Austin City Council to Alter the Conditions of Short-Term Rentals Ordinance

Airbnb VRBO Austin Texas[Alvin Brickman for Metrosetter Wire]

UPDATE (10/19/2012): The Austin City Council has officially reduced the notification fee to $50. Read more here.

As reported by Wells Dunbar of KUTNews.org, the Austin City Council is considering returning to the lawbooks to alter the conditions of the ordinance on short-term rentals that went into effect only two weeks ago on October 1 (2012).  Since then, only 19 licenses have been issued in the city, which means that the vast majority of people who rented their property during the Austin City Limits Music Festival, which ended on October 14, were breaking the law. Despite this, Code Compliance Director Carl Smart’s office — while receiving several complaints — has confirmed only one violation of the ordinance (Marshhood, 2012). According to KVUE.com, the Austin City Council could reduce the notification fee (now $241) to $50 (Kovar, 2012).

Some speculate that the vast majority of short-term renters in the city simply aren’t aware of the newly required permit, but responses to similar difficulties in Rollingwood (a mere 5 miles away from Austin) two years ago indicates that they are acutely aware of it.

So are the 1,481 short-term renters who haven’t acquired a permit (Statesman.com reported that there are an estimated 1,500 short-term rental properties in the city) weighing the costs of getting caught and judging that the immediate benefits are worth the risk? That’s what it looks like. Julie Holden of Austinist.com writes:

“The other day, sitting at the ThunderCloud Subs on Bee Caves Road right smack in the heart of Rollingwood, we couldn’t help but overhear the fat cats one table over from us, noshing and chatting about the scads of money they’ll make by renting out their starter castles during F1 weekend. “Yeah, just slap up an ad on Craigslist!” But wait … the City of Rollingwood has had an all-out ban on short-term rentals since 2010. Violators can be fined as much as $500 per day. Ah, no bother. The potential income makes it worth the risk” (2012).

Those who violate the ordinance (and are caught) in Rollingwood would be charged with a Class C Misdemeanor and — as stated above — a fine of up to $500 a day, the equivalent of being cited for public intoxication, underage drinking, or drug paraphernalia; a Class C Misdemeanor in Texas can, however, be forever expunged from one’s permanent record after two years. With that said, I don’t know anyone who would treat the possession of drug paraphernalia so lightly as to completely ignore that laws exist prohibiting it. To put it another way, to publicly list one’s property online, cognizant of the legal penalties, is not unlike soliciting drug paraphernalia on Craigslist—if one doesn’t want to be caught by authorities, it seems counterintuitive to publish one’s illegal activity on a public website for everyone to see, no? And making it doubly risky is that all it would take is for a neighbor to file a complaint after observing short-term tenants coming and going from one’s property.

Carl Shephard, a Westbank resident and co-founder of HomeAway, said (in 2010) in response to the ban in Rollingwood, that “It would be better to regulate vacation rentals. Outright banning drives practices underground, and it is not good for travelers or the community” (Rolards-Forbes, 2010). Two years later, we can see that even the seemingly astringent, all-out banning of such rentals lacks the dissuasive force to drive practices underground; on the contrary, practices are very much in the same place they always were — on online sharing sites.

Actually, Rollingwood was grappling with exactly the same problems two years ago; for example, the problem of  enforcing restrictions on rental agreements entered into before an ordinance has taken effect. Shephard, in defense of Rollingwood’s short-term renters in 2010, “pointed to an ordinance banning short-term rentals in Venice Beach, Fla,. that resulted in a lawsuit [concerning rental agreements entered into pre-ordinance] that cost the city thousands of dollars…. The ordinance was eventually rewritten … to regulate rentals, rather than ban them outright.” (Robards-Forbes, 2010). Likewise, Statesman.com reported last week about a woman who was concerned about the lack of a grace period in Austin’s new regulations.   In short, short-term renters two years ago were citing the same objections to the outright banning of short-term rentals as Austin citizens are now citing as objections to their mere regulation.

Is there such thing as a regulation on short-term rentals that will satisfy renter’s demands? Or will they continue to rent their properties illegally even after a fee reduction?

Austin City Council member Kathie Tovo expressed her concern: “If they feel the fees are too high to make having a short term rental a financially viable option, they shouldn’t do it. But we need to recover the costs that are appropriate for the city and not just be responding to citizens who would rather pay less” (Dunbar, 2012).

Below are the seven areas the item’s sponsors want reconsidered, as listed in the resolution:

1. Review the fee schedule for short-term rentals;

2. Consider a different method of notification that provides the necessary information to those who need it, is easily administered, and does not cost as much as mail;

3. Consider allowing the public to register online instead of requiring a visit to a city facility;

4. Consider clarifying or eliminating the short-term rental affidavit entirely in favor of a list of expectations and safety requirements;

5. Review the requirements for suspension and revocation of licenses and propose appropriate improvements to the enforcement process;

6. Consider eliminating the requirement that Type 1 short-term rentals must include the whole dwelling unit; and – lease a single room

7. Provide clarity on whether a short-term rental owner must register before one can advertise their property, or whether registration can happen after a reservation has been made.

Maybe the Austin City Council should have considered the response to Rollingwood’s ban two years ago before they made the application process so expensive and meticulous. They may have  been able to save the money that will now go into rewriting the ordinance.

Works Cited

Dunbar, Wells. “Council Considers Changes to Short-Term Rental Rules, Fees (Updated).”KUT News. KUTNews.org, 16 Oct. 2012. Web. 16 Oct. 2012. <http://kutnews.org/post/council-considers-changes-short-term-rental-rules-fees-updated>.

Holden, Julie. “Short-Term Notice for Short-Term Rental Registration.” Austinist. Austinist, 12 Oct. 2012. Web. 16 Oct. 2012. <http://austinist.com/2012/10/12/short-term_notice_for_short-term_re.php>.

Kovar, Heather. “Austin Homeowners Wanting to Rent Their Houses May Get Fee Break.” Kvue.com. KVUE.com, 16 Oct. 2012. Web. 18 Oct. 2012. <http://www.kvue.com/news/Owners-Planning-to-Rent-out-their-Austin-homes-may-get-a-registration-fee-break-174478191.html>.

Marshhood, Farzad. “Two Weeks In, Some Council Members Seek Changes to Short-term Rental Rules.” Statesman.com. Statesman.com, 17 Oct. 2012. Web. 18 Oct. 2012. <http://www.statesman.com/news/news/local-govt-politics/two-weeks-in-some-council-members-seek-changes-to-/nSgJh/>.

Robards-Forbes, Esther. “Rollingwood Bans Short-term Home Rentals.” Westlake Picayune. Westlakepicayune.com, 23 Sept. 2010. Web. 16 Oct. 2012. <http://westlakepicayune.com/2010/09/23/rollingwood-bans-short-term-home-rentals>.

Images Cited

Monopoly. Digital image. KUT News. KUTNews.org, 16 Oct. 2012. Web. 16 Oct. 2012. <http://mediad.publicbroadcasting.net/p/kut/files/201210/monoploy-wwworks.jpeg>.

Rent. Digital image. Austinist.com. Austinist.com, 12 Oct. 2012. Web. 16 Oct. 2012. <http://austinist.com/attachments/beeswing/forrent_1qXKE.jpg>.

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