Short-Term Rentals Debate to Continue at City Hall, State Lege

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Keith Jordan stands outside of his property that he rents out via VRBO.

Bonnie Arbittier / Rivard Report

Keith Jordan stands outside of his property that he rents out via VRBO.

While San Antonio wrestles with formulating its own rules for short-term/vacation rental properties and platforms like Airbnb and HomeAway, the Texas Legislature is considering a bill that would limit the reach of local regulations.

Senate Bill 451 by State Sen. Kelly Hancock (R-North Richland Hills), which passed the Senate last week with a 22-9 vote, would prevent cities from banning short-term rentals outright and narrow certain restrictions, overriding some existing rules in Austin , Fort Worth, and other cities. Supporters of the bill say it would protect property rights while allowing for some local control. Critics say the one-size-fits-all approach would lower property values and that short-term rentals disrupt neighborhood continuity.

Locally, a series of well-attended stakeholder meetings continued Monday afternoon as City officials heard from hosts, renters, and neighborhood association leaders with drastically different opinions on how, if at all, short-term rentals – residential properties offering rooms for rent for periods of less than 30 days – should be regulated.

“We’re still in the fact-finding process … no decisions have been made,” said Interim Director of the City’s Development Services Department (DSD) Michael Shannon. “We certainly are not against short-term rentals.”

A preliminary draft of an ordinance that includes permitting, parking and tax requirements, and property inspections was far too onerous, hosts said. Other stakeholders said such rules would keep short-term rentals safe and level the playing field for traditional lodging companies.

City staff has been looking unofficially into how other cities approach balancing the demand for diverse lodging options with neighborhood concerns for more than two years, said DSD Policy Administrator Michael Dice. But since the first two stakeholder meetings this year, city officials have pretty much scrapped the divisive draft ordinance, opting instead to have a 24-member task force take on each ordinance section, definition, and issue “more holistically.”

“We’re basically at step zero,” Dice said.

The task force – which includes rental hosts as well as neighborhood associations, Council district offices, real estate and tourism industry representatives – will hold a public meeting once per month on the fourth Tuesday for the next six months. They will discuss a few issues at a time and, if consensus is reached, bring those issues to general meetings also held once per month from July through November.

The tentative schedule of task force and general meetings will be available online here.

Whatever these discussions lead to policy-wise, Dice said, the task force will need to “maneuver our discussion based on what the State gives us to work with.”

A guestbook full of thank you notes is a permanent fixture in Jennifer Morey's Southtown Airbnb.

Scott Ball / Rivard Report

A guestbook full of thank you notes is a permanent fixture in Jennifer Morey’s Southtown Airbnb.

After Austin enacted a vacation ordinance in 2012, the city’s downtown experienced a boom in short-term rentals that were not owner-occupied. People were buying properties for the sole purpose of renting them out on Airbnb, HomeAway, or VRBO (Vacation Rentals By Owner). The latter two are owned by Expedia.

The city then capped the number of short-term rentals with no live-in owners. This restriction, as well as Forth Worth’s rule that allows bed and breakfast permits to be given only to homes built before 1993, would be void if Senate Bill 451 is approved by the House and signed by Gov. Greg Abbott. The law would cap registration and permitting fees for short-term rentals at $100.

San Antonio has fewer short-term rental properties than other cities of its size, but neighbors are starting to notice them. Under current rules, property owners are required to pay hotel occupancy taxes (HOT), but not required to register with the City or obtain a permit.

“We started receiving phone calls from people in neighborhoods wanting to know what the City was going to do about the fact that these businesses were now being conducted right next to their homes,” Councilman Mike Gallagher (D10) told the Rivard Report last week.

The predominant complaint was parking, Gallagher said, but there were also concerns about noise, trash, and “strangers, people [neighbors have] never seen, coming in and out of the house next door.”

Some, including Gallagher, have suggested that Airbnbs should be considered commercial use and, therefore, require rezoning for a variance or mixed-use status – an arduous process.

Barbara Matthews, who has lived in her Terrell Heights home for 16 years, said she now lives next to a house that “functions like a full-time hotel.”

Matthews said the property owner doesn’t monitor the guests, and she’s uncomfortable not knowing who is staying next door from one day to the next.

“The people with small children who live nearby are even more concerned about their kids’ safety with so many strangers around,” she told the Rivard Report. “Our neighborhood has had problems with thefts and robberies, and we are watching for strangers. Well, this [short-term rental] brings a string of strangers into the neighborhood constantly whose screening was little more than to see if their credit card works.”

Most short-term rental platforms do not perform background checks on hosts and guests, instead relying on user reviews of experiences.

But many neighbors and hosts say the guests actually increase security in neighborhoods.

“The more eyes on the street at different times of day, the better,” said Jennifer Morey, who rents out a small, detached studio behind her house in King William Historic District. The revenue from Airbnb guests lets the stay-at-home mom remain in the neighborhood, which has higher property values and taxes every year, she said.

