The big picture
This year's process came as Austin leaders had sought for years to update policies governing local short-term rental, or STR, operators and platforms like Airbnb or Vrbo.
City staff have cited challenges with regulating rentals and ensuring all spaces in Austin are licensed; thousands of units are now estimated to be operating off the books. They've also noted that enforcing unlicensed operations and neighborhood nuisance and safety complaints can often be difficult, or impossible. Unlicensed operations were also cited for not generating the city tourism tax revenue that'd otherwise go toward work like local cultural initiatives and the Austin Convention Center redevelopment.
While City Council members said they're hoping to address such issues, some revisions to Austin's STR rules remain on hold and could end up looking different later this year.
What happened
STR operators and platforms won't be working under a new framework just yet. However, council did approve changes to hotel occupancy tax, or HOT, collection policies for STRs taking place in one month.
Starting April 1, rental operators—and platforms—will be required to collect and pay HOT. The change will likely increase Austin's rental revenues as platforms start collecting taxes from all operators doing business in town, in addition to the licensed spaces submitting their own payments.
“This is really an unfair competitive advantage that STRs have had versus hotels. This, in one way, will help level the playing field now; you’re not getting a discount if you’re reserving an unlicensed STR," council member Chito Vela said.
Airbnb Senior Policy Manager Luis Briones previously said the platform has long been pushing for changes allowing operators to collect HOT on behalf of property owners in Austin. And Attorney Michael Whellan, acting as a lobbyist for Vrbo parent Expedia Inc., told council the platform will be ready for the new collection process this spring.
What else?
The development of new STR rules for Austin included a resident feedback period and a series of public hearings before city officials. The changes followed recent legal challenges to Austin and other cities' local STR policies, and would've made several adjustments to the oversight of rental spaces in town.
Citing ongoing legal proceedings and the potential for state-level regulatory changes out of the Texas Legislature, Mayor Kirk Watson called for a pared-down vote in February. Council advanced city ordinances including some of the new rules Feb. 27, but those won't go into effect until Oct. 1 after the state legislative session wraps up—and could be further tweaked in the summer or fall.
"In my view, we are not ready to make some of the key decisions and won’t be by Thursday [Feb. 27]," Watson wrote on council's message board earlier this week. "For me, I want us to be in consistent dialogue with leaders at the Capitol regarding the best approaches to addressing regulation of STRs. Additionally, I would like to see the City moving on licensing improvements and making the cost more in line with peer cities before instituting a new regulatory scheme. And, there are legal concerns that I would like answered."
Officials including council member José Velásquez, who proposed the October delay, said extra time will be needed as the Development Services Department procures and rolls out new software related to STR licensing and tracking. Council member Ryan Alter said he wants that new technology to help streamline operators' licensing, potentially increasing voluntary compliance through a better system. And council member Marc Duchen said the technology update should help Austin make the broader changes in the near future.
"I’m really hopeful that we select someone who we think has the right technology in this space to ultimately identify what could be thousands of scofflaws or bad actors, or just anybody trying to avoid paying taxes or otherwise out of compliance of current or future policies that we might come up with over the summer," he said.
