Austin Short Term Rental (STR) Update

by Steve Crossland, REALTOR in Austin TX on December 4, 2011 · 14 comments

Almost a year ago I wrote about the Austin Short Term Rental (aka STR, Vacation Rental, VRBO) issues surfacing in the Austin community. That blog article generated 57 comments and a lot of heated back and forth. I eventually had to close the comments for that article because I felt everything had been said that could be said at that stage of the process. This article is an update on what has happened with STRs in Austin since the last blog post, and what will happen next.

The issue has moved forward through a “Working Group” process which concluded last August. City Staff is currently reviewing a draft set of regulations. The full Planning Commission will consider the recommendation after City Staff finishes the review. From there, a Code Amendment and set of new rules will be sent to Austin City Council. That probably won’t happen until 2012.

The Working Group Process
I participated in the Working Group process in the role of a Government Affairs Committee member of the Austin Board of Realtors. The Austin Board of Realtors involves itself in any local issue which could affect the private property rights of home owners. In many ways, ABOR is somewhat of a “Silent Knight'” working for the benefit of Austin homeowners, though most home owners are probably unaware that they are served in this manner.

ABOR seeks to protect the rights of property owners and opposes rules or laws that would diminish the private property rights of Austin property owners. The ABOR position on Short Term Rentals in Austin is, in short:

The Austin Board of REALTORS® supports preserving the character of Austin neighborhoods and protecting the quality of life of its residents. ABoR also believes homeowners have a right to lease their homes, regardless of the length of the lease, without municipal licensing requirements or registration fees. We also believe that the City of Austin should hold formal stakeholder meetings to address the issues concerning short-term rentals and develop a solution that balances the needs of neighborhood residents and residential property investors.

The stakeholder meetings did occur, a middle ground was determined which, as predicted in my earlier article, didn’t give either side the warm fuzzies, but that’s how these things go.

The Board of Adjustments Decision
Meanwhile, those opposed to STRs in Austin used the Board of Adjustments process to have one STR in Allandale declared in violation of a newly made-up-on-the-fly 10-day rule. The Austin Board of Adjustments essentially decided, capriciously, that since the word “transient” was not defined in City of Austin Code as a specific number of days, it would make up a number. It came up with “10”. Meaning, the rental of an Austin home for 9 days would be a “transient” use of the property, whereas 10 days would not be “transient”.

The City of Austin ignored and continues to ignore that ruling. As reported in the Austin Statesman August 2011:

“The City of Austin is allowing short-term, or vacation, rental homes to operate for now in residential areas despite a city Board of Adjustment’s ruling that rentals for a period of less than 10 days violate city code.

The Adjustment Board’s decision, which overturned a city staff decision earlier this year, has triggered a lawsuit by five owners of rental homes who contend that if upheld, it would deprive them of constitutionally protected property rights.

Meanwhile, the city’s decision to defer enforcement is drawing the ire of critics, including some who live next door to short-term rental homes and who want the city to enforce the Adjustment Board’s decision now.”

The anti-STR group continues to press on, having now passed a reolution through the Austin Neighbors Council. That resolution was voted down by the Zilker Neighborhood, which contains the highest concentration of STRs in Austin. Other neighborhoods did sign on though. ANC states that the support of the resolution was better than 2 to 1.

The ANC Resolution for Short Term Rentals would impose an outright ban on STRs, except for homestead owners. The language is:

Be It Resolved that the Austin Neighborhoods Council supports the following Resolutions:

That the Land Development Code’s definition of permissible residential uses in single family zoning districts be expanded to allow properties that are homesteaded as defined above and are the owner’s primary residence to be rented on a transient, short term basis, defined above as a residential rental of between one and thirty days, for a maximum total of 60 days per calendar year.

That the City Council of Austin, Texas specifically enact an ordinance disallowing short term residential use in single family zoning districts as being a transient use, unless exempted by the property being homesteaded and the owner’s primary place of residence. This ordinance, by the definitions and wording above, would emphasize that STRs have always been and continue to be in contradiction with the permissible residential uses allowed in single family zoning districts, and that the current use of a property as a CSTR is not a legal nonconforming use and that this use shall not be grandfathered.

This proposal, which ANC is pushing at City Council (ABOR and HomeAway are also pushing our separate but similar positions as well) would shut down existing STRs in Austin except for homestead properties. So, if you owner-occupy your homestead, I guess ANC is OK with you renting it out to overnight guests 30 weekends a year while you leave town. The “strangers” that you rent to would somehow be “acceptable” or “different” strangers than the ones renting non-homesteaded houses, and presumably pose none of the problems or issues that are used as the basis of complaint for outlawing STRs in non-owner occupied homes.

Sorry, but I call B.S. on that. Come on. It’s dumb. Makes no sense. It’s intellectually indefensible to say that a class of renter can be split into “problematic” and “not problematic” categories based solely on the homestead status of a home.

