Short-Term and Vacation Rentals On The Lawbooks

History Of Short Term Rentals Laws

Credit: Austin Business Journal

[Alvin Brickman for Metrosetter Wire]

What started in Austin in July seems to be having a ripple effect across the country.  Prior to Austin’s decision to treat residences being used as short-term rentals as commercial properties and taxing them as hotels, short-term renters were relatively free to do as they pleased, tax-free, when renting their properties for less than 30 days. In fact, most governmental regulations that were effected before the widespread use of such services as Airbnb and HomeAway (i.e., before 2011) were primarily warranted as necessary to secure health and safety standards rather than the interests of neighboring property owners and homeowners associations — but the short-term rentals issue has quickly evolved.

Health and Safety

Many pre-2011 ordinances were created, in essence, as a public good; advocates defended them by citing health standards and safety requirements. For example, in 2010, in wake of the DePaul student shooting, wherein a student was fatally shot at a party in a house that had been short-term leased just to host the bash, an ordinance was introduced by Alderman Brendan Reilly — of Chicago City Council’s Join Committee on Zoning Licensing — to maintain standards of cleanliness and meet requirements for fire safety (Byrne 2010). “We’ve got hundreds of rentals being offered, with no though to the health, safety and welfare of those staying there,” Reilly said in recommendation of the bill, which subjected short-term renters to licensing fees and taxes (Byrne 2010).

Credit: ChicagoMag.com

Also in 2010, the State Senate passed a similar bill in New York. Mayor Michael R. Bloomberg said in a statement that “Illegal hotels all too often erode our base of affordable housing while creating fire safety and security hazards and quality-of-life concerns in residential neighborhoods. The bill provides a clear definition of what constitutes transient and permanent occupancy, which would allow City agencies to issue summonses and initiate other enforcement actions against illegal hotels” (2010). The law enhanced “the city’s ability to take effective enforcement action against landlords who rent apartments in residential buildings as hotel rooms” (Bloomberg 2010).

The New York instance, along with Chicago’s detailed above, typifies the discourse surrounding short-term rentals of only two years ago. In each case, men who were — at least in part, through public advocacy — responsible for the passage of such laws, defended them by way of appeal to the public good (i.e., public health and safety).

But the issue has quickly evolved. Only two years later, health and safety has largely become secondary to more pecuniary interests of community members and associations.

Protection of Property Value

Austin, in July, set the precedent for a community-enacted legislation — with many who wanted to outright ban short-term rentals, and some demonstrating outside Austin’s City Hall with signs denouncing home rentals with placards reading “Neighbors Not Strangers” — in their decision to regulate such short-term rentals, and other cities are quickly following suit, motivated by an interest in protecting their property value as opposed to simply the health and safety of its citizenry (Hadlock 2012).

In just the past few weeks, litigations concerning the legality of short-term rental properties have begun in The Village of Lake Delton, Wisconsin; Sausalito City, California; Dana Point, California; and Columbia Falls, Montana; and the issue has become increasingly complex.

In Lake Delton, Wisconsin, The Lake Delton Village Board in Sauk County just denied a permit to the owners of a duplex seeking to use their property as a short-term rental, and instead gave them the option to rent it long-term (Marx 2012).

According to Hayden Marx of Wiscnews.com, Village President John Webb said that short-term rentals are not the best use of the area, with high-end property across the street, and that he would rather see the property as a 30-day rental. Neighbors of the property concurred (2012).

Sausalito, California, courtesy of liveinmarin.com

In Sausalito, California, the Sausalito City Council approved a plan in July to allow property owners to rent their homes during the America’s Cup yachting races from July to October 2012 and May to October 2013, which is part of a larger effort to regulate vacation rentals in the city, and the city has enlisted a part-time code enforcement officer who investigates short-term vacation rentals that are reported by neighbors through complaints (Hemmila 2012).

Similarly, in Columbia Falls, Montana, unanimously approved regulations for vacation rentals went into effect on August 16th.

After numerous complaints from neighbors, the city decided to establish an administrative, conditional-use permit system to keep track of and reduce the number of short-term rentals in residential areas.

Credit: MontanaPictures.net

The new regulations require applicants to:

“(1) Provide contact information to the city.

(2) Provide at least two off-street parking spaces.

(3) Provide a sign-off by the Columbia Falls Fire Marshal.

(4) Obtain a Montana Public Accommodation License for a Tourist Home from the Flathead County Health Department, which will conduct annual inspections.

(5) Collect and submit Montana bed taxes.

(6) Erect no signs advertising the vacation rental business.

(7) Obtain a city business license if inside the city limits.

(8) Review and adhere to all covenants and conditions for the subdivision in which the vacation rental is located” (Hanners 2012).

Columbia Falls Realtor Bill Dakin told Hungry Horse News that “While their [vacation rentals] impacts are not always really bad, they do have a bad reputation” (Hanners 2012).

The short-term rentals issue has quickly evolved from a health and safety concern to one of protection of property. In effect, six of the eight conditions of Columbia Falls’ new permit requirements either protect the value of neighboring properties or attenuate the commercial use of such rentals.

