A one-size-fits-all plan for regulating short-term vacation rentals in Denver is riling second-home owners who have invested big in the city’s red-hot short-term rental market.

Still, after four passionate town hall meetings, the architect of the rules, City Councilwoman Mary Beth Susman, says she won’t back off the most contentious element of the proposed regulation: that only permanent residents would be allowed to rent their properties on the short-term market.

The permanent-resident requirement has become a fractious issue in communities across the nation that are wrangling rules for a 20-year-old industry that matured mostly under the radar. As traveler tastes have shifted away from bunking with big hotel chains, increasing numbers of rooms, gate houses and second homes are being rented to tourists.

Cities trying to reduce the impact of tourists in typically residential neighborhoods — and capture lost lodging taxes — have adopted strict rules that allow only permanent residents to rent their properties on the short-term market. And that worries industry supporters who say that kind of regulation could stifle growth and force short-term rental hosts underground.

“Primary residence is not the silver bullet,” said Brian Egan, who employs 70 at his Denver-based Evolve Vacation Rental Network, which works with 1,500 short-term rental owners around the U.S. “It’s very difficult to enforce. And once you get into a world where rules are difficult to enforce, compliance slips.”

Susman, who for two years led the committee that drafted the potential rules, guided each of the town hall meetings and expected to hear far more resistance to the idea of legalizing short-term rentals. Although they are illegal under current zoning rules, there are an estimated 2,000 short-term rentals listed in Denver.

But it was the permanent-residence clause that raised the most ire, Susman said Thursday night, after the final town hall meeting at Christ Church United Methodist on Colorado Boulevard.

“This confuses me, that the council would make this illegal,” John Kraulkis said. ” I don’t get how council is thinking of eliminating this ability of having a second home, that you rent out for this purpose, that I, as a resident, would keep immaculate and beautiful and perfect at all times because that’s what sells.”

Krauklis, who said he spent $200,000 renovating a seven-bedroom home in Capitol Hill that is booked with families and groups nearly year-round, added, “The only other option for these large groups is a hotel, which is not very inviting.”

Susman reminded Krauklis that all rentals of less than 30 days are illegal in Denver right now. The proposed rules would allow short-term rentals with a small change to zoning laws and require all hosts to collect lodging taxes and register for a $25 business license.

The permanent-resident clause is contentious, for sure. San Francisco has a similar rule that has challenged regulators. Austin, Texas, once considered the model for short-term rental rules, last week installed a permanent-residency clause in certain neighborhoods. Boulder has cracked down on short-term rentals, and Durango limits the number of vacation rentals to one per street segment.

“I’m going to stick with primary residence out of the chute,” she said, noting that the regulations could be overhauled in committee or when they arrive at the council for consideration this spring.

Freshman City Councilman Kevin Flynn says he will vote to keep short-term rentals illegal. He wants a question on the November ballot giving neighborhoods the option of allowing vacation rentals.

“While we’ve spent a lot of time talking about the regulations and licensing and taxing mechanisms, I have yet to see us grapple with the fundamental question of whether this is a good thing for our neighborhoods,” Flynn said. “I need a more compelling reason to allow what essentially amounts to hotels in the midst of our neighborhoods other than ‘Millennials refuse to stay at hotels.’ “

Walter Gonzales, who works for Austin-based HomeAway’s busy government relations department, said he’s seeing growing support in Denver for a change in the potential rules that would allow second-home short-term rentals. The com pany, parent to VRBO.com, in early February unveiled a new program in Austin called the “Stay Neighborly” initiative, which aimed to deflect neighborhood concerns in the Texas capital with a no-tolerance policy for bad renters and hosts.

But it wasn’t enough to sway city leaders from phasing out short-term second-home rentals.

Gonzales said he expects this to push hosts underground, where they will not comply with city rules or pay lodging taxes. “When you get these restrictive regulations, it forces people to go under the radar. Then the city does not benefit.”

A University of Denver survey of 408 Denver short-term rentals listed on VRBO.com estimated those rentals harvesting about $13.6 million annually, which would generate about $2 million in lodging taxes for the city. Short-term renters, the analysis said, spend about $21.3 million a year in the city — not counting lodging.

About 30 of the roughly 80 people in the church hall Thursday night spoke, and about 20 of them supported short-term rentals and asked Susman to reconsider the permanent-resident rule.

Opponents, some of them fired up, urged the councilwoman to enforce existing laws, citing potential impacts to their neighborhoods. A woman worried about a neighbor opening a boarding house or a brothel or having fraternity reunions.

Several opponents wondered how short-term rental inspections would be funded, with one Washington Park resident noting that it took four months for a city inspector to approve her home’s new roof.

Susman said the city might be able to use a portion of its 10.75 percent lodging tax to pay for inspections or enforcement.

Supporters spoke about meeting new people and introducing travelers to Denver. Jim Blaz, who lives in Highland, said the issue should be put to a public vote.

“I want this on a ballot. Then at least we all get to speak,” he said. “Thirteen council members can’t represent a zoning change this big.”

The proposed regulations — found at denvergov.org/str — include the formation of a committee of neighbors, hosts, guests and city officials that would measure the impact of the new rules and suggest potential changes as the industry evolves.

“We know we are not necessarily going to get this right the first time,” said Stacie Loucks, the director of the city’s department of excise and licenses. “This is something we absolutely believe in and want to eventually get right. We can evaluate comparable cities, and we will just look at the impact and see if there are any unintended consequences from what we are proposing today.”

Jason Blevins: 303-954-1374, jblevins@denverpost.com or @jasonblevins