Zoning Commission Amends, Approves Short-Term Rental Rules

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An Airbnb home in Dignowity Hill

Bonnie Arbittier / Rivard Report

Homeowners looking to rent out spare rooms or entire homes are required to register with the City and pay hotel occupancy taxes – but few do.

The City’s Zoning Commission on Tuesday voted 10-1 in favor of a proposed short-term rental ordinance after about three hours of community testimony and commissioner discussion.

The controversial rules that would regulate so-called “homesharing” platforms such as Airbnb, VRBO, and HomeAway in San Antonio will be presented to City Council, which will make the final decision.

Commissioners amended the ordinance with language that could make it harder for non-owner-occupied short-term rentals to open up near established bed and breakfasts.

Council members will have recommendations from the Board of Adjustment, the Planning Commission, and now the Zoning Commission to consider in their deliberations on the short-term rental ordinance. City staff has not yet determined when Council will be briefed on the proposal or when it will vote. Council members on the Community Health and Equity Committee suggested in January that they need more time to speak with constituents and familiarize themselves with the issues before taking a vote.

Click here to download the draft ordinance.

The rules include taxes, fees, applications, and basic safety inspections that would be required for owner-occupied and non-owner occupied properties on the short-term rental market. The process for the latter, called “Type 2” in the ordinance, is more expensive and complicated for property owners – that’s where most of the concern lies. Someone renting out a spare room or garage apartment doesn’t alarm as many neighbors as having an entire home or apartment up for rent every day does.

The draft ordinance was produced by a stakeholder task force that was formed more than one year ago after former City Councilman Mike Gallagher (D10) requested regulations for the emerging industry.

The City estimates there are anywhere between 1,500 and 2,000 short-term rentals in San Antonio, Development Services Department Policy Administrator Michael Dice told commissioners, and that number continues to grow.

Some say short-term rentals take homes and apartments out of the city’s housing stock, especially in historic districts, and allow commercial uses to creep into neighborhoods. Supporters point to the significance of property rights, especially in Texas, and cite investment in short-term rental units that would otherwise be derelict.

A total of 42 citizens signed up to speak during the meeting, and at least a dozen more came to listen in the crowded board room.

Several representatives from the San Antonio Board of Realtors told commissioners that the rules regarding Type 2 rentals were onerous and would divert real estate investment from San Antonio to other cities.

Margaret Leads, resident and King William Association board member, said the Type 2 model is altering the “essential character” of the historic neighborhood.

“I would not want a motel to replace my neighbors,” Leads said.

Anita Ortiz does not live at the downtown properties she lists as short-term rentals, she said, but she would be “forced to sell” if she tried to put it on the long-term rental market at an affordable price.

Under the proposed regulations, new non-owner-occupied listings in residential areas would have to be approved by the Board of Adjustments and its owners would have to pay a $400 fee for the special exemption process. Existing Type 2 listings would be grandfathered in as long as they are registered with the City and pay local Hotel Occupancy Taxes.

Commissioners grappled with specific language in the ordinance regarding property lines, rental density, parking, and other technical details for hours.

After returning from an impromptu executive session to discuss legal matters, Commissioner Patricia Gibbons (D9) suggested that only Type 2 rentals be regulated.

“If you’re in a house and you’re elderly and you need extra income, you [could board someone] for extra income,” Gibbons said, adding that the proposed fees could jeopardize such homeowners’ income.

But a majority of her colleagues disagreed and voted down Gibbons’ motion to remove all mention of Type 1 owner-occupied rentals. Gibbons cast the sole vote against approval of the recommendations Tuesday.

There will always be concerns about how this policy will affect homeowners and renters, said Commissioner Joe Nix (D10), but the ordinance “may be adjusted in the future as things develop. … I’m willing to give it a chance.”

City Council could approve the proposed ordinance as is, amend it further, or reject it altogether.

 

Correction: The District 9 commissioner’s name is Patricia Gibbons.

This article was originally published on Feb. 6.

31 thoughts on “Zoning Commission Amends, Approves Short-Term Rental Rules

  1. The name is Patricia Gibbons, and I would’ve made the motion to throw the whole ordinance away, but dare I shock those who have a power obsession on its taxpayers. Anyone wanting to supplement income AND improve the neighborhood because no one else is are the ones getting punished many times over. Had an innovative idea not come along, many inner-city neighborhoods would still be sitting as unsolved problems.

