There goes the neighborhood

by Natalia Ciolko

Published in the Austin Chronicle, February 2015

Organic gardener and longtime Austin resident Bob Easter is proud of his two short-term rental properties: two- and three-bedroom houses in the Allandale neighborhood, with eco-landscaped yards full of drought-resistant flowers that he says neighbors pull over to admire. His renters never have more than a single car, and Easter says he prefers these visitors to the long-term renters who often damaged the property with pets and parties.

For now, his short-term rental properties, classified as Type 2 (non-owner occupied, aka commercial), are 100% legal. He holds licenses to operate them, and pays quarterly city and state hotel occupancy taxes on the income. However, opponents of the STR ordinance say properties like his aggravate local issues of affordability, quality of life, and the "commercialization" of their neighborhoods.

In 2012, Austin was one of the first cities in the U.S. to comprehensively address the new market created by websites such as Vacation Rentals by Owner, HomeAway, and Airbnb. City Council approved, by 5-2 vote, an ordinance to make these short-term rentals (defined as fewer than 30 days) an option for homeowners seeking some rental income. Legally, only 3% of available housing stock per census tract is allowed to be used as vacation rentals.

"It's like marijuana," said Jerry Rust­hoven with the city's Planning and Devel­op­ment Review Department. "People are already doing it. So you can either make it illegal, and go after everyone, or set some rules and regulate it." Rusthoven was one of the architects of the ordinance, which basically goes as follows: Pay the annual licensing fee, stay current with your city and state hotel occupancy taxes, and don't run afoul of the neighbors.

However, not everyone in Austin is happy with the law as it stands. "People have heartburn over short-term rentals, for many reasons. This is just one of those issues that makes people come unglued," said Mary Ingle, president of the Austin Neighbor­hoods Council. Comparing commercial STRs to "mini-hotels," Ingle said they're responsible for a host of neighborhood ills, including noisy parties and unmanageable parking, and said she'd like to see the new Council revisit the ordinance completely.

Aside from neighborhood heartburn over Type 2 rentals, another problematic area is the enforcement of the ordinance requiring operators to be licensed and pay their taxes. Since beginning its enforcement efforts, the Code Department has begun investigations into 1,089 housing units, and has succeeded in bringing 72% of those into compliance with the ordinance. But in a presentation to Council last week, Austin Code Director Carl Smart admitted to the difficulty of a comprehensive solution. "How do you identify an STR?" said Smart. "That's part of our challenge."

HomeAway Inc., an international company employing 900 people locally, also helped shape the ordinance. Co-founder Carl Shep­herd said, "The city of Austin should pat itself on the back for its work on short-term rentals," citing the 72% compliance rate of code enforcement as a national best.

But a provision in the ordinance also allows would-be STR operators to advertise their properties without first being licensed – as a hypothetical means of testing the market before investing in the license – and that provision has made Code Enforce­ment's job doubly hard. In a statement from Austin Code, Assistant Division Manager Marcus Elliot said the department "also recommends an increased licensing fee for identified unlicensed ordinance violators and establishing penalties for expired licenses." He also said neighbors should report troublesome short-term rentals by calling 3-1-1.

An open question is how far the new Council will go to revisit what the previous Council decided in 2012. Mayor Pro Tem Kathie Tovo – one of the two dissenting votes – reiterated her opposition. "At a time when rents are skyrocketing and many Austinites are facing higher housing costs, allowing 3% of our housing stock to be used as mini-hotels within our neighborhoods was a very significant policy decision – and not one with which I agreed," Tovo said in a statement that also indicated how she would like to tackle the issue: "As the ordinance has been in place for some time now, it's appropriate for the city to review the program and provide a comprehensive financial analysis along with an evaluation of any impact [that] commercial short term rentals have had on our neighborhoods." Mayor Steve Adler similarly expressed his willingness to review STRs: "I would not be opposed to us taking a look at how [the ordinance] has operated."

By contrast, Shepherd of HomeAway said if Council amends the ordinance at all, it should abolish the $285 annual licensing fee. "I personally believe the fee is needless friction when the goal is to get all STR operators licensed, and to have taxes supporting the city and state. The high cost of the fee flies in the face of transparency," he said, "by setting people up to be bad actors by giving them reason not to be licensed."

