Property Rights Under Siege: Short-Term Rental Fees and the Housing Affordability Crisis

On this August 17, 2023 broadcast, Kim Monson explores how government regulations and subsidies distort housing markets and threaten property rights. Attorneys Jennifer McCallum and Edward Bakos discuss their lawsuit challenging Estes Park’s discriminatory impact fee on short-term rentals, while urban policy expert Randall O’Toole exposes how urban growth boundaries and affordable housing programs benefit insiders at taxpayers’ expense.

Estes Park’s Discriminatory Impact Fee on Short-Term Rentals

Start listening at 32:31 – Hour 1

Jennifer McCallum, a patent attorney with over 20 years of experience in intellectual property and real estate cases, breaks down the legal challenge against Estes Park’s new linkage fee targeting short-term rental owners. The town conducted a 2020 study showing only 10% of their 4,380 housing units were short-term rentals, yet this small group was singled out to bear the burden of solving the affordable housing crisis through a $1,390 annual fee enacted January 1, 2023.

McCallum explains the fundamental unfairness: short-term rental operators already pay lodging tax, sales tax, and annual license fees. Meanwhile, retirees making up 40% of the population, second homeowners, and long-term landlords contribute nothing to address affordable housing despite equally impacting the market. The ordinance contains an exemption provision that grants bureaucrats arbitrary power to decide who pays and who does not.

“How come they keep getting all these taxes and being asked to solve a problem that no one else is being asked to solve? The affordable housing problem was created by all sorts of different factors up there, not just them.”

Jennifer McCallum, Patent Attorney, McCallum Law Firm

Equal Protection and Commerce Clause Violations

Start listening at 35:09 – Hour 1

Edward Bakos, a litigation attorney with 15 years of experience, outlines the constitutional arguments against Estes Park’s fee. The legal team argues the fee violates equal protection by treating short-term rental owners differently than other property owners who equally contribute to housing demand. The Commerce Clause challenge addresses how the fee impacts interstate economic activity, since many short-term rental guests come from outside Colorado.

The case centers on the Grigsby family, who invested in restoring three uninhabitable cabins. When they requested a hearing to challenge the fee’s validity or claim an exemption, the town immediately revoked their license for one cabin, causing an estimated $30,000 in lost revenue and diminishing their property value. Bakos notes the irrationality of the town’s position, fighting over a $1,390 fee while causing thousands in damages to a small family business.

“We’ve been attacking the rationality of it because we have two overarching issues. First, it’s equal protection. We also have a Commerce Clause problem here because it impacted interstate activity.”

Edward Bakos, Attorney, McCallum Law Firm

The Affordable Housing Industrial Complex

Start listening at 82:40 – Hour 2

Randall O’Toole reveals how the 1986 Low-Income Housing Tax Credit program created a lucrative industry benefiting developers and nonprofits rather than housing consumers. Congress mandated 10% nonprofit involvement, spawning organizations like Denver’s Mercy Housing that pay executives over $400,000 annually while simply hiring contractors to do actual work.

The perverse incentives push developers toward four and five-story apartment buildings costing nearly $300 per square foot when single-family homes cost $125-150 per square foot. Urban planners prefer these dense developments despite 80% of Americans wanting single-family homes. A 2016 Aurora project called Alameda View spent over $30 million on 116 units, with 104 going to households earning $75,000 annually, not the truly poor. Meanwhile, these subsidized developments often receive property tax waivers, shifting the burden onto single-family homeowners.