  2. The city still hasn’t said how they plan on enforcing this. Will code compliance city employees open up accounts and look for rental properties?

    Will the app companies share any of the blame for allowing people to register without providing a license from the city?

    If I am a new homebuyer who wants to set up a STR2, how am I going to know that I have to register with the city? If I am ignorant of the law, am I exempt from it? How can the city prove I’m not ignorant of the law?

    How will taxes be assessed?

    Or is this whole ordinance based on the honor system?

    This may seem trivial, but these properties don’t put up “for rent” signs and can be hard to detect. And if this ordinance doesn’t have strong enforcement mechanisms, then you can bet it will be ignored.

    • Good questions. Look at how the Bed & Breakfast ordinance is enforced: not at all. Tax is assessed on gross income from the rental (including cleaning fees), at the hotel occupancy tax rate, 9% to the city and 1.75% to the county. Another 6% goes to the state coffers, too, and the city makes sure you are paying that as well.

    • Giles, there are probably a lot of laws that you are ignorant of that have nothing to do with short term rentals but instead on all other walks of life. If you break one of those laws, only the leniency of the government employee/officer citing you will determine if you get off the hook. If you come from a state that does not have laws on cell phone use while driving and a cop stops you in Texas for that offense, does that automatically mean you’ll only get a warning ticket? There’s a law in San Antonio about pets having to be fixed unless a special exemption is approved. If you are ignorant of that fact and buy a dog and never take him to the vet, that doesn’t exempt you from possible prosecution if your dog is picked up by the city and linked back to you as the owner. As most people know, ignorance of laws does not exempt you prosecution for breaking those laws.

      But don’t worry, if you go with AirBnB, they will make sure you can’t claim ignorance. That way if the city were to sue for an illegal short term rental, they would only sue you as the host since AirBnB did their part in notifying you of the requirement to register with the city. AirBnB let’s you know. When the State of Texas started requiring short term rental properties to pay the state Hotel Occupancy tax, AirBnB notified me months in advance via their website every time I logged on and then again monthly via email. But they went a step further, AirBnB collects the taxes for me and pays the State of Texas on my behalf. You don’t even get the opportunity to try to be dishonest about this. If you want to be shady about occupancy taxes, short term rental platforms aren’t the way to go because they’ll give you up to make sure their bottom line isn’t damaged.

      In San Francisco, home of AirBnB corporate headquarters, the platforms work with the city as required by city law/ordinance. The platforms must inform the city of the hosts within the city limits and the city verifies if the hosts are registered. If they are not, the city notifies the rental platform who then deletes the hosting account. And if the city chooses to verify any listing on a platform and find out it is not registered with the city, the platform is required to pay the city $1000/day/listing until they delete the listing.

      • by enacting onerous restrictions, inspections, and taxation on STRs, hotels are given a competitive advantage over the current conditions. they have the scale to clear the barriers to entry and distribute overhead costs across dozens or hundreds of rooms, whereas STRs do not. The application of Hotel Occupancy Tax to STRs is a recent, retroactive sort of decision and was an unintended consequence of the broad definition of Hotel in the City Code. The Hotel Occupancy Tax was created with traditional hotels in mind, not small time STRs.

        • So is there a middle ground where STRs could pay a modified version of the Hotel Occupancy Tax? Do you think that they city should still do safety/health inspections of STRs to make sure they are compliant with city and state statutes?

  3. District 9 has less than 4% of the 1700 short term rentals currently in neighborhoods surrounding downtown. Furthermore, seventy percent (70%) of the short term rentals on the home sharing platforms are entire homes. Like our senior citizens, these old neighborhoods surrounding downtown have rights too and they need to be protected!

  4. Definitely need regulations, and not just for downtown areas. People buying up properties for the sole purpose of renting them out short term takes away housing for people that live in or move into SA (hello population explosion every year) as well as creates neighborhoods that are basically hotels. This takes away from the community. This is a problem in D8 too. Personally I don’t want my neighborhood turned into a hotel. I want families to be able to move in, participate in our HOA since it’s voluntary, meet neighbors and make friends, and become community members.

