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Council argues proposal to suspend regulations on short-term rentals

Wednesday, January 11, 2012 by Josh Rosenblatt

Council Members Laura Morrison and Kathie Tovo had a heated debate with Council Member Bill Spelman at Tuesday’s Council work session over his resolution that would suspend the code amendment process to change regulation of short-term rental properties.

Opponents of the measure claim that such a delay could do harm to the city’s central neighborhoods.

In addition to temporarily suspending the code amendment initiated by the Planning Commission, the resolution would direct the City Auditor’s Office to conduct a review of short-term rentals in order to account for “insufficient and conflicting data.” That review would include an analysis of the number and locations of the rental properties, distinguishing between commercial short-term rentals – houses used for short-term rental purposes only – and owner-occupied properties rented out only for certain events like South by Southwest.

The City Auditor would also conduct a review of 3-1-1 and 9-1-1 calls for service and code-compliance citations issued at those locations.

The city stipulates that commercial short-term rentals would have to have inspections and pay higher fees, while casual rentals would need to pay a registration fee and would be allowed to operate a smaller number of days. They would also be required to post rules and provide a contact number to the city.

All short-term rentals would be required to pay hotel occupancy taxes, adhere to dwelling code occupancy limits, and provide tenants with an emergency contact.

“It seems to me that to pass an ordinance without getting the basic facts of what really is at issue may be a problem,” said Spelman. “We don’t know the public cost differences. I just don’t know where we are in this. The right thing for us to do, rather than pass an ordinance in a vacuum, is to collect some information that everyone can agree on. “

But both Morrison and Tovo expressed concern about the possibility of an indefinite suspension, stressing that the more unregulated short-term rentals there are in the city, the greater the risk to the viability and desirability of the city’s residential neighborhoods.

Morrison, in particular, took issue with Spelman’s use of the term “public cost,” arguing that it doesn’t take into account the potential damage short-term rentals could do to residential neighborhoods.

“The public cost that you’re mentioning does not address the public cost of the sustainability or the lack thereof on our neighborhoods,” Morrison told Spelman. “I’m very concerned about the sustainability of our central neighborhoods.”  Without regulations on short-term rentals, she argued, “you no longer have a neighborhood.”

Tovo, too, argued against the delay, pointing out that the city already conducted an audit of short-term rentals last June. Any new information unearthed in a second review, she said, wouldn’t offset the potential damage done to the city’s neighborhoods.

“New information as a result of delay will not be any more helpful than what we already have,” said Tovo. “What we’re talking about here is taking structures out of their primary function as a residence and converting them into something that is more like hotel-motel use. And I think that should be balanced against our citywide goal trying to reverse the trend of families with children moving out of the central city… We need some form of regulation, and delaying is not of great benefit.”

According to City Auditor Kenneth Morey, however, the audit conducted last June didn’t attempt to count all of the short-term rentals in the city, only those the city could get the most tax revenue from. In addition, that audit didn’t look at the number of complaints, citations, or 3-1-1 and 9-1-1 calls for service related to those properties. He called that initial audit a “limited look.”

“From a citation violation… we have not looked at that at all. It was only from a revenue perspective. It was not an attempt at a universal-type study to identify all of them,” said Morey.

That initial audit turned up about 270 short-term rental properties in the city. Morey said he estimates the proposed second review would take approximately three months to conduct. So, even if they began work at the beginning of February, auditors would not be likely to report back to the Council before mid-May.

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