Council Adopts New Regulations for Short-Term Rentals

Feb 24, 2016

From the Austin Monitor: City Council on Tuesday passed, on a 9-2 vote, new regulations governing short-term rentals that aren’t owner-occupied. Council also adopted plans to phase out all of the so-called STR Type 2 properties in residential zones by 2022.

Council members Ellen Troxclair and Don Zimmerman opposed the new rules, many of which become effective in 10 days, including broader STR regulations such as a new occupancy limit of no more than two adults per bedroom plus two other adults, for an overall max of 10 adults, or six unrelated adults.

Regulations on STR Type 2s in primarily residential zones will become effective April 1, 2017, when a yearlong moratorium on any new licenses for the rentals is up. It remains unclear if and how new licenses for STR Type 2s in commercial zones will be issued in the future.

Hundreds of HomeAway employees and supporters marched from the company’s Austin headquarters downtown to pack Council chambers but none spoke, because the public hearing on the ordinance was held in January.

Those who supported the new rules focused on the commercially owned properties, which they say have contributed to the movement of families outside of the urban core. Mayor Pro Tem Kathie Tovo called the STR pilot program “a failed experiment,” adding that while renting out homes does help residents earn more income, “having mini-hotels in residential areas is a very different thing.”

Upheld are provisions passed in November that restrict assemblies – including weddings, bachelor or bachelorette parties, concerts, sponsored events “or any similar group activity other than sleeping” – from 10 p.m. to 7 a.m., and restrict outdoor gatherings from 7 a.m. to 10 p.m. to a maximum of six adults.

In an emailed statement, Airbnb – which says it brings an estimated $124 million in guest spending to Austin annually – said that 85 percent of its hosts live in their rentals and therefore won’t be affected by the new rules.

Acknowledging that some Airbnb properties aren’t owner-occupied, though, the company said it hopes that “continued dialogue will result in a better path forward for responsible and law abiding Type 2 renters.”

Council will evaluate the moratorium on new Type 2 properties next year, but it won’t hold a public hearing then, the majority of members decided Tuesday. Council Member Ora Houston said she’s heard enough comments in public hearings on the ordinance, and holding another next year seems like “we’re just kicking the can down the road.”

Troxclair argued that the moratorium wasn’t meant to be permanent but was intended as a pause during which data could be collected and the issue could be re-evaluated. On that, Zimmerman and Troxclair disagreed – but only because Zimmerman doesn’t see the point in more public hearings, he said.

“I think the voters are going to have to decide if they want to change the makeup of the Council, which they can do in November 2016,” he said. “I don’t see anyone up here changing their mind.”

The new rules also address “bad actors,” or owners who get two violations within a year or “repeated substantiated violations” of the city code or state law over two years. In those cases, applications for licenses may be denied. Those who don’t register and become licensed with the city will be fined.

Also, if the property has received a notice of violation related to the life, health or safety of the structure, it is subject to inspection every three years, according to the ordinance.

Tom Hale, the chief operating officer of HomeAway, said his company is also addressing bad actors and has adopted “a no-nonsense policy.” A new initiative called “Stay Neighborly” allows anyone to log complaints on HomeAway hosts.

Hale said HomeAway is “working with the city to have some consequences,” including removing violators from its platform of services.

Though some Council members expressed an interest in grandfathering STR Type 2 rentals owned by those who follow the rules, those efforts ultimately failed. Walter Gonzales, who works for HomeAway’s governmental relations team, said the company had been hopeful that “good actors wouldn’t be punished.”

“It’s been a very confusing discussion,” Gonzales said.

Tracy Smith, a member of the Neighbors for Short-Term Rental Reform group, said she and other neighbors spent hours working to have the license revoked for a bad actor in their neighborhood, and she applauded some of Council’s decisions Tuesday.

“My area is the worst in the city, and we really needed to address this,” Smith said, adding that the new STR ordinance “is muddy, it’s complicated, and it’s stuck in a spiderweb.”