  5. As a homeowner in an area affected by the proliferation of STRs, I believe that it would be derelict of me not to be concerned about new commercial activity. For one, our schools have been losing kids to the suburbs for decades, our school districts are still on the hook for paying teachers and paying for infrastructure in already old and aging buildings. However, a new group of folks have been engaging in revitalizing what were at the time transitional to depressed areas in our inner city. At the same time, there is city investment in the inner city, especially in a place like San Antonio, which has always been a destination city with an robust support economy (this goes back to the river as a source of food, commerce, travel and health). We have a beautiful and unique city with a diverse history that is lucky to have late 19th and early 20th century residential and commercial properties. STRs have become a vehicle for some restoration, but they are also heavy use, and are specifically geared towards a customer that is temporary (12hrs to 30 days). In some cases (type 1) the owner is on property and should anything arise, they are there for their neighbors and community (I am thinking typical neighborly disputes) and in other cases (type 2) the owner is not present. This is an issue if this owner hasn’t communicated with their neighbors should anything arise. There is nothing in this ordinance that prevents this type of owner from just being a commercial business. This is something neighborhoods and the city should be concerned with and I would add certainly it falls into their purview of the city council and government. Austin has a policy on the books as does Dallas. The same is true in many cities across the nation, Denver, San Diego, New Orleans, San Francisco, etc..

    My main concern is how the STRs affect the neighborhood makeup, specifically as it pertains to schools. Without families moving into this neighborhood, our schools will wither on the vine. . .

    • School districts still receive taxes from property taxes levied on homes in the district you doof. The benefit would be a better teacher to student ratio.

      • Jin, apparently you don’t read up on anything concerning school financing. If you did, then you would know that property taxes do not fully fund school districts. The state still has to put in their share, which still isn’t enough. The state only contributes money based on attendance so if a school loses kids, then they lose money as well. And as schools lose kids, then to save on money they let teachers go. This in turn does not let the teacher-student ratio improve.

  6. A couple of thoughts: This coming through zoning would fly in the face of an existing court ruling out of Austin. Almost certainly, the City will be sued. Since the actual studies show that the STR use is less negative in its impact than traditional rental (lower crime, fewer neighborhood disturbances, less parking impact) it really amounts to an assault on rental vs owner occupancy in areas where the owners don’t want renters of any type. It’s not legal — says the court. So there’s that to consider as well.
    With regard to neighborhood impact, while I support some density restrictions on STRs, it’s also true that owners of these properties pay into the school taxes without making demands on the schools (no kids, just money). That means more local dollars per student, not less. And there is lower use of other area infrastructure: If the home is occupied only 60% of the time, that’s 40% of the time that no parking is used on the streets in the area by those cars, etc.
    Everything comes with trade offs. Zoning only heard one “side” of the issue, because the usual loud neighbors from King William area turned out in force — a few of whom are literally protecting their own B&B operations from competition.
    We can strike a balance. But this isn’t it.

  7. Hopefully people realize that long term rentals can also be run by a “Business” and the landlords are not present. Maybe they have never had a horrible long term renting Neighbor. Those tenants have many rights and can continue to live there for months before the landlord can legally remove them.

