

So far, the town remains silent, outside of requiring a business license, on regulating short-term rentals, though some homeowner associations in Castle Rock neighborhoods have put in place restrictions effectively banning rental stays shorter than a month. 

Most town council members were content with the status quo on rules for the industry in Castle Rock during a discussion Tuesday night, but bemoaned companies like AirBNB not remitting the sales tax it collects to municipalities. 

“We don’t have a problem… we don’t have a problem” Castle Rock Councilman Jason Bowes said. “And I don’t want to create a problem with added regulation.”

Short-term rentals, which typically constitute a 30-day-or-less stay on a property, are often billed as avenues for supplementary income for homeowners and a way to boost tourism to an area, but are cited for noise complaints, transient occupants and a negative effect on affordable housing. 

In Castle Rock, there are about 120 AirBNB listings and 25 VRBO listings, according to Assistant Town Manager Kristin Zagurski. That’s out of a total housing stock of about 21,000 residences. 

With the town not fielding complaints on the current short-term rental community, most council members said there’s no need to create rules. 

Councilman George Teal, the lone member who expressed support for a discussion, said they should wrestle with creating some limited rules or at least definitions, but also cautioned against overregulating the industry in town.

“We have to do something.. I think if we try to ignore it, it’s something that we will end up regretting. On the same token…, I think this is still a property rights issue. I would not want us to overregulate it. 

“I still come down to this is a property owners right to make use of their property, to capitalize on their property,” Teal said. 

Teal called for refined definitions of different types of short-term rentals, especially to make a distinction between a personally-run rental and a corporate ownership. Teal argued corporate ownership could come into town, buy a dozen homes and remotely run short-term rental properties. 

Though both AirBNB and VRBO collect fees like “occupancy taxes and fees” or “lodging taxes,” neither forward the monies to the town. AirBNB requires municipalities execute an agreement before it remits tax revenue, but even then, it’s proven difficult to collect revenue from the companies. 

The handful of short-term rental hosts who have obtained a business license through the town are the few remitting sales tax revenue. 

Councilman Jason Bower labeled AirBNB collecting a “tax” but not remitting it to a local municipalities as “lame.”

The current law provides that the town collect a 4 percent sales tax on short term rentals, Town Manager Dave Corliss said.

“We think that’s appropriate given the importance of that revenue stream and the likelihood that they are using services like everyone else does,” Corliss continued. “That’s the status quo that we are operating under.”

Teal noted short-term rentals should be viewed similarly to the outlet mall in town.

“I love the outlet mall, and the majority of people to patronize the outlet mall are not Castle Rock residents, and yet we are recovering sales tax from them when they come into our town,” Teal said. “I think the same logic applies here. I think it would be fully consistent with historic Castle Rock tax policy to levy and sales tax and recover a sales tax on the short-term rental of these properties.”

Zagurski said as a starting point, the town could begin to send letters to short-term rental hosts notifying them of the requirement to obtain a business license as a means of collecting the sales tax. 

Corliss noted the town is considering putting the question of a lodging tax to voters on the spring ballot.