Individuals Versus HOAs

Dana Point, California, courtesy of corleyprophoto.com

But with all of these city governments with vacation rental laws on their books, it would seem that vacation rentals have been unanimously proscribed in the minds of voters; however, there is a bit of counteractive data on the subject. From a recent survey conducted in Dana Point, California, with 400 local registered voters, more than half (fifty-six percent) said that they support short-term rentals in the city (with “short-term rentals” being defined as less than 30 days) with twelve percent undecided, seventy-six percent were not even aware of the city’s prohibition of vacation rentals in residential areas, and sixty-six percent said they support allowing short-term rentals if they are accompanied by permits (Francis 2012).

And in a survey conducted by the same company, True North Research, with homeowners associations, they found that only four percent of HOAs that responded allow short-term vacation rentals and seventy-three percent strictly forbid them (Francis 2012).

If this data is a representative sample of the attitude of the country as a whole, it appears that individuals tend to be indifferent and even supportive of properties being rented for less than 30 days, with associations overwhelmingly against it — which may ultimately result in a compromising give-and-take between the interests of homeowners associations and the approvals of individual voters.

Works Cited

Bloomberg, Michael R. “STATEMENT OF MAYOR MICHAEL R. BLOOMBERG ON STATE SENATE PASSAGE OF HOUSING PRESERVATION LEGISLATION TO ENABLE ENFORCEMENT AGAINST ILLEGAL HOTELS.” NYC.gov. NYC.gov, 25 June 2010. Web. 12 Oct. 2012. <http://www.nyc.gov/portal/site/nycgov/menuitem.c0935b9a57bb4ef3daf2f1c701c789a0/index.jsp?pageID=mayor_press_release>.

Byrne, John. “Clout St: Aldermen Eye Regulation of Short-term Rentals in Wake of DePaul Student Shooting.” Clout St: Aldermen Eye Regulation of Short-term Rentals in Wake of DePaul Student Shooting. Chicago Tribune, 23 June 2010. Web. 12 Oct. 2012. <http://newsblogs.chicagotribune.com/clout_st/2010/06/aldermen-eye-regulation-of-shortterm-rentals-in-wake-of-depaul-student-shooting.html>.

Francis, Josh. “Survey: 56% Support Short-term Rentals in Dana Point.” The Orange County Register. Ocregister.com, 18 Sept. 2012. Web. 12 Oct. 2012. <http://www.ocregister.com/articles/percent-371850-rentals-term.html>.

Hadlock, Robert. “City Council Approves Short-term Rental.” KXAN TV. KXAN, 2 Aug. 2012. Web. 12 Oct. 2012. <http://www.kxan.com/dpp/news/local/austin/decision-time-for-short-term-rentals>.

Hanners, Richard. “Vacation Rental Regulations Now in Effect.”FlatHeadNewsGroup.com. Hungry Horse News, 29 Aug. 2012. Web. 12 Oct. 2012. <http://www.flatheadnewsgroup.com/hungryhorsenews/article_3962a058-f1e6-11e1-a5a5-0019bb2963f4.html>.

Hemmila, Soren. “Vacation Rental Program off to Slow Start.” Marinscope.com. Marinscope, 12 Sept. 2012. Web. 12 Oct. 2012. <http://marinscope.com/articles/2012/09/13/sausalito_marin_scope/news/doc504fd8e6033c1764665832.txt>.

Marx, Hayden. “Village Nixes Short-term Rentals, Favors Long-term.” Wiscnews.com. Wiscnews.com, 14 Sept. 2012. Web. 12 Oct. 2012. <http://www.wiscnews.com/news/local/govt-and-politics/article_0966c14a-feb6-11e1-80c6-0019bb2963f4.html?comment_form=true>.

Images Cited

Austin Short-term rentals. Digital image. BizJournals.com/Austin/. Austin Business Journal, 26 Sept. 2012. Web. 1 Oct. 2012. <http://assets.bizjournals.com/austin/print-edition/ShortTermRentals*280.jpg?v=1>.

Chicago short-term rentals. Digital image. ChicagoMag.com. ChicagoMag.com, 19 May 2010. Web. 1 Oct. 2012. <http://www.chicagomag.com/images/2010/0510/DE20100519-rentalsign.jpg>.

Columbia Falls. Digital image. Columbia Falls, Montana Pictures on MontanaPictures.Net. MontanaPictures.net, n.d. Web. 1 Oct. 2012. <http://www.montanapictures.net/images/91403%20cf%20enter%20town%206250%20sign357.jpg>.

Corley, Chris. Digital image. CorleyProPhoto.com. CorleyProPhoto.com, n.d. Web. 1 Oct. 2012. <http://0.static.wix.com/media/5df431_05f6704a7ce2e413a548d39e015d17fd.jpg_1024>.

Sausalito, CA. Digital image. Liveinmarin.com. Liveinmarin.com, n.d. Web. 1 Oct. 2012. <http://liveinmarin.com/uploads/images/Sausalito_Hillside_from_the_water_brighter.jpg>.

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