Austin City Council passed an ordinance amending city code to regulate short-term rentals, or STRs, with a 5-2 vote at its Aug. 2 meeting. Councilwomen Kathie Tovo and Laura Morrison were the two "no" votes, having warned they likely would not vote for Councilman Chris Riley's motion after he declined to accept several friendly amendments.
STRs are homes rented for 30 days or fewer, and they are divided into two categories. A Type 1 STR is occupied by the owner who either rents out the entirety of their dwelling in his or her absence or another full dwelling, such as the other side of a duplex.
A Type 2 STR is not occupied by the owner, and this type of STR was the subject of the most debate. Proponents of the ordinance said Type 2 STRs can and already do fit into the fabric of neighborhoods. One speaker, Sharon Walker, said she turned her family's dream home into a Type 2 STR to avoid having to sell it after facing financial troubles.
"I feel so incredibly blessed to find a temporary way to stay afloat," Walker said.
Opponents of the ordinance took issue with Type 2 STRs, with many referring to them as commercial STRs. Attorney Nikelle Meade spoke on behalf of her client, HomeAway Inc., a company that allows homeowners to list their homes online as vacation rentals. She chided the opposition for resorting to what she called xenophobic rhetoric.
"How many jobs have you created in Austin lately? Or ever?" Meade said.
The opposition nominated one woman, Susan Moffatt, to speak for the entirety of the allowed 30 minutes to lay out the issues with the ordinance.
Moffatt said the ordinance-mandated cap on 3 percent Type 2 STRs allowed per ZIP code would allow 5,500 single-family residences to be operated as Type 2 STRs and would make too many homes unavailable for families and other residents.
"This is a hardship on the families, but it also contributes to sprawl, which is something we have been trying to get our arms around as a city for quite some time," Moffatt said.
The opposition took issue with those homes potentially displacing students and contributing to declining attendance numbers at local schools. Moffatt cited a lack of language in the ordinance addressing Americans with Disablities Act compliance and other issues.
"I was here when we celebrated the 22nd anniversary [of the ADA], and I don't think we should celebrate it by giving STRs a complete pass on ADA," Moffatt said.
She presented five regulations she proposed the council add to the ordinance in order to make it more palatable. She concluded by asking the council to consider that purchasing a home is for many people the largest investment they will ever make, and she said that if the land development code is changed to allow Type 2 STRs, it will jeopardize that investment.
"We made [that investment] in good faith relying on the residential land code," Moffatt said.
Proposed amendments
Councilwoman Morrison proposed five amendments in her initial motion that closely resembled the regulations Moffatt requested:
1. Require ADA compliance in the ordinance
2. Reinstate a provision sent to the council from the Planning Commission that required Type 2 STRs be no closer than 1,000 feet from each other from property line to property line
3. Reduce the 3 percent cap on Type 2 STRs to 1 percent
4. Use language that preserves multifamily use and does not allow multifamily properties to be inadvertently turned into hotels
5. Define any property advertised as an STR as an STR for purposes of enforcement
Councilman Riley then made a substitute motion with his own set of amendments, most of which came from staff in the form of wording tweaks. He did, however, ask to change the wording capping Type 2 STRs to 3 percent per ZIP code to 3 percent per census tract.
Tovo and Morrison both requested amendments to Riley's motion that would have brought it in line with the motion Morrison had made, and he accepted amendments adding language to the ordinance that would require ADA compliance information be included in packets handed out to Type 2 STR licensees. He also amended the motion to make advertising a property as an STR prima facie evidence of its status as an STR and added language requiring the council review the issue in 12 months.
He did not, however, agree to the other amendments. He said he would not reduce the cap from 3 percent to 1 percent.
"I am open to revisiting this in the future, but I do not believe that this would be appropriate," Riley said.
He declined to add the 1,000-foot requirement, saying the issue of clustering is what he intended to address by moving the focus from the ZIP code to the census tract, and said he would not make the use an option neighborhoods could elect to have via a neighborhood plan.
Councilman Mike Martinez asked for and received a friendly amendment that would expressly allow for homeowners to lease the home they purchased back to the seller for short periods of time, as commonly happens when a sale occurs quickly.
Mike Cannatti came to the meeting to support the opposition.
"We were disappointed that there weren't more protections to prevent the system from kind of going haywire," Cannatti said. "There are concerns about what happens, especially with higher concentrations. Does it change the character of the neighborhood?"
He said he is encouraged that the council will review the issue after one year, though.
Jay Reynolds manages STR properties, and he said he is pleased with the ordinance passed and is confident it will allow the city to monitor the burgeoning STR industry and ensure the city is able to collect hotel occupancy taxes from STRs.
"That is the reason they passed this is to give the city the tools to monitor sort of an unknown industry. It doesn't make sense to heavily regulate an industry that nobody really knows anything about in regards to Austin," Reynolds said. "We're not a town that is a timeshare town that most people don't actually live in ... When you see a little offshoot, a really small amount of commerce in a certain area, you really don't want to just stomp on it."
