Grapevine starts enforcement of ordinance to 'protect single family' residences

The city of Grapevine in mid-September issued approximately 77 residents a cease-and-desist letter concerning their Airbnbs and other short-term vacation rental properties after the city revisited an ordinance aimed at preserving local homeowners’ quality of life.

This letter informed property owners that short-term rentals, or STRs, are illegal in the city of Grapevine and have been since 1982, with more specific language added to this ordinance in 2000. A Sept. 4 Grapevine City Council meeting affirmed this prohibition with a unanimous council vote. The letter said STR property owners have until Oct. 22 to terminate rentals or be faced with a $2,000 fine for each day of operation.

Grapevine officials’ main reason for reinforcing the ordinance is responding to an increase in the number of noise complaints related to the STRs, and city officials are joined by Colleyville and Southlake in efforts to curb short-term rentals.

“We’ve worked very hard over a long period of time to separate the commercial from single-family neighborhoods,” Mayor William D. Tate said at an Aug. 21 council meeting. “It’s what has made Grapevine great and a wonderful place to live. It certainly undermines the whole theory of zoning for a single-family neighborhood for these things to exist.”

However, the enforcement of the ordinance has several residents who count on the income from STRs crying foul. This was the case for Kari Perkins, who said her Airbnb property helped her pay the mortgage, care for her sister and pursue an online education.

“I’m probably going to have to put off my doctorate,” she said following the council’s ruling.

Lisa Nichols, another Grapevine resident and STR owner, said when she asked the city two or three years ago if there was anything prohibiting her from using her property as a STR, she was told there was no problem.

The city will enforce the ordinance by having staff patrol STR websites and utilizing “other available resources,” Grapevine Assistant City Attorney Matthew Boyle said in an email.

Grapevine Development Director Scott Williams said STRs have been identified through addresses where the police received STR-related complaints, tips from neighbors, a list of owners from the Sept. 4 public hearing and companies that identify
the properties.

This decision has some residents questioning how property owner rights can coexist with this ordinance.

The short-term rental disruption

Residents have vocalized their concerns to Grapevine City Council at meetings saying STRs bring strangers into residential areas and lead to increased noise levels late at night.

STR “party houses” were brought up several times by both council members and Grapevine residents at the Sept. 4 council meeting in reference to homes listed that allowed large groups to stay and encouraged parties. However, Grapevine resident and STR owner Cheryl Helms said eliminating STRs altogether is not the solution.

“Even the people that were arguing against [STRs], they were not arguing for a total ban,” she said. “They were asking for regulation or some kind of limits on the very large party houses.”

Helms said she had looked at renting her property to long-term renters but said STRs were less likely to be damaged as the renters would not be in the home long and that STRs offer a better income than long-term rentals.

Data from AirDNA, which pulls data directly from Airbnb to find rental trends, shows an entire house in Grapevine can be rented from $70-$188 a night. With more than 70 Grapevine rental listings on Airbnb, these properties together had the potential to generate more than $170,000 in revenue for this past August alone.

Tate stood by the city’s original ordinance to prohibit STRs, however, saying the council has worked for years to protect single-family neighborhoods from commercial zoning.

“If you don’t prohibit [STRs] then you have the nightmare of regulating them,” he said at the Aug. 21 meeting.

Earlier this year Southlake opted to ban STRs and created a new ordinance that gave residents six months to fulfill standing obligations.

“People pay a lot of money in Southlake to live in neighborhoods that have very strict [homeowners association] rules,” Mayor Laura Hill said. “You have to consider the quality of life of your citizens.”

Meanwhile the city of Colleyville has drafted an ordinance prohibiting STRs that should go before the planning and zoning commission in October, Colleyville Community Relations Director Erin Spicer said. Pending the P&Z recommendation, City Council will consider the ordinance next.

Taxing and occupancy regulation

The state comptroller’s office website said that as homeowners rent their homes or rooms in their houses, they must collect a hotel occupancy tax from guests the same way traditional hotels or motels do. The state of Texas has a 6 percent hotel tax, and Grapevine has a 7 percent hotel tax.

Several rental property owners told Grapevine City Council at the Sept. 4 public hearing for STRs they had sent these taxes to the city and that the city had kept these revenues in spite of the ordinance against STRs.

Of the approximately 70 identified STRs in Grapevine, however, Chief Financial Officer Greg Jordan said only four of these property owners registered for hotel occupancy taxes in the last year, allowing the city to collect approximately $18,000 during the current fiscal year for STR properties.

“I think in many cases those people were paying the state portion, and those dollars were going to the state,” Jordan said. “So they were in fact paying hotel occupancy taxes—they just may not have been paying the city’s hotel occupancy taxes.”

Airbnb Public Affairs Representative Ben Breit confirmed Airbnb collects hotel taxes from Texas STR property owners to give to the state as part of a 2017 tax agreement.

On a local level Airbnb always seeks to collaborate with cities on potential Airbnb taxing and occupancy regulations, Breit said. For example, Airbnb is collecting local hotel taxes for cities in Alabama and Denver in addition to statewide taxes. Airbnb also has citywide registration systems for city administrators and hosts in Chicago, New Orleans and San Francisco, a report from Airbnb said.

Grapevine did not collaborate with Airbnb or other STR companies, Grapevine Public Information Officer Mona Burk said. Rather, the city engaged in a study period that included three public meetings and one formal public hearing before reaching its decision.

The future of STRs in Texas

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 HOA when he began using his San Antonio residence as a STR property. The HOA said the practice violated the portion of his deed restrictions that said his home must be used “solely for residential purposes.”

The argument is when a person begins using their home as a vacation rental, it becomes more like a commercial business than a residence and creates competition for the hotel industry.

After the May 29 ruling, The Texas Tribune reported the outcome could threaten cities like Austin that have more strict and complicated STR policies. Since the ruling applies to an HOA against a homeowner, it does not directly connect to city-level restrictions. It does, however, place an emphasis on property owner rights.

Hill said STRs become an issue when one property owner’s rights infringe on another’s.

“I do see the argument that you should do what you want to do in your home, but does it cross a line when you turn your home into a business?” she said. “That’s my question.”

Additional reporting by Rachel Nelson