San Antonio City Council Passes Ordinance Regulating Short-Term Rentals

City Council approved San Antonio’s first ordinance to regulate and license short-term rentals Thursday on an 8-2 vote.

The rules, which will apply to more than 2,000 short-term rentals (STRs) across the city, set permit requirements and installed fees for people who put homes, apartments, rooms, or other property up for rent on platforms such as Airbnb, VRBO, and HomeAway. The regulations also set limits on how many short-term rentals not occupied by owners can exist per block.

Councilman John Courage (D9) and Councilman Greg Brockhouse (D6) voted against the ordinance. Courage said the rules aren’t strong enough to prevent so-called “hotel districts” from cropping up in residential neighborhoods, while Brockhouse said the measure interfered with property rights. But most Council members agreed that the rules are a positive first step and can be adjusted as needed in the future.

Councilman Cruz Shaw (D2) was not present for the vote but told the Rivard Report he would have voted to approve the ordinance.

“It’s important that we find the right balance … [an ordinance that] allows the permitting of STRs while protecting our beautiful neighborhoods,” said Councilman Roberto Treviño (D1), who worked closely with City staff to fine-tune the rules that were developed over the course of a year by a 24-member volunteer task force. Most STRs are located in District 1.

“The sharing economy is here and we want to work through this,” Treviño said. “I want to protect our neighborhoods and preserve their character and culture.”

The new rules define and regulate owner-occupied (Type 1) and non-owner-occupied (Type 2) STRs differently. Type 1 units are allowed anywhere, as long as the owner lives somewhere on the property, but Type 2 units must follow density rules as an attempt to prevent the proliferation of STRs in residential neighborhoods.

Courage began reading a letter from a resident who outlined reasons to reject the ordinance. After 15 minutes, Nirenberg and City Attorney Andy Segovia asked Courage to voice his own comments and instead place the letter into the public record.

“I believe short-term Type 2 rentals adversely effect the nature and character of residential neighborhoods,” Courage said, adding that the proliferation of short-term rentals “reduces the availability of affordable, working-family housing, which is a main emphasis that this city has committed itself to.”

Courage motioned to amend the ordinance to prohibit Type 2 units in residential areas. None of his colleagues seconded his motion.

Under the new rules, about one-eighth of units on a block face can be Type 2 STRs and similar rules apply to multifamily buildings. There is a $400 appeals process through the City’s Board of Adjustment for Type 2 operators seeking an exemption from the density rules.

Click here to download the ordinance.

Existing Type 2 STRs will be allowed as long as owners submit newly required permitting information and register with the City to pay the required local hotel occupancy tax (HOT).

Such operators have a 90-day grace period to register, but will not be grandfathered in unless they’ve been paying the HOT.

STR operators already were required to pay the HOT before the ordinance was approved, and they still are, said Michael Shannon, director of the City’s Development Services Department.

One of the key things that the ordinance does is “stop the grandfathering,” Shannon said, and allows the city to start collecting the HOT it is due. Less than 15 percent of STR operators were paying the local HOT earlier this year, according to a Rivard Report analysis. The City will hire a consultant to find and register STRs, Shannon said, and create a user-friendly online system to pay the HOT.

That consultant will be selected later this month, City Manager Sheryl Sculley said, and will help the city collect back taxes going back four years.

“There is no free pass,” Sculley said. “We will not forgive past taxes.”

Lost revenue from HOT could cost the City at least $2.4 million this year, according to the Rivard Report analysis.

Brockhouse, who operates short-term rentals in another city, said he voted against the ordinance because it was an “overreach” of regulation that infringes on property rights.

“The more we regulate, the more we pass on costs [to taxpayers],” Brockhouse said, adding that he is supportive of basic permitting and collection of HOT. But the ordinance “steps way out of line and moves well past the original intention … into an over-regulating environment.”

The new rules also include penalties for neighborhood nuisances and prohibit all STRs from being used for events such as weddings and other parties. Housing units that received City incentives, such as large multifamily projects, are prohibited from hosting Type 2 STRs.

Those rules and others were suggested earlier this year by Treviño’s office.

“That made this ordinance, I think, more robust,” said Councilwoman Ana Sandoval (D7). She supported the ordinance, but echoed Courage’s concerns about STRs potentially taking over affordable housing stock.

“I think that’s something we need to keep a close eye on,” Sandoval said.

Further changes and additions to the ordinance are possible, Treviño said. For instance, he said he’s looking into changing the density requirements for Type 2 STRs in non-residential areas to allow more.

City staff will take stock of how the new ordinance performs – or doesn’t – and bring it back to City Council for review in about six months, Shannon said.

“This ordinance isn’t perfect,” said Eastside resident Cullen Jones. “It will need to be adjusted as situations arise and climates change. … The STR ordinance offers neighbors, their neighborhood, and the responsible small business owners that operate within their neighborhood more protection and guidance than what they have currently.”

The ordinance “levels the playing field for small home-based businesses” and lets more residents participate in the STR industry as hosts, he said.

It also attempts to level the field for the hotel industry, said San Antonio Hotel and Lodging Association President and CEO Liza Barratachea.

“The ordinance provides an opportunity for a level playing field, which is better than no ordinance where there’s no accountability for [STRs],” Barratachea, who served on the task force, told the Rivard Report after the vote. She and the association would have preferred the ordinance as recommended by the task force, but support the current version, she said.

“[In the task force version], it takes a little more work to operate as a Type 2 rental and provides additional oversight for Type 2 operators,” she said. The task force recommended that all Type 2 be required to go through the Board of Adjustment process and higher fees.

The City received letters in support of the ordinance from Airbnb and HomeAway. Airbnb Texas Policy Director Laura Spanjian praised the mayor and City Council for implementing the regulations after an “inclusive and transparent process” that can serve as a model elsewhere in the state.

The Texas Legislature is expected to consider statewide regulations for STRs during its next session, said Assistant City Manager Carlos Contreras, and could use elements of San Antonio’s ordinance as an example.

“It’s been a long time coming,” Nirenberg said before the vote. “We’re finally here with I think a worthy six-month pilot that will be tweaked, no doubt, but we’ll end up in a place where I think we’ll be proud to have a well-crafted ordinance that protects everyone’s interests.”