A federal judge has dismissed a lawsuit against Summit County government’s short-term rental regulations.
Homeowners, in a lawsuit filed in U.S. District Court in Denver, alleged the Summit Board of County Commissioners imposed “successively more severe, wide-ranging, misguided and unlawful regulations” when they passed an ordinance implementing caps on short-term rental licenses and limits on bookings in February 2023.
In a June 25 ruling, federal Judge Gordon Gallagher sided with the county’s motion to dismiss the case, which was filed in federal court last August by a group of around 100 homeowners who claimed their rights had been violated.
“This court is aware of the significant consequences of the ordinance … for property owners, residents, and visitors to Summit County — and perhaps in similar communities across Colorado,” Gallagher wrote.
While Gallagher went on to say property owners’ “grievances, concerns, and the potential financial repercussions of the ordinance are valid,” he added that the court’s role is in determining the legality and constitutionality of the ordinance, which it upheld.
In an email statement to the Summit Daily News, Summit County communications director Adrienne Isaac wrote, “We respect the court’s decision and will continue to engage in productive conversations with our community on housing challenges and opportunities.”
Todd Ruelle, a county homeowner who filed the lawsuit alongside the group, told the Summit Daily, “We disagree with Judge Gallagher’s determination,” adding, “We are considering potential next steps with our counsel, but it would be premature for me to comment further.”
Under the ordinance, which went into effect this fall in unincorporated Summit County, limits were placed on the number of homes that can operate a short-term rental license, ranging from 5% to 18% in various neighborhoods. Short-term rental owners were also restricted to no more than 35 bookings per year.
Rental properties in areas deemed “resort overlay zones,” which included Keystone and Copper, were exempt from the license caps and booking limit. Additionally, the ordinance created an exemption to the license cap for full-time county residents who work more than 30 hours per week in the county or who’ve retired and have a history of working in the county for at least 10 to 15 years.
County commissioners at the time said the rules were designed to mitigate an escalating affordable housing crisis by protecting existing housing stock for long-term tenants. Similar measures were also taken by town councils in Breckenridge, Frisco and Silverthorne, each of which placed caps on short-term rentals within their respective town boundaries.
Homeowners argued that the county’s rules threaten their livelihood through loss of income, treat county homeowners differently based on exemptions for full-time residents and resort zone properties, and ultimately violate a number of property rights under the United States Constitution and Colorado state law.
In a Sept. 27 motion to dismiss, the county contested several of the allegations, stating the homeowners “do not maintain that they are members of any protected class” but claim to have a “fundamental right to lease their property for whatever length of time they prefer.”
The county government, through its lawyers, went on to state that the federal district court where the case was filed “has yet to recognize any such right, and has suggested that governmental limitations on the use of property do not implicate a fundamental right.”
The county’s motion also defends regulatory differences for working residents and properties in resort areas, stating that reported complaints over short-term rentals in neighborhoods and the loss of housing stock “provide a rational basis for distinguishing between the tourist-oriented areas around the ski resorts of Summit County and neighborhood areas.”
In his June 25 ruling, Gallagher states that the homeowners “have not established that the right to rent one’s property is a fundamental right and concede that they do not have a fundamental right” to a short-term rental license.
Gallagher also wrote that the county provided “a sufficient rational basis for the ordinance” and dismissed claims of both constitutional and state law violations, the latter of which could still be filed in state court.
In a separate case, another federal judge on July 9 dismissed several federal claims brought against the town of Breckenridge by property owners who sought to invalidate two of the town’s short-term rental ordinances.