Local governments will have more leeway to determine how short-term rentals operate within their boundaries as a result of a bill passed in the final days of the Colorado legislature’s 2023 session.

House Bill 23-1287 gives county officials the legal authority to require the owners of short-term rentals to have a rental license or permit and prohibits online websites like Airbnb and Vrbo from listing properties if their owner doesn’t have an active license or permit. Gov. Jared Polis is expected to sign it into law.

The bill was sponsored by Democrats Sen. Dylan Roberts of Avon and Rep. Julie McCluskie of Dillon, as well as Republican Sen. Perry Will of New Castle.

“Short-term rentals are an important part of our tourism economies but local residents also deserve protection from their unintended consequences,” Roberts said in a press release. “This bill enhances counties’ authority to enforce existing licensing rules, so that local governments can protect communities from bad actors in the short term rental market.”

Neither Airbnb nor Vrbo responded to requests for comment.

Short-term rental properties — housing units rented for 30 days or less — came under increasing scrutiny during the pandemic as affordable housing options in Colorado declined significantly. These challenges have become especially pernicious in resort communities like Breckenridge, Vail and Steamboat Springs.

For example, data from AirDna shows that there are more than 4,300 short-term rentals listed on Airbnb and Vrbo in Breckenridge. For comparison, census data shows there are more than 7,800 total occupied housing units in the town.

Overall, state estimates suggest that 40% of the homes in Summit County, which contains Breckenridge and other popular ski destinations, are used for short-term rentals.

While county governments are currently allowed to regulate short-term rentals through zoning and other ordinances, the new bill clarifies the definition of a short-term rental. It also outlines the county’s authority to regulate online marketplaces.