With vacation rental websites like HomeAway, Airbnb and VRBO gaining popularity, short-term rental, or STR, properties have become a divided topic in Texas.
“We do receive citizen complaints regarding possible illegal short-term rental activity,” said Chris Looney, the city’s director of planning and community development.
The city of New Braunfels adopted an STR ordinance in 2012 after going through a community input process.
“We only adopt what our citizens would want us to adopt,” Looney said. “They’re the ones who are living in the areas where the concerns are.”
One of the guidelines stated in the city’s STR ordinance is that short-term rental properties are prohibited in the city’s residential districts.
In an effort to help enforce the ordinance, the city partnered with Host Compliance LLC on March 26, a company whose business model centers around the enforcement of short-term rental compliance for local governments. The city spent $35,000 for the company’s services this year, a cost Looney said takes the place of adding additional code enforcement officers.
“It’s kind of like an extension of city staff to assist them with the volume of concerns raised by citizens,” Looney said.
The company offers a 24-7 monitoring hotline and scours vacation rental websites to help the city identify properties they suspect of being non-compliant with city guidelines. In addition to calling in complaints, citizens who suspect an STR is operating in their neighborhood illegally can submit evidence to Host Compliance, such as uploading videos and photos on the company’s website.
Bryan Ruiz, the city’s environmental services manager who supervises the city’s code enforcement division, said 26 complaints were submitted via the monitoring hotline from March 26 to May 26, and two of those cases had been submitted to the city’s Municipal Court.
Setting up shop
The International Residential Code—which brings together all building, plumbing, mechanical, gas, energy and electrical provisions for one- and two-family residences—defines an STR as the rental or compensation of family dwellings for the purpose of overnight lodging for a period of not less than one night and not more than 30 days, other than ongoing month-to-month tenancy granted to the same renter for the same unit. This is not applicable to hotels, motels, bed and breakfasts and resort properties.
According to Ruiz, operating an STR property legally is not as simple as listing a home on a vacation rental website and turning a profit.
“I think some people honestly don’t know [the correct procedures]and they just do it,” he said.
Because the city only allows STRs in areas with specific zoning—omitting residential districts—some property owners may seek rezoning. If zoning criteria is met, an STR permit must be obtained to operate a vacation rental, and the city may choose to incorporate additional conditions.
Rob Stephens, general manager of Avalara MyLodgeTax, a company that assists clients with the tax and paperwork side of maintaining an STR, said New Braunfels’ STR regulations are on the more restrictive side of vacation rental policies.
“In most cities, you can just fill out a form,” he said. “That’s extremely rare. That’s on the far end of requirements. The next level up would be a business license.”
But those who support strict STR policies feel such measures are appropriate.
Citing concerns such as declining property values, inadequate insurance coverage, peace and safety, New Braunfels resident and former City Council Member Ken Valentine said he is among several citizens who want to keep STRs out of local neighborhoods. He said he feels STRs change the dynamics of a neighborhood by “pitting neighbor against neighbor,” and that the city’s partnership with Host Compliance is “a step in the right direction.”
Tax evasion is another reason the STR industry is on many cities’ radars.
Stephens’ company charges a $20 monthly fee to clients for handling the taxes and paperwork associated with an STR so they can be sure they are operating legally. He said hotel occupancy tax rates vary by city, and New Braunfels charges 7 percent for every transaction in addition to the state’s
“Airbnb may collect that 6 percent, but no one pays the city,” Valentine said.
As the STR industry becomes more mainstream, Texas and other states are striving to strike a balance between those who advocate for strict STR policies and others who believe the practice is a testament to property rights.
On May 29 the Texas Supreme Court sided with homeowner Kenneth Tarr, who was challenged by his homeowners association when he began using his San Antonio residence as a short-term rental property. The HOA said the practice violated the portion of his deed restrictions that said his home must be used “solely for residential purposes.”
Opponents of STRs argue that when a person begins using their home as a vacation rental, it becomes more like a commercial business than a residence and creates an unlevel playing field for the hotel industry.
“Basically the Texas Supreme Court has stepped in and said these cities can’t over-regulate or shut down vacation rentals,” Stephens said.
While the court’s decision is considered a win for the STR industry, some New Braunfels residents hope tough regulations continue.
“What we’re really trying to do is preserve our neighborhoods, where you know your neighbors and you don’t have different neighbors every single weekend,” Valentine said.
Stephens said there is a lot of emotion behind the STR debate and that each community has to figure out what works best for it.
“I believe as the industry becomes so big and popular and travelers love this kind of option, we’ll all figure out a way for this type of industry to exist.”
Those looking to ensure a short-term rental property is in compliance with zoning and permitting requirements should contact a New Braunfels city planner at 832-221-4050.