On Feb. 18, the Pagosa Springs Town Council denied a variance request for a onetime exception to the town’s short-term rental (STR) regulations.
The request came from the McCelvey/Smith family and their representative, Megan Caler, of White Buffalo Property Management, for a vacation rental property at 584 Oren Road.
For several years, the property has operated under a STR permit in James Lynn McCelvey’s name, who has since deceased.
With ownership of the property changing hands to another family member, the family asked the council to make an exception to the rule that requires ownership of a property for at least two years before an STR permit can be obtained.
The request states, “the McCelvey family has always maintained their permit with the town since being granted one. We are not asking to bring a new rental to the heavily saturated STR market, we are asking to maintain our current one that is a well-established business.”
However, the town’s code on STRs states, “A vacation rental license is non-transferable” and “issuance of a vacation rental license shall not create a continued right to operate a vacation rental beyond the term of the license.”
Caler explained that the new owner (new ownership has yet to be finalized) hoped to avoid the two-year waiting period to reapply for an STR permit, asking to be “grandfathered in” to continue in operation as an STR under a new permit.
The request explains that the property had previously been grandfathered in since McCelvey obtained his permit in 2019, before the town adopted its current STR regulations.
The request recognizes “that a new permit would need to be obtained, as vacation rental permits are non-transferable,” per Section 6.7.3 of the code, but the family had hoped an exception on the two-year waiting period could be made for the new owner.
“I know you can’t transfer a permit. I know you have to wait two years …, but I was not aware that within a family you can’t pass things through like this. So, we are coming to you asking for some sort of exception, to be grandfathered in,” Caler said.
She explained that the vacation rental has nearly six years of “good reviews” online and that having to wait two years for a new permit would be a “big loss of business.”
Mayor Shari Pierce asked Town Clerk April Hessman for clarification on transferring STR permits, to which Hessman explained that even in a trust-type situation, “when you start adding people to that trust, you’ve now changed who the owner is and that’s where that two-year required — you have to own it two years before you can apply for a permit.”
Hessman further explained, “The rules talk about if the property owner sells, assigns, transfers or otherwise conveys the property” that the two-year waiting period would kick in at that point.
Council member Gary Williams reminded his colleagues that “the reason we did this rule is because affordable housing is such a problem and we wanted to limit the number of houses shifting from rentals to short-term rentals so there would be more housing available for the workforce.”
“And we currently have more [STR] licenses than our cap allows …and because one of our stated goals is workforce housing, this rule is actually working,” Williams said.
Caler explained that she did not think that “this home” would be ideal for the long-term rental market, citing the large size of the home.
Council member Madeline Bergon suggested that she was willing to consider making an exception for the family, adding that this was “a situation that we might not have really thought of when we were coming up with these [regulations].”
She said that if the council decided to grant the variance it would be “a one-off, and it’s not an everyday occurrence.”
Pierce said that her concern “would be that if we allow this, then …what are other people going to come back and ask for next? ‘If you do a variance for them, then why won’t you do a variance for me?’”
Caler said, “I get what you are saying,” but also added that since McCelvey’s permit was one of the first granted in the community, perhaps a onetime exception could be justified.
She also explained that the family is worried that if they have to wait two years for a new permit, in the meantime, the neighborhood could reach the 10 percent cap limit for STRs and, in that case, the home would be pushed out of consideration for a new permit.
With that said, “I would graciously leave here with a ‘no,’ with consideration to what you are saying. I would understand it,” she said.
Council member Brooks Lindner chimed in, saying that he thought that the family brought “a strong case” for the variance and there were “a lot of reasons a variance would be justified in this case.”
Williams expressed that he thought it would be dangerous to “establish an STR license as a property right” that can be transferred down the line.
He added that the council was “specific about that” when it drafted the STR rules.
Bergon replied, “I think you’re right that it could open up a whole can of worms, because we don’t want this to become a back way in” for people seeking STR permits.
Pierce stated that Williams “brought up some good points,” adding that the council “specifically did talk about STRs not being a property right” when it drafted the regulations around STRs.
She said that “everyone else is following that two-year rule, and you’re asking us to bypass that two-year rule for you.”
Council member Matt DeGuise suggested that it “might not be the best course of action” to risk losing an existing STR, which he described as “an established business,” adding that not granting the variance would only favor a new STR coming in.
Hessman explained that the council could consider amending the town’s STR rules in the future “to allow transfers,” saying that town staff could “bring this back for your consideration so it’s not just a one-off, so we’d have rules” in place for this type of situation.
Council member Mat deGraaf stated that he “would not” want to revisit the STR regulations since the council already spent so much time on drafting the current code.
However, he added that a decision on this matter was “very hard, and my heart goes out to you [the family], but I personally think we need to stand by our code, stand by our rules, and that keeps it better for everybody in the long run.”
Lindner noted that he worried that town government would be perceived as too “rigid, when very logical things come before us, that make sense to do, that’s when people get pissed and say, ‘Screw the town, I don’t like the town,’ and they start to have that attitude.”
When DeGuise made a motion to approve a onetime variance for the property, it was seconded by Lindner, but a roll-call vote showed the majority of the council was not in favor of granting the variance, with Williams, deGraaf, Martinez and Pierce voting against it.
derek@pagosasun.com
