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Short-term rental ordinance already drawing flak

Monday, October 8, 2012 by Elizabeth Pagano

One week after implementation of the short-term rental ordinance, several observers describe significant problems for those trying to register. There are also additional costs not revealed at the time the ordinance was approved. In short, for those trying to comply with the ordinance, things are a mess.


Among other things, People are not happy about the $476 in registration fees.


City Council agreed to a $235 registration fee as part of the budget process last month. This fee was designed to pay for the additional staff time that would be required of Code Compliance due to inspections and the like.


An additional notification fee of $241 has been added to the registration fee. This fee is to cover the cost of notifying homeowners within 100 feet of registered short-term rentals, as is required by the ordinance. The planning manager for the city’s Planning and Development Review department, Jerry Rusthoven, explained that a notification fee is a standard fee set during the budget process.


“We’re afraid with such exorbitant fees, and such an arduous process, that we’re going to kill the program from its beginning,” said Emily Chenevert, director of Government and Community Affairs at the Austin Board of Realtors. “The whole point of us advocating for some regulations was that if we made it something that was palatable and doable by homeowners, we’d see greater registration, and then more hotel-occupancy tax registration, and more income into the city.”


Members of the Austin City Council approved a short-term rental ordinance in August, after lengthy and heated debate. The ordinance took effect Oct. 1, kicking off the first wave of registrations for all Type I rentals (owner occupied) and Type II rentals (non-owner occupied) that were legally operating before June 13, 2011. The second registration period, for the remainder of the Type II rentals, will begin in January.


Joel Rasmussen with the Austin Rental Alliance told In Fact Daily that he was concerned that the high fees and laborious registration process would discourage compliance among Type I (owner-occupied) rentals.


Rasmussen, who supported the ordinance that ultimately passed, reported that by Friday afternoon he had not received a call back after he phoned the city last Monday morning to make a registration appointment. Another member of the Austin Rental Alliance board had successfully made an appointment.


Rusthoven noted that the notification fee was not subject to the number of individuals that needed to be notified. “The fee has always been $241 no matter how much mail we’re mailing out. … There’s always been this fee, and it’s just a flat fee,” said Rusthoven. “The city has never differentiated between how many pieces of mail we have to mail out, because we don’t usually know until we go to do it.”


“Depending where you are at, and what you are doing, someone could file a zoning case out in the hinterland where the notice goes to just three people, because he’s surrounded by three other farmers,” explained Rusthoven.


Rusthoven said that if they wished, Council members could create a new “short-term rental notification fee,” amend the budget, or make an amendment to the short-term rental ordinance – an act that would bring discussion over the document back before Council members.


Chenevert of the Board of Realtors said, “Everybody’s scared of the contentious conversation that we had over spring and summer that they are trying to figure out (if) we can just let this die for a minute, and then come back to it, or do we need to take care of it now? Our belief is that if it’s not right the first time, we fear that people will not pay attention to it later. Getting it right from the get go is important to the success of the program.”


The registration process is administered by the city’s Code Compliance department, whose offices are located at Cameron Road and Rutherford Lane. As part of this process, registrants must provide a certificate of occupancy – a document available from the Planning and Development Review department at One Texas Center on Barton Springs Road in South Austin – or pay for an inspection at an additional cost.


Moreover, there has also been trouble with an affidavit that is included in the short-term rental registration packet. The affidavit, established by Code Compliance, asks owners to affirm whether the unit is owner-occupied (depending on whether it is Type I or Type II), that an information packet outlining code requirements has been provided to renters and that they will pay hotel-motel occupancy taxes. Owners of short-term rentals must pay a total hotel-motel tax of 15 percent: 9 percent to the City of Austin and 6 percent to the state.


The affidavit also asks owners to state that the rental property is healthy and safe for the tenant — in what Chenevert called “fairly broad” terms.


“The problem with health and safety in a rental is that sometimes it’s the activity itself that dictates whether or not the property is healthy and safe. It would be hard for an owner to state that, without a doubt, it’s healthy and safe because a tenant could, for instance, unhook a smoke detector. So that’s an unsafe property, but it was the tenant’s action that changed its status of safety,” explained Chenevert.


Chenevert said that she had already heard a report of an owner who was advised by his attorney not to sign the affidavit because of the inherent liability.


When asked for comment, Code Compliance spokesperson Melissa Martinez, directed In Fact Daily to Jill Goodman in the City of Austin’s Public Information Office for questions about the short-term rental registration process. Goodman had not returned a phone call placed Friday.

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