  8. Having attended meetings involving the regulatory powers-that-be in the City of San Antonio (“COSA”) debate concerning the merits of the proposed Short-Term Rental (“STR”) DRAFT ordinance since early last year (i.e. first, the STR Task Force, then Board of Adjustments (BOA), next Planning Commission (PC), then the Community Health and Equity Council (CHEC) committee meeting (the STR DRAFT Ordinance was pulled from the agenda at the last minute, but public comments were allowed) a couple of weeks ago (“Health”? — it occurs to me that maybe STR really is deemed to be a medical condition, with TYPE 2’s having the more serious symptoms? oh my…), I am not at all surprised by yesterday’s action. With the exception of several members at the CHEC meeting (D6-Brockhouse, D2-Shaw, and D8-Pelaez) who seemingly questioned the need for an ordinance at all, Mr. Casey Whittington (member, Planning Commission) who questioned the fairness of the TYPE 2 permit approval requirement to be undertaken by the BOA (see further below), and now Ms. Gibbons of the Zoning Commission, very few of the collective participants in COSA’s entire regulatory apparatus have asked questions that even remotely understood STRs including that they (1) possessed even tangentially, any idea concerning the very positive impact that STRs have meant all across our City in our neighborhoods with respect to restoring properties to a status wherein they were once again a functioning, valuable asset of their respective neighborhood — including ALL of COSA’s 27 historic districts, or (2) had not already made up their minds about the pending DRAFT ordinance pre-hearing. The discussion yesterday made me feel as if I was watching the movie “1941” (the Spielberg “classic” comedy, starring Dan Ackroyd and John Belushi — only us old-timers will get it — except us TYPE 2’s had replaced the Japanese). With plenty of paranoia and a significant amount of “what-if”, anecdotal type “A&Q” by the Commissioners, it was sad there was not a better understanding of this issue on their part with what has now become a high-profile issue. It’s not entirely their fault, in what appeared to pleas for some much needed “sanity”, Zoning Commission Chairman Dr. Romero repeatedly expressed her concern with respect to definitional clarity of various provisions in the DRAFT to City/DSD staff proposed ordinance (see next paragraph). And before going further, the DSD Staff, from Director Shannon on down, have done their best to balance the competing interests in addressing the CCR dropped on them by D10’s Gallagher just over a year ago. That said, as one of my fellow TYPE 2 cohorts opined in his public comments at the meeting yesterday, the current DRAFT ordinance is very much a regulatory “solution” looking for a “problem”. [As pointed out by D8’s Pelaez at CHEC meeting, 3 of the 5 CCR “sponsors” including Mr. Gallagher are no longer on Council.]

    Definitionally, under the DRAFT ordinance, I am an “STR Type 2 “(no, it’s not contagious even though it sounds like a very serious medical condition, and in my case involves more than $4MM) even though I AND a business partner each reside in two of our condo units and can reach out and touch the condo units we own on either side of our individual units. Thus, are we not “onsite” and thus, ALL of our units “TYPE 1”, OWNER OCCUPIED? Not under the terms of the DRAFT ordinance. As an aside, “nightly” rental is not our primary business (we operate a boutique housing business model involving fully furnished units, our average rental is 30-90 days — in a word, we sell “convenience”), but we have been able to generate extra income to fill the “pockets” of time that are inevitably part of our normal business that a put towards significant deferred maintenance that comes with our ongoing efforts to preserve our historical property in King William.

    In spite of the above rambling, as a Texas resident, I am reminded to be thankful for…
    1. The Texas Constitution’s EQUAL PROTECTION CLAUSE which has been successfully used by STR owners and guests in the very recent past to challenge the constitutionality of Austin’s STR ordinance, which like SAT’s tilt the deck against the TYPE 2 owner. It is likely that similar litigation will end with the same result here in SAT if the DRAFT ordinance is approved by City Council.

    2. Texas is a strong “property rights” State, it is likely that bills such as SB 451 and SB 2551 will come back to life in the 2019 legislative session. Most of the current DRAFT ordinance’s TYPE 2 provisions that “limit” (e.g. the “distance” and “parking” requirements that were inserted into the Ordinance toward the end of the STR Task Force process) would not be allowed to infringe on such “rights” if similar legislation makes it to passage at such time.

    3. The Texas Fair Housing Act and other assorted housing ordinances that would prohibit all, or parts of the DRAFT ordinance.

    Would an otherwise truly “progressive” City seek to restrict it’s citizenry from participating in new disruptive technologies that involve the “sharing economy”? We have been down this road before (UBER), and it took some mistakes before we got it right (thank you D1 Council Member Trevino), let’s not repeat it. Other States have already rescinded their earlier STR rules (Arizona), or are currently in the process of doing so (Florida, Nebraska).

    SUGGESTIONS:
    1. Exempt STR Type 1’s altogether — do we really need to tax (16.75% HOTEL OCCUPANCY TAX, “HOT”) the financial equivalent of a “lemonade stand”? Seriously? Even if you can justify it in a “technical” sense of being “commercial” is it good policy? As a real estate-focused tax CPA, I am pretty certain that the cost of compliance on both sides of this equation will likely far exceed any resulting benefit to the assorted city-associated coffers that receive such funds. This is somehow deemed “progressive”?