Meanwhile, I’ve personally been drawn into the argument in another way via my previous blog article. Anti-STR people have taken to passing around and posting snippets of my earlier blog comments out of context. I guess this is as close as I’ll ever come to understanding what politics is like.

The first article I wrote was written intentionally to acknowledge the concerns and feelings of those opposed to STRs in Austin. It was written as a balanced presentation of both sides. For example, all things being equal, I said in the article that I personally would also prefer to have a family next door rather than an STR home. That’s still true. I’d also not want to live next to a fire station or a school, or a middle school tuba student, or a Harley owner who leaves for work at 5:30AM each morning. But I don’t want those situations banned or outlawed either.

To be clear, I would not object or complain if my neighbor converted his home to an STR. That would be his right as the property owner.

The anti-STR people apparently don’t understand that, as humans, we can hold nuanced positions about things. I can fully understand and even sympathize with the feelings of someone with whom I disagree. In this case, written expressions of that understanding and sympathy have been cut and pasted into cherry-picked excerpts used to exclaim, “Look! Crossland said he wouldn’t want to live next door to and STR!”.

What is this, Middle School? Good grief people. Context.

Yes, I understand your position. I agree with your right to feel upset. I get it. And I happen to have the ability to relate to your position and am willing to state as much. And I am 100% against the banning of STRs in Austin. Any quotes attributed to me need to be read inside the paragraph and article in which those quotes were written, not plucked out and used out of context in an attempt to discredit me and/or ABOR.

What’s Next?
We’ve (ABOR) met will all the Austin City Council members and stated our position, as summarized above. The other side is doing the same. We’re now just waiting to see what comes up from Planning Commission. At these meetings, my role was to point out, as I have all along, the lack of data to support any of the anti-STR complaints, and to relate some facts and realities about to STRs that can’t be ignored.

The 99 Percent
Short Term Rentals in Austin, in terms of property condition and appearance, are in the 99th percentile of homes in excellent condition. Want to drive randomly through Travis Heights or Zilker and try to pick out which homes might be STRs? You’ll be zeroing in on the prettiest, most well kept properties in those neighborhoods. Yard of the Month candidates. STRs make neighborhoods more attractive, helping support property values of the surrounding homes.

On the inside, these homes have to be in excellent operating condition, clean and safe with good furnishings. Guests will not tolerate anything less. The STR industry lives or dies by online reviews. Any owner trying to make a go at it with a subpar property in poor condition will be out of business quickly because they will get killed with bad reviews. In this way, the STR industry in Austin self-regulates and naturally weeds out the bad operators. Nobody will rent one of these places without first checking the online reviews, and if you want to be a successful STR owner, you better pull out all the stops to create a great experience for your guests.

No Evidence of Code Violation Problems
With regard to code violations, it follows that it’s statistically impossible that 1/10th of 1% of the single family housing stock in Austin (about 300 out of 330,000 homes in Austin are STRs) could be responsible for anything even close to a statistically significant portion of code complaints.

How could 1/10th of 1% of homes that are in the top 99% of good condition be deemed a “problem” that Code Enforcement needs to address through new laws or regulations? Existing Code rules and occupancy laws already cover STRs the same as every other home in Austin. STRs are not a source of Code problems.

No Evidence or Data Support Increased Crime
With regard to noise, crime, etc., if we ask Chief Acevedo if STRs are a source of problems for Austin Police, he won’t have a clue what we’re talking about. The guests who stay in STRs are less “vacationers” than we first knew. In fact, a great percentage of them are relatives of people in Austin who want to avoid a hotel during a visit. Many are families. As a subset of people coming to Austin, the ones choosing to reside in a Short Term Rental home instead of a hotel cannot be proven or characterized to be troublemakers or people here to disrupt the vibe of the neighborhoods in which they are staying.

So, neither the Code Violation or Criminal Troublemaker argument hold water. In fact, there is absolutely no data that describes any sort of problem that is not a universal issue existing in non-STRs. Giant parties, such as the Halloween Party every year in Travis Heights that drew 500+ people this year, are thrown by home owners, not weekend visitors. So there is no “party avoidance” to be had by banning STRs in Austin.

Finally, the city will probably want some sort of registration system identifying which homes are Short Term Rentals. While some of the STRs may remain STRs for many years, many more will phase in and out of that status rather quickly. Some may be placed into service only until the real estate market improves. Others are routinely rented alternately to long term renters. So, at any given time, the answer to “which homes are actually being used as STR?” is a moving target.

I’ll continue to follow this process. By early next year we should know what the Planning Commission is proposing. It will no doubt be “too much” and we’ll fight to par it down while the other side will fight to make it more restrictive, per the ANC proposal. But in the end, I do believe we have to fight these fights lest we allow the slippery slope of over-regulation to creep into the property rights we enjoy as property owners. That said, I do believe that both sides of this argument care about Austin and have chosen the position that they believe to be in Austin’s better interest. In that regard, we all want the same thing, a better Austin. But we’ll continue to disagree over what that looks like.

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