“It really helps our neighborhood stay safe, be vibrant, and keep money locally,” said Morey, who is also on the task force.

The typical Airbnb host in San Antonio earns $7,500 per year. Combined, they hosted 80,000 guests from all over the world in 2016, bringing an economic impact of an estimated $42 million.

As for parking and noise violations, Morey said, there are existing codes and laws that address those issues no matter who violates them: homeowners, renters, or short-term vacationers.

“Parking is going to be a major discussion point” based on meetings so far, Dice said, as inner-city, historic neighborhoods such as King William are experiencing increased issues with parking.

Hundreds of Hosts Could Owe Thousands in Taxes and Fees

Only 150 out of an estimated 1,000-plus short-term rentals in the city actually pay the required HOT, according to the City’s Finance Department. Once registered, the City could actively pursue retroactive taxes, arrears penalties, and interest from hosts who have not been paying taxes.

“We want to get everyone caught up,” said Margaret Villegas, the City’s assistant finance director, but resources, namely the Compliance Department, are limited. “It would take a long time to audit a wave of [newly-registered short-term rentals].”

One homeowner I spoke to in the River Road neighborhood has never paid any taxes related to her Airbnb property. She’s not entirely opposed to paying something in the future, but “I’d be in big trouble if I got [charged] retroactively,” she said.

She has been renting out a small studio in her back yard for six years. She hosts a guest about 20 days out of a month.

“For a lot of us it’s just survival,” she said. “It’s a good way to help make ends meet.”

Leveling the Playing Field

“Short-term rentals are here to stay. They are part of the [tourism] landscape,” San Antonio Hotel and Lodging Association President and CEO Liza Barratachea told the Rivard Report. “Our only concern is that we consider them a lodging business … so they should be contributing [hotel occupancy taxes]. Many of them are, many are not.”

Every room charge in San Antonio is subject to local and regional HOT totaling 16.75%: the City collects 7%, Bexar County collects 1.75%, the State collects 6%. An additional 2% is charged for the Convention Center. These funds are used to promote the tourism, convention, and hotel industries and often translates into infrastructure, facilities, and amenities that locals enjoy.

El Tropicano Hotel.

Scott Ball / Rivard Report

The El Tropicano Hotel is located at 110 Lexington Ave.

“HOT is a really important factor for quality of life,” Barratachea said, citing the Tobin Center for the Performing Arts, the San Antonio River reach expansions, the Henry B. Gonzalez Convention Center, and others as examples of projects that received HOT funding. “There are so many things in our community that HOT has helped to underwrite.”

Portions of the the local tax go to Visit San Antonio, the independent nonprofit that advocates for the city worldwide, convention facilities, history and preservation, and public art.

Short-term rental operators benefit from these activities just like hotels do, said Barratachea, who is also a member of the short-term rental task force. She noted that hotels are subject to random health and safety inspections.

“It’s a consumer’s world: they can choose to stay wherever they want to,” she said. “As a consumer, I think [inspections are] a good idea.”

The Hotel and Lodging Association is opposed to the State legislation that would take away local control, she said. “We’re glad that San Antonio is having a discussion …. [and would] hate for this policy to be mandated by the State.”

These pie charts breakdown the hotel occupancy taxes collected by the City, County, and State.

Courtesy / City of San Antonio

These pie charts break down the hotel occupancy taxes collected by the City, County, and State.

Airbnb announced earlier this month that, after one year of discussions with State officials, it will begin automatically paying the State HOT in Texas starting May 1. The company estimates that Texas would have received an estimated $8 million in HOT funds last year.

Local arrangements have yet to be made with the leading short-term rental platform, but Airbnb Public Policy Director Laura Spanjian told the Rivard Report that they’re ready to implement an arrangement as soon as San Antonio is ready.

Airbnb has tax agreements with almost 300 municipalities and 20 states, Spanjian said.

“We want to work on reasonable regulation … Every city is different,” she said.

The city of New Orleans, for instance, caps the number of days per year that a property can be available on the platform to prevent too many residences from becoming full-time short-term rentals.

While that isn’t a widespread issue in San Antonio right now, Spanjian said, “[it] may [be] in the future and we’re not going away. We can always come to the table to help with San Antonio’s issues. … We’re just another option, we’re not trying to put hotels out of business” or displace residents.

Keith Jordan proudly displays a collection of flags and badges from his days serving in the U.S. Military on the wall of the home he rents out via VRBO.

Bonnie Arbittier / Rivard Report

Keith Jordan proudly displays a collection of flags and badges from his days serving in the U.S. Military on the wall of the home he rents out through VRBO.

U.S. Air Force Senior Master Sgt. Keith Jordan retired from the military in 2014 and now works in cybersecurity at a local firm. He rents out an immaculate house, in which he does not live, near Lackland Air Force Base almost exclusively to members of the military and their families through VRBO.

His busiest weeks are surrounding graduation ceremonies, but he has also rented the four-bedroom, seven-bed home for other purposes, including baby showers and even a 100-year-old’s birthday. He’s careful not to rent the house out to people looking to party.

