New short term rental regulations are being discussed at city council right now that could potentially have harmful impacts on owners that want to rent their homes out.
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The City Council is proposing some extremely strict regulations on vacation rentals, all because there are a few problem properties - possibly as few as 6 in all of Austin, but I haven’t seen the exact number (http://www.austinmonitor.com/stories/2015/07/code-working-weekends-str-problems/). The focus should be on fixing things with the very few problem properties and preventing future problem properties, and not burdening the good owners.
I’ve included a breakdown of the proposed changes below and the impacts that I believe they could have on short term rentals. My main concern is that, overall, these new regulations will drive already illegal rentals further underground, force currently complying STRs to be driven underground, and make it very difficult for homeowners to rent their homes legally for SXSW, ACL, and F1 for additional money throughout the year. Licensing fees and the current process already prevents a lot of owners from getting a license when renting their homes for festivals. We should be talking about making licensing free and available with online registration to increase compliance with the STR ordinance and not talking about increasing the burdens on homeowners, which will decrease registration and compliance.
The dates this is coming up at council are below.
August 17 - Planning & Neighborhood Comm. Meeting - 4pm - City Hall 301 W. 2nd St.
August 20 - City Council meeting - 10am - City Hall 301 W. 2nd St.
Gallo’s draft STR changes can be found below.
- The authority to suspend a short term rental license for violations
This could help clarify that code enforcement does have the ability to suspend a license. However, code enforcement appears to already have this ability.
- Require STR owners to sign a statement about deed restrictions and restrictive covenants
I’m uncertain what this would accomplish or how this could help with code enforcement. STR opponents believe STRs are in violation of deed restrictions/restrictive covenants and seem to believe they will be able to take STR owners to court one by one to drive them out of business. The city shouldn’t be encouraging this type of retaliatory behavior.
- Increasing the yearly licensing fee
The current registration fee of $285 is already cost prohibitive for many owners that want to rent for SXSW, ACL, and Formula 1. My concern is that raising the fee will lead to less compliance with the ordinance. If greater compliance is the goal, registration fees should be low or free to encourage people to get a license and pay their hotel occupancy taxes- where the greatest revenue is generated. Austin currently brings in approximately $15 million per year from STRs with city and state hotel occupancy taxes and this could be a lot higher by bringing more STRs into the fold. Making registration easy and inexpensive could increase tax revenue considerably more than any licensing fee.
Hotel occupancy taxes should be considered in the costs for paying for the STR code enforcement program, if the STR enforcement program is required to pay for itself in the future. There is more than enough revenue being brought in through occupancy taxes that fees do not need to be increased.
- Licensing number should be included in all STR advertisements
This could help code enforcement quickly identify what advertisements are for registered or unregistered STRs.
However, if homeowners could easily sign up for a free temporary license online, it could allow them to “test the waters” until they received their first booking and then they could pay the licensing fee. If they don’t get a booking for SXSW, etc, then they wouldn’t be required to renew their temporary license. This would encourage homeowners to be complaint with the regulations without a high licensing fee and bring people into the registration program.
- Requiring inspections of all homes to get a license and allow inspections without notice or cause
Allowing code enforcement to inspect problem properties or properties that have had multiple violations could help code enforcement when out on a call to a property. However, there should always be cause for an inspection.
Requiring an inspection to get a license will lead to lower compliance with the ordinance as many homeowners won’t feel comfortable allowing code enforcement into their homes for an inspection. This is why the current STR ordinance provides the homeowner the option of either having a third party inspection (so they don’t have to worry about allowing code enforcement into their homes and penalizing them for other issues) or showing that they have a Certificate of Occupancy, which is provided to show that it’s a legal dwelling unit.
- Requiring commercial insurance of all STR’s
This requirement will reduce compliance with the STR ordinance and put a serious burden on homeowners for registration. Homeowners that want to rent their homes for SXSW will be less likely to get a license, but will still rent their homes without a license. This will increase the burden on code enforcement by increasing the number of owners without a license. The city could also lose out on the occupancy taxes generated through these stays since these owners will not be paying occupancy taxes. Requiring homeowners to sign a statement that says they might need commercial coverage or simply providing them information about coverage options when applying for their license would be less of a burden and allow for greater compliance.
- Maintain a guest registry (presumably that the city can demand to view)
This sets a bad precedent for the privacy of guests and homeowners. Short term rental opponents have asked for guest information to be posted online, which could allow guests to be contacted and harassed. Privacy should be protected. Local owner contact information is already provided to surrounding neighbors and available to code enforcement.
- Require short term rental license holders to comply with noise requirements
STRs are already required to comply with noise requirements like every other home in Austin. There’s no harm in adding this, but I don’t see how it helps code enforcement since it’s already a requirement.
- Adding a penalty for operating without a license
This could allow code enforcement the ability to fine those without a license. This would be a good idea, if the actual process of acquiring a license is not overly burdensome.
- New occupancy limits - the lesser of six adults period (not unrelated) or two adults per bedroom
Code compliance says that it has problems with a few properties allowing more people than what the occupancy allows. STRs currently have the same strict occupancy limits as any other home in Austin, which is no more than 6 unrelated individuals. A better approach would simply be making sure that code enforcement has the ability to enforce current occupancy limits.
Most short term rentals frequently have guests that stay more than 30 nights, which would be considered a long term rental during that time period. This new limit may be in violation of the federal and state Fair Housing Act by restricting the occupancy of families (http://www.housing-rights.org/occupancy.html).
- Possibly limiting new Type 2 licenses within no less than 1000 feet from existing Type 2 rentals.
This idea was rejected when the ordinance was first being debated. Instead, there was a 3% cap per census tract so no one census tract could have many STRs. By combining the 1000 feet rule and the 3% cap, few new Type 2 STRs might be allowed. It would burden homeowners that want to use their property for a short term rental by banning them entirely. Under the 3% rule, once all of the licenses are taken in that area, owners can get on a waiting list and have the opportunity to get a license in the future, but this new rule would permanently ban them and leave them with no option. It’s unclear how this would help code enforcement or what the purpose of this would be other than an attempt at banning Type 2 STRs and removing property rights from the owners. If there are problem properties, address those problem properties instead of proactively banning good owners.