A federal judge on Tuesday dismissed a set of claims from a group of Breckenridge property owners who alleged the town’s caps on short-term rental licenses violate their constitutional rights.

Breckenridge enacted a pair of ordinances in 2021 and 2022 that limited the number of short-term rental licenses to 2,200, divided among four zones within the town. Previously, a survey found close to 14% of Breckenridge-area residents had a lease terminated because landlords converted their units to a short-term rental.

In January 2023, a group called Colorado Property Owners for Property Rights registered with the state, ostensibly representing 300 residential property owners in Breckenridge. They filed suit in October alleging the town’s regulation of short-term rentals was arbitrary, treated property owners differently based on where they live and violated the state’s prohibition on rent control.

In a July 9 order, U.S. District Court Judge Nina Y. Wang largely granted Breckenridge’s motion to dismiss. She concluded the town needed to articulate the regulations had a rational relation to a legitimate goal, and Breckenridge had done so.

“The limitations on STRs in the Ordinances are at least rationally related to controlling associated noise, parking, and waste disposal,” Wang wrote. “Even if, as Plaintiff asserts, the Ordinances will be ineffective or the Town Council (used) unreliable methods to determine the STR zones, such considerations cannot affect the Court’s analysis.”

Lawyers for the town did not immediately respond to a request for comment. Attorneys for the plaintiff similarly had no immediate response to questions about the membership of Colorado Property Owners for Property Rights, its other activities and the percentage of members who are Colorado residents.

In its 2021 ordinance, the town council explained there had been a “steady and dramatic increase” in short-term rental licenses, totaling 3,945. Some were “exempt” licenses, meaning those for condo or hotel units that were staffed to respond to complaints, but the majority were “non-exempt.” The ordinance set a cap of 2,200 non-exempt licenses.

The ordinance cited three reasons for the new policy:

• A “serious and disturbing” reduction in workforce housing due to the conversion of homes to short-term rentals

• A change in the “character of the area”

• Loud noise, improper parking and trash from short-term rentals

Breckenridge “did not rely on or base its decision to cap STR Licenses at 2,200 on any relevant study or analytical data supporting the license cap,” Colorado Property Owners for Property Rights argued in its lawsuit. “Defendant’s actions in the passage of the Ordinances was irrational, arbitrary and capricious and not rationally related to a proper legislative purpose.”

In moving to dismiss the complaint, Breckenridge maintained its limitations on short-term rentals were a “reasonably conceivable method” of negating the negative effects cited in the ordinance.

Wang agreed the town had not violated the plaintiff’s right to equal protection under the law by treating similarly situated property owners differently without a rational reason. The concerns stated in the ordinance, she concluded, amounted to legitimate grounds for the policy.

Further, Wang did not believe Breckenridge’s regulations unconstitutionally burdened interstate commerce by, as the plaintiff claimed, seeking to privilege Coloradans who rent long term over out-of-state visitors who might use short-term rentals.

“Neither Plaintiff’s allegations nor its arguments identify any provision of the Ordinances that explicitly differentiates between in-state and out-of-state interests,” she wrote.

As for the plaintiff’s claim that the limits on short-term rental licenses forced some property owners to maintain their properties as long-term rentals at lower rates — effectively violating the state’s prohibition on local rent control — Wang declined to address it. She returned the case to state court where a Summit County judge could analyze the application of Colorado law.

The case is Colorado Property Owners for Property Rights v. Town of Breckenridge.