Trail Talk #3

Steamboat’s Green Zone vs. Red Zone: What Buyers Need to Know About Short-Term Rentals

If you’ve started looking at real estate in Steamboat Springs, you’ve probably heard properties described as being in the Green Zone or Red Zone. These terms refer to the City of Steamboat Springs’ Short-Term Rental Overlay Zone and can affect whether a property may be rented for stays of fewer than 30 consecutive days.

For buyers who hope to generate rental income—or simply want that option in the future—understanding the zoning before making an offer is extremely important.

What Is the Green Zone?

The Green Zone is officially known as Zone A. In this area, the city does not limit the number of short-term-rental units that may be licensed.

That does not mean a buyer can begin renting automatically. The owner must still obtain the appropriate city license, follow operating requirements, and confirm that the HOA allows short-term rentals.

From a city-zoning perspective, however, Green Zone properties generally offer buyers the greatest flexibility.

What Is the Red Zone?

The Red Zone is officially known as Zone C. Traditional short-term rentals are generally prohibited unless the property has an existing qualifying status, such as a valid Vacation Home Rental permit or registered legal nonconforming use.

This is especially important when a property is sold because a short-term-rental license does not automatically transfer to the new owner. A property’s current rental history does not necessarily mean the next owner will be able to continue renting it in the same way.

There Is Also a Yellow Zone

Steamboat also has a Yellow Zone, officially called Zone B.

Short-term rentals in this zone are restricted by caps within six subzones. A property may qualify because of an existing permit, legal nonconforming status, or a license awarded through a city lottery.

Buyers should never assume that a Yellow Zone property can be used as a short-term rental without further investigation.

Does Green Zone Status Guarantee Rental Ability?

No. The city’s overlay zone is only one part of the answer.

Buyers should also confirm:

• Whether the HOA permits rentals of fewer than 30 days.
• Which city license is required.
• Whether the property is currently licensed.
• What happens to that approval when the property is sold.
• Any occupancy, parking, noise, trash, and local-contact requirements.
• Whether the property is inside city limits or elsewhere in Routt County.

An HOA may be more restrictive than the city. A property can be in the Green Zone and still prohibit short-term rentals through its governing documents.

Why This Matters When Comparing Properties

Two similar homes or condos may have very different rental possibilities depending on their overlay zone, HOA rules, and existing approvals.

A Green Zone property may appeal to a buyer seeking income or flexibility. A Red Zone property may appeal to someone who prefers a more residential setting with fewer neighboring vacation rentals.

Neither designation automatically makes one property better than another. The right choice depends on how you plan to use the home.

Questions to Ask Before Making an Offer

If short-term-rental potential matters to you, ask these questions early:

• Which STR Overlay Zone is the property in?
• Does the HOA allow short-term rentals?
• Is the property currently licensed?
• Does the current approval survive a sale?
• Will I qualify to apply for a new license?
• Are there caps, lotteries, waitlists, or legal nonconforming requirements?
• Is the advertised rental income based on actual history or only a projection?

These questions should be answered before rental revenue becomes part of your purchasing decision.

Frequently Asked Questions

Can I short-term rent any property in Steamboat’s Green Zone?

Green Zone properties are not subject to a citywide cap, but the owner must still obtain the proper license and comply with city and HOA requirements.

Can I buy a licensed short-term rental and keep using its existing license?

Not automatically. Short-term-rental licenses do not transfer with the sale of a property. The new owner must apply for a license in their own name.

Can an HOA prohibit short-term rentals in the Green Zone?

Yes. HOA rules may be more restrictive than city regulations.

Are short-term rentals completely prohibited in the Red Zone?

New traditional short-term rentals are generally prohibited, but some properties may qualify through an existing permit, legal nonconforming status, or another limited license type.

What does the Yellow Zone mean?

The Yellow Zone limits the number of traditional short-term rentals within six designated subzones.

How do I determine which zone a property is in?

The City of Steamboat Springs provides an interactive Short-Term Rental Overlay Zone map here.

— Barkley