Judge vacates order nullifying town’s short-term rental fee

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On Wednesday, Dec. 28, Chief Judge Jeffrey Wilson of the Sixth Judicial District entered an order vacating his Dec. 26 order that struck down the Town of Pagosa Springs’ voter-imposed short-term rental fee.
The order, which was issued in the afternoon after The SUN’s press time, states, “The order issued on 12/26/22 in this case was issued in error and is vacated.”
The orders both come in a case where a number of plaintiffs are challenging the town’s per-bedroom short-term rental fee, which was implemented earlier this year after being approved by an 11-vote margin in the town’s April election.
For more information on the case, see the Jan. 5 issue of The SUN.

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Judge strikes down town’s voter-imposed short-term rental fee

By Dorothy Elder and Randi Pierce | Staff Writers

In a Dec. 26 order, Chief Judge Jeffrey Wilson of the Sixth Judicial District struck down the town’s voter-imposed per-bedroom fee on short-term rentals.

The order came in a case against the Town of Pagosa Springs that essentially questioned the validity of Ordinance 982, “Short Term Vacation Rental Fee Implementation.” 

The ordinance was enacted by the town after a citizen-led petition put the fee on the ballot in the 2022 regular election, which passed by 11 votes. 

The ballot question asked if the Town of Pagosa Springs Home Rule Charter should be amended to initiate a workforce housing fee for short-term rentals amounting to at least $150 per month for each permitted bedroom with all fees dedicated to creation and sustainability of workforce housing. 

The language in the complaint argued that the STR Amendment is invalid because “it is an administrative, regulatory or executive function” that is not an allowable subject of the citizen-led petition that created it, that it is “unconstitutionally vague” and the ballot question was “vague, misleading, confusing or unconstitutional.” 

It also asked that the court declare that the amendment and ordinance impose invalid fees because the fee “is not reasonably related to the cost of the administration of the short-term rental program,” “did not comply with statutory requirements for adoption of impact fees,” or “has no essential nexus between short-term rental properties, where the owner does not live on the property full-time, and workforce housing.” 

The complaint was filed on June 10 to the Archuleta County District Court by attorney Paul Kosnik of Eggleston Kosnik LLC in Durango, who is representing plaintiffs Clinton Alley, Monica Alley, Blackhead Properties LLC, Melissa Buckley, Escapa LLC, Gregg Fitts, John Grey, Kristin Grey, JLSFUN LLC, Peter Macomber, Nicole Buckley, Olivia Modern and Aaron Moore. 

After a July 11 hearing on the complaint, Wilson filed an order granting preliminary injunction on the Town of Pagosa Springs’ enforcement of the ordinance. 

With the hearing, both parties also agreed to an expedited trial, forgoing a full trial. 

In his Dec. 26 order, Wilson ruled that the initiative, charter amendment and 2022 regulations are invalid for several reasons:

• The initiative approving the charter amendment “is invalid because it was administrative in character and not constitutionally authorized.”

• The initiative “is invalid because it was unconstitutionally vague, as Town Council was forced to guess at its intent and its application can vary greatly based on the subjective interpretation.”

• The charter amendment and regulations are “invalid because they adopted impact fees while ignoring the statutory requirements for adopting such fees found in” state statute.

• The charter amendment and regulations are “invalid because the Charter Amendment and the 2022 STR Regulations are properly identified as a tax that was not adopted in compliance with TABOR,” or the Taxpayer’s Bill of Rights.

• The “application of the charges in the Charter Amendment and the 2022 STR Regulations violates the Equal Protection Clause of the Fourteenth Amendment because of the lack of any rational basis for the unequal treatment of owners of short-term rental properties.”

For those reasons, the order grants the plaintiffs’ motion and orders that the charter amendment and the regulations are “invalid, null and void as a matter of law.”

It further states, “Any funds submitted to the Town under the 2022 STR Regulations must be returned to the persons that submitted such funds.”

On Wednesday, Town Manager Andrea Phillips explained the matter will be on the Pagosa Springs Town Council’s Jan. 3, 2023, meeting for council discussion regarding “possible action to consider repealing the ordinance that put it in place following voter approval.”

For full disclosure, Randi Pierce is the daughter of Mayor Shari Pierce.