Council: Short-Term Rental Ordinance Not Yet ‘Fully Baked’

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City Council B Session.

Bonnie Arbittier / Rivard Report

City Council listens to a presentation by City Manager Sheryl Sculley.

San Antonio’s City Council got its first collective look at rules proposed for short-term rentals Wednesday. For the most part, Council members did not like what they saw.

Mayor Ron Nirenberg directed City staff to continue to collect feedback and research other policy options before presenting to the Council’s five-member Governance Committee and coming back to the full Council.

As the City’s experience with rideshare proves, it “takes time and care to find the right balance,” Nirenberg said. “It’s going to be a little bit of a policy slog between now and then.”

The proposed ordinance compiled by City staff and a stakeholder task force to regulate home and room rental platforms like Airbnb, Home Away, VRBO, and others would establish fees and inspections for rental units, make it more difficult to start a rental at which the owner does not live, and “grandfather” in some established units.

Implementing and enforcing the proposal would require hiring seven more City employees.

After an estimated 700-800 hours of meetings between staff and the task force, Development Services Department Director Michael Shannon told Council members they arrived at what staff thought was a fair compromise between the interests of preserving housing stock and the emerging local homesharing industry. There are more than 2,000 active Airbnb units in San Antonio, Shannon said, and likely hundreds more that use other platforms.

There is a wide variety of opinions about how San Antonio should handle regulations – including no regulations, Shannon said. Some cities have less onerous rules than the ones proposed here and some have more restrictive rules, he said, but the key lies in having  “something that’s balanced. … This is our best attempt to get as close to consensus as possible.”

Click here to download Shannon’s presentation to Council.

Director of the DSD Michael Shannon.

Scott Ball / Rivard Report

Director of the Development Services Department Michael Shannon

But several Council members pointed out that what works in one part of the city may not apply in others, and the property rights of both property owners (or short-term rental operators) and their neighbors have to be more balanced. Councilman Roberto Treviño (D1), whose downtown district hosts the most short-term rentals in the city, will work with City staff and his colleagues to find a compromise.

“We hear about this every day,” Treviño said, adding later that he is “very hopeful that we can get past these hurdles.”

In neglected parts of town like the Westside where communities struggle with vacant lots and homes, a short-term rental could be seen as a positive investment – a welcome improvement to the district, Councilwoman Shirley Gonzales (D5) said. She suggested that the $200 registration fee and $100 three-year renewal fee could be prohibitive for lower-income property owners who want to supplement incomes by renting out rooms, garage apartments, or so-called “granny flats.”

Giving discounts to legacy home owners, senior citizens, and others susceptible to increasing property appraisals could help incentivize neighborhood investment, said Gonzales, who represents much of the Westside. Councilman Cruz Shaw (D2), who represents the Eastside, agreed and said he has seen the impact firsthand in the near-Eastside historic Dignowity Hill.

“It’s really turning around communities,” Shaw said. “A lot of these homes were vacant lots or distressed homes.”

But there is “still too much up in the air” for her to support the ordinance as is, Gonzales said.

Other neighborhoods, especially historic districts such as Lavaca and King William in Southtown, have what some have called an overabundance of short-term rentals – occupying nearly all homes on some street blocks. Several neighborhood associations have called for more restrictive rules than those found in the proposal, especially for non-owner-occupied (or “Type 2”) units.

Legally, historic districts’ overlays cannot limit how homes are used, Shannon said, but the City might be able to create some other kind of overlay to establish areas with increased restrictions or incentives for short-term rentals.

The proposed ordinance has been reviewed and approved by the Board of Adjustment, Planning Commission, and Zoning Commission, with amendments.

“[Short-term rentals] allow you to pretend you’re a local,” Councilwoman Ana Sandoval (D7) said, but too many in one neighborhood can start to feel “like a hotel or a theme park.”

Sandoval joined Councilmen Rey Saldaña (D4) and Greg Brockhouse (D6) in expressing interest in finding a solution that wouldn’t “blanket” the city with one set of rules for diverse neighborhood challenges. The legalities of that will be part of Shannon’s and his staff’s research in the coming weeks – and possibly months – before returning to City Council.

“Not all Council districts are created equal” when it comes to short-term rentals, Saldaña said, adding that he will lean heavily on advice from Treviño, who already has his own list of proposed amendments. Those include changing the way density of short-term rentals is measured, how permits are awarded to properties (he would like to see them awarded per unit), prohibiting rentals from being used as event spaces, and forbidding short-term rentals in City-incentivized housing projects.

“We need more time to stew on this so we can fully bake it,” Saldaña said.

The bedroom in Jen Morey's Airbnb in Southtown.

Scott Ball / Rivard Report

A bedroom in an Airbnb in Southtown.

In the meantime, short-term rentals can and will continue to operate and likely proliferate throughout the city – but most operators aren’t paying the required hotel occupancy tax. Airbnb and other platforms automatically pay state taxes, but there is no mechanism for registering short-term rentals, so the local tax is hard to collect, Shannon said.

