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More issues raised at work group over rules for short-term rentals

Monday, June 27, 2011 by Kimberly Reeves

Commissioner Mandy Dealey told a work group last week that they might not like the draft set of recommendations for short-term rentals.


That was no joke. Even after a number of well-attended sessions that hashed out any number of issues, the owners of short-term rentals at Monday night’s meeting were more than willing to raise even more issues, and more questions, about the Planning Commission’s potential compromise proposal.


“This draft set of recommendations is not going to make any one person really happy,” Dealey told the group. “Either you think we did a terrible job or we did our job. I think we did our job, and I really do think this is going to be a good solution, and that we were all a lot closer than we first thought.”

More than 40 homeowners and business operators attended Monday night’s work group session at One Texas Center. Commissioners Saundra Kirk and Danette Chimenti aided Dealey in the outline of a draft short-term rental proposal, with Chair Dave Sullivan in attendance in the audience.


Dealey insisted, more than once, that the proposal was still in its draft stage. The short-term rental policy, which must still go through a subcommittee, committee and Council approval, would create a multi-tiered system, based on usage. All rentals, no more how limited, would require city registration.


The first tier would be the owner-occupied property that is used for so-called “limited rentals.” Limited rental was defined as no more than two rentals a year totaling no more than 15 days within a calendar year. The obvious example would be a homeowner who rented out a room or house for events like SXSW or Austin City Limits. The owner would register the dwelling with the city, provide appropriate contact information and pay an annual $25 fee.


The second tier would be the so-called owner-occupied “periodic rental.” This would be the homeowner who rented a room, home or detached dwelling for more than two rental periods totaling more than 15 days per year. That person would be required to register with the city for a fee of $100 a year.


A third tier, or category, would be the so-called “business rental,” with multiple properties. This would be a $500 fee to cover multiple dwellings for a single property manager or owner with an ongoing short-term rental business.


What all three categories must do, and auditor Clarke Hammond was on hand to emphasize the point, is to pay appropriate taxes to the city. Hammond said he had completed any number of recent audits on short-term rental properties that had failed to pay the 9 percent tax rate due to city and state.


“The most important thing you can do right now is to contact us if you’re not already signed up,” Hammond told the group. “I would recommend you go ahead and get registered with the city.”


The short-term rental proposal would require owners to provide renters with rental terms, such as occupancy limits, parking requirements and noise restrictions. The city also must have an emergency contact on file for the property.


Under the draft proposal, more intensive short-term rental use would require additional requirements, such as fire code safety inspections, on-site parking requirements and any other requirements eventually suggested by city staff.


Properties that could provide documentation of at least a year of rental use could be grandfathered, but additional short-term rentals beyond that initial threshold would have to be located at least 1,000 feet from existing short-term rental properties. The intention would be to provide some boundaries on use.


“We’re not saying that anybody has to go out of business if they follow the rules,” Dealey told the group. “We’re just saying we don’t want a proliferation of these that are in close proximity to each other.”


Some questions raised by attendees were simple, such as whether single-family properties, zoned in a multi-family zoning category, could qualify. One attendee suggested that the limit be set at 15 days, regardless of how many events, since it was more logical that festival rentals would be no more than a weekend.


Other questions were more complicated, such as whether permits should lapse after a two-year period of no use, so neighbors could apply for their own permits. And should the safety requirement be any more or less than a bed-and-breakfast establishment in the same neighborhood?


A number of other suggestions were made, such as charging the business rental owner $100 per dwelling, up to $500. Others questioned just how expansive the city’s fire safety code requirements might be. For instance, would the installation of sprinklers in a short-term rental house or a guesthouse be a detriment to re-sale value? Dealey said many of those specifics, and decisions, were still awaiting the evaluation of city staff members.


The proposed fee amounts, Dealey admitted, were simply “pulled out of the air” and that final fees likely would be based on the actual cost to the city for the administration and inspections of potential permits.


The next stop for the work group proposal will be the Codes & Ordinances subcommittee, followed by a review of the full Planning Commission. They would then forward a proposal to Council for approval.

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