Among his recent clientele, Easter lists traveling nurses, grandparents, and summer camp counselors who come to stay for one to three weeks at a time. "It's something that brings increasing revenue into our city and state," he said. "I just don't understand why we would want to take away something like that."

Pilot Program Spurs STR Crackdown

by Natalia Ciolko

Published in the Austin Chronicle, July 2015

The City Council's Planning and Neigh­bor­hoods Committee takes two steps forward and one step back on regulating the city's short-term rentals (STRs), as fundamental disputes about how to achieve the city's affordable housing goals remain unresolved. Chairman Greg Casar, Vice Chair Pio Renteria, Mayor Pro Tem Kathie Tovo, and Council Member Sheri Gallo stayed on the dais past 2:30am Monday night to hammer out a resolution on STRs to bring before the full Council today (Thursday, Aug. 20).

This resolution includes the removal of a provision to advertise an STR before obtaining a license, an official occupancy maximum of six adults per unit, and increased penalties for operating illegally. Meanwhile, more controversial pieces of the proposal, including a requirement for inspection, commercial property insurance requirements, and a 1,000-foot minimum between licensed Type 2 rentals, were tabled for further research and discussion in September.

Conversation began at 4pm with deliberation on relaxing the rules governing the construction and use of accessory dwelling units (ADUs). Residents wearing T-shirts reading "I Love Granny Flats" testified that building these units in the urban core would help relieve the housing shortage in the central city and alleviate affordability woes.

Not everyone agrees unreservedly. "I don't want to relax rules on accessory dwelling units just to find that they're all being turned into STRs," said Tovo to the applause of reformers in the chamber's front rows.

Four hours into the meeting agenda, STRs were finally up to the plate. Carl Smart of Austin Code presented his findings from the recent pilot enhanced-enforcement program, which resulted in 146 violations found and cost $5,831. Smart estimated that supporting this pilot into the future would cost an estimated $69,970 annually.

Before describing the department's ordinance update recommendations, Smart spoke to the various barriers blocking effective enforcement of the existing law, which included the inability to inspect offending units and the high burden of proof to legally proceed in shutting down noncompliant owners. Smart also spoke to one of the prevailing themes of the night: over-­occu­pancy and how to manage it without the ability to inspect STR units. Referring to the Code Department's recommendation of a maximum of six adults per unit: "Yes, many of the houses can accommodate more," he said. "But should they?"

Next came citizen testimony. With 200 people signed up to speak, Chairman Casar initially suggested that only 60 speakers, at just two minutes apiece, should testify, to help wrap up the meeting before midnight. CM Gallo demurred, saying everyone who wanted to speak should get their full three minutes.

The air conditioning was turned off around 11pm, and citizen stakeholders fanned themselves with protest signs as the committee worked its way through a list of those signed up to speak. Drawing huge cheers and occasional outrage, both reformers and supporters claimed affordability for their side as they took their turns on the microphone, occasionally finding common ground. That included wide support of Type 1 STRs to relieve the financial strain of increasing property taxes, as well as admonishment of "bad actors" ad nauseam.

The arguments were heated and at times emotional. John Williams, a longtime Austinite who says he can no longer afford to live in the house he built himself without income from short-term renting, held up a handful of guestbooks filled with grateful messages from his rental guests. "This whole adversarial relationship is completely wrong. I wish y'all would stop holding up those signs," he said. "Why don't we all just get together? We're all citizens."

Repeatedly, the refrain from STR supporters was that the current ordinance just needs to be enforced. But those wary of Type 2 STRs say that just isn't possible with the current loopholes and weaknesses. "This ordinance does need to be strengthened," said David King, vice president of the Austin Neighborhoods Council. "The definition of insanity is to not change anything and expect to get different results."

The impassioned testimony went on until after midnight. After the last constituent had spoken, the committee began deliberation on the resolution to present to the full Council on Thursday. It approved several recommendations from Gallo's June 18 proposal, tabled others for more discussion next month, and incorporated several recommendations from the Code Department, notably the removal of the "testing the waters" provision.

