Austin Steps Up Short-Term Rental Enforcement Around SXSW

Mar 16, 2017

When he arrives at work Monday morning, Khalid Marshall is greeted by a slate of complaints from Austin residents. Marshall is a code enforcement officer with the city, and his work specifically focuses on short-term rentals, or STRs, like those you’d find on HomeAway or Airbnb.

“We get the complaints directly from 311, so whenever you text in your complaint or you call 311, for short-term rentals, they come directly to my inbox,” Marshall said.   

After a scroll through his messages, Marshall heads to investigate a noise complaint about an STR on West 8th Street. He parks down the street and walks up to the property. It’s a triplex, like a duplex plus one, and there’s a woman sitting outside on the porch.

The woman tells Marshall that she’s renting unit A of the building through Airbnb. She says there were more people staying next door, but they seem to have left. Marshall knocks on the doors of units B and C, but there’s no answer.

“So we’ll go back and check to see and make sure they have a license for all three units or just one unit,” Marshall says as we walk back to his truck. “Since we found renters in A, I might have to write a warning or a citation. We’ll see how this goes.”

Most years, Marshall sees an influx of complaints about STRs around festival season. His department has also increased enforcement hours for the duration of South by Southwest, and now, there are even more rules to enforce. Last year, the city passed sweeping new regulations on STRs. They limited the number of occupants and banned any outdoor gatherings between 10 p.m. and 7 a.m. The city also plans to phase out so-called type-2 STRs, those that are not owner-occupied, by 2022. Vacation rental companies and STR owners have responded with sharp criticism, protests and even a lawsuit.

Chance Weldon, an attorney with the Texas Public Policy Foundation, represents a group of short-term rental owners who sued the City of Austin last year over the new regulations.

“We don’t have any problem at all with them increasing enforcement on loud parties or trash in the yard or parking violations,” he says. “As a matter of fact, that would actually be a constitutional way to address the problems that they say they have with short-term rentals.”

"If people are getting away with charging $600 a night for staying in Austin, that clearly shows that there’s sort of unmet demands in the city.”

But despite existing rules and increased monitoring, some homeowners say the STR regulations can be virtually impossible to enforce. Mike Polston lives in the Northwest Hills neighborhood, where STRs aren’t a common sight. But about two years ago, Polston said an investor bought the house across the street from his for the sole purpose of renting it out as an STR. He said it essentially became a party house, and he’s got some stories he can tell you.

“I think the worst one that a couple of neighbors witnessed at like 1 o’clock in the morning, the guys got off the party bus or out of the cab, they forgot the number of the STR house, and they were kind of going around knocking on doors, and then they had to urinate in the front yard because they’d been downtown drinking,” Polston said.

Polston approves of Austin’s increased regulations, but he questions whether the city has the resources to keep enforcing them. He said overall, he just doesn’t approve of the idea of STRs in residential neighborhoods.

“It’s a very difficult thing to manage,” he said. “I think they’re doing a better job now than they did, but I don’t think you can sustain it.”

The debate over regulations is ongoing. Lawmakers have introduced a bill in the Texas Senate that seeks to limit local control over STRs. It could prevent cities like Austin from enacting their own restrictions on the rental properties. Polston testified against the bill at a hearing this week.

Vacation rental companies also made their case. Websites like Airbnb don’t actually own the homes listed on their pages, but their businesses depend on property owners having the freedom to rent out their homes.

Philip Minardi is with the Austin-based STR website HomeAway, which supports the bill.

“It preserves the property rights of individual homeowners in our community, while at the same time recognizing that municipalities should have the role and the responsibility to regulate things that are important to the local community such as trash, noise, nuisance parking and the like,” he says.

Minardi said HomeAway’s Austin rentals are 95 percent booked through the remaining days of SXSW.

“The lesson we learn from South By is that responsible vacation rentals are foundational to Austin’s economic health,” he says.

HomeAway estimates that in 2014, short-term rentals contributed $234 million to the Austin economy. Beyond the financial impact, some analysts wonder what would happen to Austin’s tourism industry should non-owner-occupied STRs be phased out. Last year, research firm Datafiniti found that Austin needs STRs to house all of its visitors during major events.

“Last year, I was kind of on the fence,” Datafiniti's founder and CEO Shion Deysarkar says. “I thought the city was obviously trying to build more hotels and things like that, so maybe they could do it, but I think with the data we see this year, I’m more convinced the STRs are absolutely needed to help Austin if they want to continue growing as they are.”

Datafiniti did an updated analysis this year. It found, unsurprisingly, that the price of Austin’s STRs spikes a few times a year around big events. Datafiniti estimates the median price of an STR in Austin to be $200 a night, but during SXSW, it’s about $600.

“The spike in the pricing just speaks to that,” Deysarkar says. “If people are getting away with charging $600 a night for staying in Austin, that clearly shows that there’s sort of unmet demands in the city.”

He says if the city does phase out some STRs by 2022, it could take a toll on much-needed rental capacity.