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Divided Council OKs rules for short-term rentals

Friday, June 8, 2012 by Josh Rosenblatt

Just after midnight, after nearly four hours of public input, Council voted 5-2 to approve on first reading a compromise plan to regulate short-term property rentals. Council Members Laura Morrison and Kathie Tovo voted no.

The plan, put forth by Council Member Chris Riley was a variation on recent proposals put forth by the Planning Commission and city staff designed to bring closure to an issue that has exposed deep divides in the city over the character of residential neighborhoods and the role of government in the regulation of private residences.  

Under the Planning Commission proposal, owners of all short-term rentals — both owner-occupied (Type 1) and “commercial” (Type 2) properties — would be required to register their homes with the city, allow for a health and safety inspection upon registration and then every three years, notify all their neighbors within 100 feet that their home is being used as a short-term rental, and pay a Hotel Occupancy Tax, equal to 15 percent of gross receipts.

In addition, Type 2 short-term rentals would require the owner to obtain a conditional use permit (and thus undergo a public process) and would not be permitted within 1,000 feet of another Type 2 short-term rental or a bed & breakfast. Type 1 properties could be rented out for no more than 90 total days during a single year.

According to Planning and Development Review Department Senior Planner Robert Heil, a city register will help keep short-term rentals in compliance with city code, keep homeowners and short-term rental renters aware of city laws, and solve the majority of short-term rental-related complaints.

“It will provide the ability to monitor short-term rentals and bring them into a higher level of compliance with the Hotel Occupancy Tax,” Heil told Council. “Also, it will provide a mechanism for staff and the community to be readily able to contact property owners or their responsible agent to let them know what their responsibilities are if they choose to rent out their property on a short-term basis. And if there are problems that arise, it provides a much easier avenue to address those.”

The new rules would treat Type 1 properties much like the Planning Commission plan but would also introduce a strong punitive component. STR registrations could be voided in the event that three or more valid citations had been levied against it. The plan would allow non-owner-occupied short-term rentals but would place a cap on the number of such properties allowed in any particular ZIP code, tentatively 3 percent of all single-family properties.

That figure did not meet the approval of Council Members Laura Morrison and Kathie Tovo, both of whom expressed concerns about the negative effects they said “commercial” short-term rentals have on neighborhood cohesion, housing costs, school enrollment, and population rates in center-city neighborhoods. Tovo pointed in particular to the trend of population loss in these neighborhoods and the fact that the city demographer said clustering of short-term rentals is a factor in that trend.

“The last thing we need to be doing is supporting a commercial use that is going to exacerbate that trend,” Tovo said.

To that end, Morrison put forward a substitute motion that would allow homesteaded short-term rentals but ban non-owner-occupied short-term rentals. Tovo threw her support behind that motion but only after offering an amendment granting an amnesty period of three years for owners of all commercial short-term rentals to come into compliance with the ban. Morrison approved that amendment.

Only Morrison and Tovo voted for that substitute motion, however.

The great majority of those who spoke against staff’s proposal also disagreed with the Planning Commission plan, saying that both missed the point by allowing commercial short-term rentals. Those properties, they argued, damage neighborhoods and tear at the fabric of communities. One speaker said commercial short-term rentals endanger communities because they “remove eyes on the street.”

Attorney Dowe Gullatt, speaking on behalf of a group of homeowners called Protect Austin Neighborhoods, said they had proposed a compromise that would allow owner-occupied short-term rentals but ban all commercial rentals in single-family-zoned areas.

“They are unified in the belief that commercial short-term rentals are not appropriate in single-family neighborhoods,” Gullatt said. “They came with a compromise. They acknowledge the value of homesteaded short-term rentals. … We believe there is plenty of stock of homesteaded STRs to meet the needs of the community … This is an accelerating problem, an accelerating use in our city. This is all about drawing a line. This is not about a good operator versus a bad operator, but rather about banning commercial activity in a single-family zoning district.”

On the other side of the issue, Nikelle Meade, a lawyer with Brown Carroll, the firm representing short-term rental agent HomeAway, pointed to an April report from the City Auditor’s office stating that short-term rentals don’t result in more 911 or 311 calls. She said the short-term rentals issue is “truly not an issue.”

“So, why are we all here?” Meade said. “Why are we focusing so much energy when the city has real problematic issues it has to deal with? We don’t have an STR problem in this city.” Meade said her client supports the staff plan, save for the inspection requirement. “We feel like properties that have a (Certificate of Occupancy) should not have to have an inspection.”

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