Overview: STR Allowance in Ouray, CO

Short-Term Rentals are explicitly allowed in Ouray, CO, but are heavily regulated. The operation is permitted within the City of Ouray and unincorporated Ouray County through a rigorous permitting process. Both jurisdictions have distinct regulations and caps on the number of licenses available. Investors must obtain a specific license and adhere to all applicable rules to operate legally.

1. How to Start a Short-Term Rental Business in Ouray

Starting an STR business requires a clear understanding of which jurisdiction governs your property. The City of Ouray and Ouray County have separate processes.

Step 1: Determine Jurisdiction

• City of Ouray: Check the Official City Maps to see if your property is within city limits.
• Unincorporated Ouray County: All areas outside the City of Ouray and Town of Ridgway fall under county regulations.

Step 2: Understand Zoning & Permitting Requirements

• City of Ouray: STRs are a permitted use in R-2, C-1, and C-2 Zone Districts. They are prohibited in R-1 districts (except for existing legal non-conforming uses as of July 17, 2019) and in all accessory dwelling units (ADUs). The city has a strict cap of 120 total STR licenses.
• Unincorporated County: STRs are regulated under Ordinance 2024-01. Permits are issued as a special use. The county has caps for three permit types: 50 Type 1 permits, 50 Type 2 permits, and 25 Type 3 permits (with a possible 25 additional permits by resolution).

Step 3: Application Process

• City of Ouray:

  1. New License: Submit a completed STR application to the Community Development Department. The property must pass an inspection by the City's Building Inspector.
  2. Fee: A non-refundable fee of $750 is required at the time of license issuance. If the city has reached its cap of 120 licenses, your application will be placed on a waitlist and processed in order of receipt when a license becomes available.
  3. Annual Renewal: Licenses are valid for one year and must be renewed by February 28th of each year. The renewal fee is $350. License periods and fees are not prorated.

• Unincorporated County:

  1. Permit Type: Decide which type of permit applies to your property:
     • Type 1: For rentals of an entire Primary Dwelling Unit (PDU) or entire ADU with an Off-Site Manager or Off-Site Owner.
     • Type 2: For rentals of an entire PDU or entire ADU with an On-Site Owner or On-Site Occupant.
     • Type 3: For rentals of a specific portion of a PDU with an On-Site Owner or On-Site Occupant.
  2. Application: Submit a complete application to the Land Use Department, including proof of legal construction, a site plan, inspection by the County Building Inspector, and a Compliance Affidavit. A business license or other necessary regulatory approvals from the State of Colorado are also required.
  3. Fee: Application and renewal fees are set by the Land Use Fee Schedule. Annual renewals are due by November 1st.

2. Required Documents, Permits, Licenses, and Guidelines

The following are the key requirements based on the jurisdiction:

Required for All:

• Inspection: A successful inspection by the respective Building Inspector is mandatory to ensure compliance with safety standards (e.g., smoke/carbon monoxide detectors, fire extinguishers, emergency egress).
• Business License: A Colorado Sales Tax License is required to collect and remit lodging and sales taxes.
• Tax Registration: Proper registration and remittance of all applicable taxes.
• Proof of Legal Construction: Evidence of a valid building permit and final inspection, including a Certificate of Occupancy.
• Site Plan: A hand-drawn or scaled plan showing lot lines, parking areas, driveways, and significant features.

City of Ouray Specific:

• STR Application Packet: Provided by the City.
• Proof of Insurance: Required at the time of renewal.

Unincorporated County Specific:

• Compliance Affidavit: A sworn statement under penalty of perjury certifying compliance with all terms of the ordinance.
• HOA Notification: If applicable, certified mail notification to the Homeowners' Association must be provided.
• Notification Materials: Information for neighbors and a public contact database for the STR Manager.

Key Guidelines:

• Good Neighbor Guidelines: All STR managers must provide this document to guests upon booking. Link to County Guidelines.
• Noise Ordinance: STRs and their guests must comply with the local Noise Ordinance. Link to City Noise Ordinance
• Wildfire Mitigation Regulations: Properties must comply with County Section 16 regulations.

3. Specific Regulations for Short-Term Rentals

The regulations focus on neighborhood compatibility, safety, and taxation.

Zoning & Use:

• City: Permitted in R-2, C-1, C-2; Prohibited in R-1 (except for pre-existing uses) and ADUs.
• County: Permitted as a special use in zoning districts allowing single-family dwellings, excluding the High Alpine Area and Public Lands Zone.

Caps & Availability:

• City: Maximum of 120 licenses. New applicants are placed on a waitlist if the cap is met.
• County: Maximum of 125 permits (50 Type 1, 50 Type 2, 25 Type 3). New applicants may be placed on a courtesy waitlist.

Occupancy & Parking:

• City: Dwelling units with an STR license must be rented for at least 30 days per year to remain compliant. Parking is limited to on-site and off-street.
• County: The maximum number of guests is two persons per bedroom, plus two additional guests. All guest parking must be located off-street, fully contained on the property, and not in any public right-of-way.

Taxes:

• City STRs: The total tax remittance is 22.5% (4% City Sales Tax, 3.5% Lodging Occupation Tax, and a voter-approved 15% Excise Tax for residential units not taxed at a commercial rate). STR owners are also responsible for County (2.55%) and State (2.9%) Sales Tax.
• County STRs: Must use Colorado NAICS Code 721199 for submitting sales and lodging taxes and are subject to all applicable local, state, and federal taxes.

Management:

• City: Licenses are not transferable. New owners of previously licensed properties must apply for a new license.
• County: All permits require a designated STR Manager (On-Site or Off-Site) who is responsible for property management and guest conduct during the rental period. Contact information for the STR Manager must be provided to neighbors.

4. Contact Information for Local Authorities

For Properties within the City of Ouray:

• Department: Community Development
• Phone: (970) 325-7211
• Email: info@cityofouray.com
• Physical Address: 320 6th Ave, Ouray, CO 81427
• Website: City of Ouray STR Page

For Properties in Unincorporated Ouray County:

• Department: Land Use and Planning Department
• Phone: (970) 626-9775
• Physical Address: 111 Mall Road, Ridgway, CO 81432
• Website: Ouray County STR Permitting

5. Important Links to Source Pages

• Ouray County STR Ordinance 2024-01: Ordinance-2024-001-Short-Term-Rental-Regulations-of-Residentail-Properties
• City of Ouray STR Regulations (Resolution 12, Series 2021): Resolution 12-2021 Short-Term Rental Policies (See "Resources & References" section)
• City of Ouray Official Maps: Official City Maps
• County Good Neighbor Guidelines: Good-Neighbor-Guidelines
• List of Current County STR Licensed Properties: Issued-licenses-07-01-2025-9-19-AM