Jordan was more open to inspections than other hosts I talked to.

“I don’t have anything to hide,” he told the Rivard Report last week.

Properties like Jordan’s and others are not seen as bad actors by their neighbors, but not all property owners maintain their properties as well as he does. Other neighborhoods, especially historic districts, have concerns about absentee property owners.

“King William is losing its housing stock to businesses,” King William Association member Rose Kanusky said during the meeting. Almost two dozen Airbnbs operate in the King William area, according to a search on the website. There are also several traditional bed and breakfast operations in the area.

And this isn’t the first time these issues have come up, Kanusky said, noting that the City already developed a Bed and Breakfast Ordinance after several years of work in 1999.

Bed and breakfasts are required to be owner-occupied, while many short-term rentals, are not. Many hosts have called for a “tiered” ordinance that deals with the many different types of short-terms rentals: some rent a private room within a house/apartment, some an entire house/apartment, and the owner may or may not live in either. There have been some hosts that rented out recreational vehicles and even a porch hammock, City officials said.

“Different tiers or levels of requirements for those different property and owner occupancy types …. will likely be an important part of anything we do,” DSD Director Shannon said.

The initial timeline for City Council consideration was slated for May, but the process has been significantly slowed to allow public input, he said, adding that city officials would rather “get it done right the first time” than get it done fast.

“I’m impressed so far with how the City is coming to the table,” Morey said. “They really seem to want to listen to the citizens … They’re open and they want to make it work.”

5 thoughts on “Short-Term Rentals Debate to Continue at City Hall, State Lege

  1. Why does using a website/app make them different from any other bed and breakfast? Regulations should be the same.

    Turning as much available housing as possible into short-term rentals will make San Antonio less affordable to those looking for the fewer long-term rentals on the market. It only drives the perception of San Antonio as a tourist city. Just ask New Orleans.

    Blah, blah, blah, sharing economy, blah, blah, blah.

  2. In response to Mr. Pate’s observation:

    The original B&B ordinance (# 65513) adopted in 1987 defined a B&B as “A building other than a hotel where lodging for persons is provided for definite periods, usually overnight, for compensation pursuant to previous amendments.” It appears that this definition was lost when the city adopted the Unified Development Code in 2015 (# 2015‐12‐17‐1077).

    Therefore, according to city logic, “short term rentals” are not defined in the code or listed on the list of permitted uses, and they can’t be the same as a B&B (which is likewise not defined but certainly listed as a permitted use). One would think if “short term rental” is not on the list of permitted uses, then they would not be permitted. But using city logic, if the use is not on the list, then it can be done.

    The original B&B ordinance was amended (#89722) in 1999 after many years of public discussion about the exact same issues I keep hearing now about the “sharing economy.” Nothing is new! Here’s a link to the city’s records summarizing the debate (a report and power point following the text of the 1999 amendment):

    https://webapps.sanantonio.gov/filenetarchive/%7B5120E469-9E84-472F-B7E2-7065AD0D9E45%7D/%7B5120E469-9E84-472F-B7E2-7065AD0D9E45%7D.pdf

    • Short-term rentals fall under the definition of hotels in the city municipal code of ordinances, which defines “hotel” as follows:

      “Hotel shall mean any building or complex of buildings, trailer, converted railroad pullman car, or any other facility in which the public may, for a consideration, obtain sleeping accommodations. The term shall include hotels, motels, tourist homes, houses or courts, lodging houses, inns, rooming houses, trailer houses, trailer motels, parked railroad pullman cars used for sleeping accommodations and not involving the transportation of travelers, dormitory where bed space is rented, apartments not occupied by permanent residents, and all other facilities where rooms or sleeping facilities or space are furnished for a consideration. The term hotel does not include hospitals, sanitariums or nursing homes. ”

      https://www.municode.com/library/tx/san_antonio/codes/code_of_ordinances?nodeId=PTIICO_CH31TA_ARTIVHOOCTA

  3. To me it is all about having the owner on site. I have no problem with with folks renting their studio in back or even their house in front if they instead live in the studio. If we allow STRs with owners far away or worse STRs on a commercial scale then we will really lose control of our communities. I live in Southtown which is very vulnerable to STRs since we are so close to the River Walk, BlueStar, South Alamo etc. This is a very lucrative area to own STRs. I can see living in Southtown becoming like being a permanent resident in a tourist resort. Please, let’s limit STRs to ones where we have owner on site.

  4. It blows my mind why this is so hard for the city to decide on. Owner occupied short-term rentals should be taxed if they have more than “x” number of rooms for rent, say 3 or more. Non Owner-occupied homes should be zoned commercial and operated like a hotel.

    All this crap about the “strangers” in the neighborhood is just a bunch of children complaining. Your neighbor of 20 years could be a serial killer and you wouldn’t know it.

    Noise, trash and all that is still regulated by the police, just like if your neighbor were being rowdy.

    Parking is a separate issue the city is already working on.

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