During its Dec. 21 meeting, Lakeway City Council unanimously approved a new ordinance—effective Jan. 14—capping the number of allowable short-term rental, or STR, units in the city at the current 43 permits.

Council members discussed amending the city’s STR laws at their October and November meetings.

Some of the residents who spoke during the November and December public hearings cited concerns about excessive noise, safety and the deterioration of property values stemming from living in close proximity to homes with STR licenses. Other residents said the STRs provide an income for the owners who, without prior incidents, should not be penalized for a few permit holders who violate city laws. Most residents advocated for stronger enforcement of laws against violators of the city’s STR ordinances.

“One of the ways to eliminate all of the issues [with STRs] is just to eliminate STRs, but I don’t think that’s a good solution,” Mayor Joe Bain said.

Under the new ordinance, a special-use permit will be required of all Lakeway STR units, making the process easier for an STR permit to be revoked if violated, Deputy City Manager Chessie Zimmerman said. The change allows the city to suspend or revoke a permit if the holder is found to have a “substantial violation of [the permit’s] terms or conditions” or Lakeway’s ordinances or regulations, among other criteria.

Currently, a court conviction must occur before the city can revoke an STR license, Zimmerman said.

Other major provisions of the revised law include:

• Rentals must be for a minimum of two consecutive nights.
• No more than two adults are allowed per bedroom.
• Initial special-use permits are granted for one year and are renewable for two years.
• STR owners are required to post truthful ads regarding the occupancy permitted in the home.
• Condominiums—such as the World of Tennis development—are included in the ordinance.
• Current license holders are grandfathered as far as the remainder of their three-year permit, but their license will convert into a two-year special-use permit once it expires.