    2. For the moment, let’s try an approach that might actually have a chance at passing the likely constitutional challenges and near-term legislative updates: LIMIT THE DRAFT ORDINANCE’S STR TYPE 2 regulation to “registration” and “HOT collection”. Existing rules are already in place to deal with the otherwise largely anecdotal episodes of crime, noise, and bad actors that the rental platforms such as AIRBNB deal with very effectively. We can then revisit additional TYPE 2 regulation (if necessary) in the near future with the added context of not only the projected State of Texas legislative action, but also the City’s 2020 scheduled update of the Unified Development Code (UDC), City-confirmed reporting of violators and/or the related case law that will surely develop in the near future.

    Bottomline, San Antonio does not have an STR problem. If we must “find” one at all, the current DRAFT ordinance needs to be recalibrated to one (1) first, truly yields a cost/benefit for the taxpayer, and (2) provides well-defined criterion for the permitting approval process for TYPE 2’s (including the transfer of said permit by those who comply and are “good actors”) rather than the approach currently mandated by the proposed DRAFT concerning what can only be described as an elusive “supermajority” vote requirement (9 out of 11 members) for approval from a BOA that currently has more than a few members who have made public statements concerning their anti-TYPE 2 sentiments. Removing the current version’s overreach could provide a “solution” that might actually be constitutionally defensible.

    There are many other issues that our City’s resources should be consumed dealing with.

    • Agree. I have successfully operated a STR in Lavaca, and still refer all of my guests to the ones that surround my home, since square footage in Southtown is limited. I completely understand the argument for community, but, the StR that we owned was so well received in the neighborhood, that the guests were often invited to the block parties! Often our guests were relatives of local home owners that just didn’t have the extra space. I feel that STR are imperative to community awareness, and accessibility. I have recently pulled ours off the market, but still remain certain that our small STR served an enormous need in the Lavaca area…

  9. Great points, well researched and pinned to the heart of the matter. As a HOST in a re-emerging area of town, I believe it is in the city’s best interest to find a progressive and popular way to promote our livability to visitors. I hosted a couple who changed their minds about living in another part of town after staying at my STR in Government Hill. They bought a run-down wreck of a place a few blocks away and turned it into a gorgeous home. Anecdotal, yes, but powerful nonetheless. These are the quiet financial growth victories of high-quality STRs that shouldn’t be overlooked.

  10. I don’t think short term housing is good for the health of a neighborhood. That’s what hotels are for. I live in District 2 and it’s becoming a problem. How can you live on a street where your “neighbor” is being swapped out every week? Long term rentals are bad enough but short term rentals are creepy. If I were to buy a house again I would check the ownership of all the houses around me before I purchased. If everyone did that then the free market would solve this problem. Once property values decline because of the short term rentals then this problem goes away.

    Ironically, vacant lots are also a problem in my neighborhood and I honestly have to ask myself which is worse.

  11. The facts are that property values go up when STR’s are in a neighborhood. And I believe that using vague terms like “health” of a neighborhood and “integrity” of a neighborhood are disingenuous because they have no definition regarding a neighborhood. One could argue that the “health” and “integrity” both improve in a neighborhood with STR’s. I have a Type 2 and if it weren’t for STR option, we would have to sell it because property taxes are becoming ridiculous. As for King William, they are not representative of the rest of the city. Can we UN-ANEX them?

    STR’s should just be left alone – and indeed the market will determine their fate. Government oversight is ok, but over regulating is not.

  12. I’m counting on Council members to continue to question the need for an STR ordinance / changes to existing STR regulation at this time and to understand how problematic the draft ordinance is — including based on the state constitution, our local housing market and the City’s visitation, economic, sustainability, social cohesion and other long-term planning aims.

    The City’s past and extraordinary incentivizing of hotel development in the city center should also be considered with the City’s consideration of STRs (I’m wondering where is the encouragement, including possibly some tax relief, for STRs?). This includes noting the interplay between some hotels, motels and bed and breakfasts and platforms like Airbnb (much Airbnb ‘growth’ can be attributed to more traditional vacation rental options now also using the booking platform) and the overall positive impact of STRs on neighborhood housing options (including for aging in place), visitation and investment.