At 2:30am, once the recommendations were approved, Tovo began to offer her four major amendments to the resolution, including an immediate freeze on any new Type 2 licenses until the current ordinance is enforceable, and a move toward shutting Type 2 STRs out of all noncommercial zones and neighborhoods with exceptions for a conditional-use permit process.

The deliberations broke down as half of the committee cited exhaustion and an early morning work session the following day. Council Member Gallo asked for all discussion of these new items to be tabled until the September committee meeting. The new resolution, as updated by meeting's end, will be presented before the full Council for approval on Thursday, while the bigger questions of inspection and more will be saved for the next round of negotiations in September.

Late-Night STR Debate

by Natalia Ciolko

Published in the Austin Chronicle, August 2015

The City Council's Planning and Neigh­bor­hoods Committee takes two steps forward and one step back on regulating the city's short-term rentals (STRs), as fundamental disputes about how to achieve the city's affordable housing goals remain unresolved. Chairman Greg Casar, Vice Chair Pio Renteria, Mayor Pro Tem Kathie Tovo, and Council Member Sheri Gallo stayed on the dais past 2:30am Monday night to hammer out a resolution on STRs to bring before the full Council today (Thursday, Aug. 20).

This resolution includes the removal of a provision to advertise an STR before obtaining a license, an official occupancy maximum of six adults per unit, and increased penalties for operating illegally. Meanwhile, more controversial pieces of the proposal, including a requirement for inspection, commercial property insurance requirements, and a 1,000-foot minimum between licensed Type 2 rentals, were tabled for further research and discussion in September.

Conversation began at 4pm with deliberation on relaxing the rules governing the construction and use of accessory dwelling units (ADUs). Residents wearing T-shirts reading "I Love Granny Flats" testified that building these units in the urban core would help relieve the housing shortage in the central city and alleviate affordability woes.

Not everyone agrees unreservedly. "I don't want to relax rules on accessory dwelling units just to find that they're all being turned into STRs," said Tovo to the applause of reformers in the chamber's front rows.

Four hours into the meeting agenda, STRs were finally up to the plate. Carl Smart of Austin Code presented his findings from the recent pilot enhanced-enforcement program, which resulted in 146 violations found and cost $5,831. Smart estimated that supporting this pilot into the future would cost an estimated $69,970 annually.

Before describing the department's ordinance update recommendations, Smart spoke to the various barriers blocking effective enforcement of the existing law, which included the inability to inspect offending units and the high burden of proof to legally proceed in shutting down noncompliant owners. Smart also spoke to one of the prevailing themes of the night: over-­occu­pancy and how to manage it without the ability to inspect STR units. Referring to the Code Department's recommendation of a maximum of six adults per unit: "Yes, many of the houses can accommodate more," he said. "But should they?"

Next came citizen testimony. With 200 people signed up to speak, Chairman Casar initially suggested that only 60 speakers, at just two minutes apiece, should testify, to help wrap up the meeting before midnight. CM Gallo demurred, saying everyone who wanted to speak should get their full three minutes.

The air conditioning was turned off around 11pm, and citizen stakeholders fanned themselves with protest signs as the committee worked its way through a list of those signed up to speak. Drawing huge cheers and occasional outrage, both reformers and supporters claimed affordability for their side as they took their turns on the microphone, occasionally finding common ground. That included wide support of Type 1 STRs to relieve the financial strain of increasing property taxes, as well as admonishment of "bad actors" ad nauseam.

The arguments were heated and at times emotional. John Williams, a longtime Austinite who says he can no longer afford to live in the house he built himself without income from short-term renting, held up a handful of guestbooks filled with grateful messages from his rental guests. "This whole adversarial relationship is completely wrong. I wish y'all would stop holding up those signs," he said. "Why don't we all just get together? We're all citizens."

Repeatedly, the refrain from STR supporters was that the current ordinance just needs to be enforced. But those wary of Type 2 STRs say that just isn't possible with the current loopholes and weaknesses. "This ordinance does need to be strengthened," said David King, vice president of the Austin Neighborhoods Council. "The definition of insanity is to not change anything and expect to get different results."