Brockhouse, who operates a non-owner-occupied short term rental in New Orleans, suggested all existing units be “grandfathered in.” The proposed ordinance would require operators who are not paying the local hotel occupancy tax to go through the application process.

He cautioned against overreaching with “onerous regulations” that could end up in court, as Austin’s short-term rental ordinance has.

Councilman Manny Pelaez (D8) delivered the harshest critique of the proposed ordinance.

“I worry about us getting involved in people’s property rights,” Pelaez said, noting that most neighborhoods in his district already prohibit short-term rentals via homeowner associations and other City ordinances regarding noise, trash, and parking.

“What the heck are we solving?” he said. “I can’t think of anything less Texan than telling people who they can or can’t rent their property to.”

Councilman John Courage (D9) said he is concerned about the “social fabric” of neighborhoods. Taking long-term neighbors from a neighborhood impacts the property rights of people who bought homes there in the first place, he said.

Some Council members said they received a host of suggested changes from neighborhood associations that they will forward to Shannon for review.

Shannon said he welcomed Council members’ feedback.

“This is part of the process,” Shannon said. “I’m actually encouraged by where we’re at … we don’t want to do something that’s wrong. We want to make sure that what we do is eventually right.

“It’s just a matter of deciding on what that ‘right’ is.”

During the Texas Legislature’s most recent session, a new state law regarding short-term rentals almost came to fruition but eventually was halted in a House committee. That law, largely supported by short-term rental platform companies, would have overridden almost all local rules.

“We fully expect that to be discussed at the next legislative session as well,” Shannon said.

8 thoughts on “Council: Short-Term Rental Ordinance Not Yet ‘Fully Baked’

  1. And non owner occupied rentals and owner occupied rentals should be taxed at a different rate…in the proposed regulation they have them taxed (city tax, not including Airbnb fee, state tax and federal tax) at the same rate of 10.5%. Owner occupied rentals should be taxed at a much lower rate.

  2. And application fees and taxes should not apply to temporary rentals for a month or more. San Antonio is starting to get winter Texans who rent apartments for 3-5 months each winter. I met two couples last year–one from Kansas City and another from St. Louis–who rented apartments in King William for a short period by the month and plan to return yearly. Other cities have exempted units that are rented on a monthly rate, and San Antonio should do so, too.

  3. This asinine debate on restrictions has been going on for a year and still “there is no mechanism for registering short-term rentals, so the local tax is hard to collect”. In the past year, what action has the City taken to set up such a mechanism. I rent out an Airbnb room and happily pay the state tax automatically. I will pay the City too as soon as there’s an individual-friendly process. I shouldn’t need to hire an accountant to pay my piddling amount.

  4. Some Council members want to act like this City does not have zoning which already determines what a property owner can do with their property. There are several residential zoning classifications from single-family to high density multi-family. There are also commercial zones for hotels and other short term rental uses. Running a business in a residential zones is usually prohibited. Why is running a small hotel any different than operating a law office?
    Those of us that bought or built homes in near downtown neighborhoods believe that having residents live in the city is a very positive thing. Now we are being penalized by higher taxes, not only because we have established livable communities, but also by being taxed on the market value of properties being used for income generation. The short-term rental properties should have to apply for a new zoning district that would allow the neighborhood to protest this change of use, and the Appraisal District should tax short-term rental at a higher value than single family and long-term rental properties. This make sense since a short-term rental has the potential to make much more money than a long-term rental.

    • Texas courts have already established that short-term rentals are a residential use, not a commercial use. And it seems you do not understand how residential property values are assessed. It has nothing to do with income generation.

  5. Hello Lewis. I was at the meeting yesterday and the councilman Pelaez had the gentlemen running through all the ‘stats and info’ slide show revisit a couple slides and asked a very direct question about property value increases, noise complaints, and police calls due to STR. The gentlemen who compiled all the research very clearly stated that there has been NO changes in those categories due to STR in any and all metrics investigated. If you have an unruly STR near you, I understand the complaints you would have. However, your concerns about property values increasing are not at all tied to STR

    • This suggests that safety is the issue. I assure you, it is not. The issue is our neighborhood becoming a hotel zone, instead of a community.

      THose of us who have lived in the inner city for years lived here when everyone else thought it was “unsafe.” Most of us aren’t worried about yards being maintained and “strangers.” We’re worried about no long having a community in our 130 year old neighborhood. In a community with a significant lack of SFH, and 6 houses in a row are STRs, those are families have no where to go.

  6. Here’s another perspective. I risked my own money and took the worst property on the block and transformed it into the best one in a “deferred maintenance” neighborhood. My property has to be nearly perfect for it to keep getting booked. As a short term rental operator, I worry that the existing neighbors’ junky yards, noisy parties, and visits from the authorities may make my business less than desirable. The city should be thanking me that I’ve cleaned up an eyesore (which, by the way, had multiple ordinance violations for years, but no one did anything about) and have significantly raised my property value. If anything, the neighbors need the existing zoning and regulations enforced, not more regulations on me!

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