    Unlike large hotels, STR platforms like Airbnb have more directly helped local families and encouraged housing stock improvements and additions in economically distressed zipcodes and neighborhoods inside the 410 loop — including the diversified construction and ownership and maintenance of the one-bedroom rental units that HUD (2016) stresses are predicted to lead rental demand in San Antonio over at least the next two years (and that large and more concentrated rental housing development including hotel development does not seem to be meeting the demand for).

    STRs like Airbnb have given global visitors and the latest arrivals better options and more reason to visit San Antonio (more often and staying longer, per research in other cities) and platforms towards moving to and investing further in the city. The clustering of particularly Airbnb options in San Antonio’s economically distressed zipcodes within the 410 loop (with listings often promoting VIA bus routes to downtown and the airport) should also be considered in seeking to encourage (not discourage) this neighborhood housing development engine.

    The proposed ordinance seems to be driven by the fears or interests of a vocal handful who oppose much — from footpath improvements to VIA access to solar panels. That the City has spent any time drafting, through committee, experimental (eg. likely not constitutional in Texas) and extraordinarily strict STR regulation targeting the most transparent and popular (but seemingly plateauing) STR platform and with operations measured in only the hundreds as a ‘big’ gain in San Antonio — in a city of over 1.4m and a housing market that HUD (2016) describes as “balanced” for rentals and sales but with annual home sales down significantly from 10 to 14 years ago — further suggests that this is a misdirected local policy discussion and effort.

    As someone who lives in a “hot spot” or locally relatively “major” cluster of Airbnb operations and amidst various other rental activity, I wouldn’t have known it if I hadn’t taken time to look at an Airbnb map (my neighborhood apparently wasn’t polled as part of the drafting of this local STR ordinance). There really is no discernible public impact, but a few San Antonio neighbors seem to be bothered by just about anything — although mainly by public access and fair use of private and public property, including apparently parking on the street (which can help to reduce neighborhood speeding and support walking).

    Given the local housing market that HUD (2016) describes and our long-range/SATomorrow aims (I suggested to City planners in 2015 to consider STRs and known STR activity clusters in SA — including the characteristics of these clusters and operations how operations are described — as part of long-range planning), the City likely should incentivize the construction of more accessory or small dwellings and otherwise encourage the use of underutilized or vacant properties as housing in existing residential areas. This includes the creation of more self-contained one-bedroom units that some days or months might be used as STRs.

    A key failure of the proposed STR ordinance is that it does not seem to recognize how STR platforms like Airbnb can be and often are used by landlords and tenants to transition to or between longer term rentals or ownership and to increase and diversify San Antonio’s housing stock (month to month STR rentals through Airbnb aren’t uncommon). Likewise, the STR ordinance fails to acknowledge the links between housing affordability and sustainable urban development and access to housing and other services by foot and public transit and the ending (not the introduction) of off-street parking requirements.

    STRs are or can be start-up and sustainable housing in San Antonio — including staging grounds and the fund generators for fixing up long blighted or underutilized residential properties. From my experiences, STRs help to diversify, increase housing units and options in neighborhoods — including for aging in place and in areas and zipcodes with high percentages of vacant structures and lots (hotels and hotel incentives haven’t done this). The benefits in San Antonio outweigh many of the phantom concerns suggested with the proposed STR regulations.

    The City’s recommendations seem to lack an equity or social cohesion focus and to be light on local research and consideration of local biases — including biases against car-free visitation, renting generally (and particularly in neighborhoods) and desires for fair access to high amenity urban areas. I am hopeful that more Council members will decide to walk out of this particular STR regulation conversation that seems loaded against the majority of local residents, fair use of private and public property, equitable enforcement, the needs of our local housing market and the welcoming of visitors, newcomers, young people, retirees and innovation in San Antonio.

    https://www.huduser.gov/portal/publications/pdf/SanAntonioTX-comp-16.pdf

    • Just wanted to let you know, as a short term rental host (owner occupied), I know 5 other STRs in my neighborhood that are STR 2 and the owners live in California and New York. They’ve got STRs all over the country. How do you deal with those owners who could really care less about the economic viability of San Antonio other than how if affects their bottom line?

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