The impassioned testimony went on until after midnight. After the last constituent had spoken, the committee began deliberation on the resolution to present to the full Council on Thursday. It approved several recommendations from Gallo's June 18 proposal, tabled others for more discussion next month, and incorporated several recommendations from the Code Department, notably the removal of the "testing the waters" provision.

At 2:30am, once the recommendations were approved, Tovo began to offer her four major amendments to the resolution, including an immediate freeze on any new Type 2 licenses until the current ordinance is enforceable, and a move toward shutting Type 2 STRs out of all noncommercial zones and neighborhoods with exceptions for a conditional-use permit process.

The deliberations broke down as half of the committee cited exhaustion and an early morning work session the following day. Council Member Gallo asked for all discussion of these new items to be tabled until the September committee meeting. The new resolution, as updated by meeting's end, will be presented before the full Council for approval on Thursday, while the bigger questions of inspection and more will be saved for the next round of negotiations in September.

STR Debate Unresolved

by Natalia Ciolko

Published in the Austin Chronicle, August 2015

For three months, members of City Coun­cil have worked on creating a resolution to redefine the rules for short-term rentals (STRs). Enforcing the current ordinance and reducing noncompliance has been a challenge for the Austin Code Department, tasked with keeping property owners who participate at peace with their neighbors and the city's laws.

On Aug. 20, the Council approved a resolution to update the ordinance, while promising to revisit the numerous loopholes that remain unaddressed. The resolution will increase fines for operating without a license or with an expired license, remove the "testing the waters" provision that disallows advertising to be used as evidence of short-term rental activity, require property managers to maintain a guest registry of all who stay on the property, and to appoint a local contact to be reached in emergencies for all short-term rentals.

However, the resolution was amended to leave out a provision creating an occupancy limit of no more than six adults in any unit. That provision has been tabled for further discussion until September. Council Member Ellen Troxclair cited the desire for more debate, and the amendment was passed 10-1, Mayor Pro Tem Kathie Tovo voting no. Citing her opposition to the amendment, Tovo said, "Occupancy has been one of the primary challenges, and there are multiple, multiple examples of houses that are overoccupied. I think it's important to move forward with this, so I can't support this motion." CM Pio Renteria supported the amendment but made clear his desire to revisit occupancy in the near future. "I'm going to make sure it gets put back in because we need some limits. But we need to have a thorough discussion so we can get it right."

Despite the passing of this resolution, there's no end in sight for the debate on the STR ordinance and how to enforce it well.

"Get ready for a train wreck," said CM Don Zimmerman. "I'm disgusted at how we've been thrown in the middle of this." Zimmer­man went on to describe how the city of Austin had zoned neighborhoods for strictly residential use, then three years ago opened them up to short-term rental business activity for nonresidents, creating a conflict with two heavily invested sides. Zimmerman abstained from voting on the resolution, which was approved by the rest of the Council. (Regard­ing Zimmerman's comment about the nightmare situation, Tovo replied, "I can't always say this [to Zimmer­man], but I agree with your comments.")

Palmer Quaroni, a member of the citywide group known as Short Term Rental Reform, spoke before the full Council. She said frustrations with the law are a common ground between reformers and supporters of the law. "I think we can all agree the current ordinance is a mess," Quaroni said. "We wouldn't have all been here until 3am if it wasn't a mess."

At the Aug. 17 Planning and Neighbor­hoods Com­mittee hearing that Quaroni referenced, more than 200 constituents testified on the STR agenda Item, in addition to a presentation from the Code Department. In deliberations that lasted past 2:30am, CMs Greg CasarSheri Gallo, Tovo, and Renteria decided to push debate on the more far-reaching aspects of the original resolution – particularly addressing the non-owner-occupied Type 2 businesses – to September for more debate (see "Late-Night STR Debate," Aug. 21).

In her closing statements upon Council adopting the new resolution, Gallo issued a stern address to city officials. "After spending three months on this issue, I have something to say to Austin Code Department Director Carl Smart: 'It's time to do your job, now. Use the tools you have, use the tools we're going to give you, and let's fix these noncompliant owners.'"