Short-term rentals prompt cities to action

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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

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13 comments
COMMENT
  1. Regulation of short-term rentals is key. Traditional homeowners insurance doesn’t cover vacation rental business activities, communities are recognizing this and regulation requiring at least $500,000 of liability can prevent allot of potential problems. Policies like the one Proper Insurance sells (https://www.proper.insure/) make short term renting lucrative and safe.

  2. Jared Hawthorne

    I’m sorry, but you know what this will result in? Decreased value in the Colleyville, Grapevine, Southlake, Westlake area. You start imposing regulated restrictions, and people are going to start looking at other areas to live in, because these areas will now have a “negative aspect” to them — i.e., “I own this property, but you’re telling me I can’t do what I want with my own property? Okay. Time to look in Carrollton or Euless, or NRH, Hurst, wherever. This just hurts resale value for the people in these cities.

    Oh well. Time to look into Carrollton!

  3. I’m no genius but Grapevine, Colleyville and Southlake are 3 of the most sought after cities in north Texas, this won’t change that. Bottom line is rich people won’t allow this in their backyards. Plus there are several big hotels in grapevine that are pushing this legislation through and padding the pockets of those in power. I believe at the very least Airbnb should be allowed in ones primary residence. And Carrollton will be the next city to ban it, I’m quite sure of that.

    • Jared Hawthorne

      Carrollton already has it on the docket to be discussed lol. Well, this just means I won’t ever buy a home. Simple. No one will tell me what I can and cannot do with my property, anywhere, period, ever. If I’m paying for it, it’s MY property, and I’ll do what I want with it. I don’t care about rich people, and their comforts. They won’t tell me what I can and cannot do, and I would take it all the way to the supreme court if that’s what it takes for sweeping legislation. That’s what Airbnb wants anyway — sweeping legislation. Just like those hotels (ahem Gaylord, ahem Great Wolf Lodge) that are putting their giant thumbs on our City Council members. All of this is ridiculous and only hurts resale value. When you buy a home, you’re assuming it’s yours to do as you please with, and once people realize there is an ordinance that keeps them from exercising their Homeowner Rights, they’ll pick somewhere else. Trust me, they will find somewhere else that can accommodate, and this will only hurt reselling in the future. As a Millennial buyer, I would NEVER purchase something with restrictions like this. Ever.

  4. All of us residents/homeowners owe a huge debt of gratitude to Mayor Tate and entire City Council. Would you want to live next to a full time short term vacation rental and party house? 95+% say no. I lived next to one and can show the data for what it’s like. That’s why STR bans in residential areas are increasing around the globe. The property rights of a few STR investors and absentee owners (75% in GV) do not take precedence over the property rights of thousands of residents who have the right to quiet and safe enjoyment of their homes in residential areas.

    • Jared Hawthorne

      I’m waiting on that data, Andrew! Let me know when you’ve got the evidentiary support online, where I can see it and make my own judgements.

    • Both sides of this issue are valid and correct. The traditional idea of Airbnb was to rent space in a personal home. The communal resource sharing has so many great benefits… too many to list. The problem is that with many Airbnb listings the original concept has changed to be a money making business. To me the solution to this problem lies within the distinction between these two approaches. If renting space in a home that one owns and lives in problems such as party houses do not exist. If renting a space that one does not live in or own, yes happens and is crazy, it is a business. Communities can tell if a person lives in the home they own by the homestead exemption for real estate taxes and I don’t know why municipalities are not using this guideline as a regulation. Perhaps because it is simple, rational, and makes sense! I have an Airbnb in my home and I watch this discussion all over the nation and shake my head at all the effort going into what I see as a pretty simple solution, but what do I know…….

  5. If the question is that STRs are businesses and businesses can’t be utilized in a residentially zoned area, what of the home office? Should that not also be taxed, regulated, and possibly banned? If the problem is noise violation, then fine the renter harshly. We are not absentee, we live across the street from our STR. We want to protect our neighborhood while covering some of the expense we have in having my father winter here with his wife. He can no longer manage the snow and ice at his home in the midwest. Having his home here for 6 months of the year will elongate his independence and quality of life. We’re just trying to make that happen while not going broke in the process. Party houses should absolutely not be allowed, but I would use fines to do this. Punishing responsible renters and homeowners is not the answer.

    • Hi Lisa! I wanted to let you know that if your father is staying with you for more than 30 days that does not qualify as a short-term rental, it would be a long-term rental with a six-month lease I would imagine. Those are still allowed in the city, but feel free to reach out to code enforcement to make sure.

      • Yes, the father would be a long term lease – anything 31 days or longer is. What, I believe, Lisa is trying to do is pay the bills while he is not there. If she can use the home as an STR for the 6 months her father is not in residence – then she has the potential of paying the bills for the entire year. That would reduce the fiscal strain on the family.

  6. As a homeowner in “another town” I have to say the hysteria over “party houses” plays right into the hands of the greedy large hotels and corporations who do put “their thumbs” on the city councils of towns. They love painting the picture of every short-term renter being a party animal, destroying the quiet neighborhoods.
    I have owned and operated Airbnb and VRBO rentals for over 5 years elsewhere and will tell you I have never once had any problem with disrespectful party animals. I’m sure it has happened but it is by far not the norm.
    I have in turn added thousands of dollars to the coffers of “my town” in the way of taxes collected, paying quarterly, on time and also paying the state portion of the collected taxes, far outweighing any taxes that would be collected otherwise. I also most often book my vacation stays in the wonderful and unique Airbnb and VRBO homes and avoid giving the money to large greedy hotel chains. It’s a true shame that corporations have convinced an uninformed city council of your town to yield to their rules.

  7. I find it interesting that Grapevine sent 77 letters of cease and desist…when after checking Airbnb, I find over 300 locations are offered in that area. Who is doing THAT research? This could lead to a cry of discrimination from those who have received those notices. I have belonged to two HOA gated communities; and will never again. The concept of keeping property values falls in the toilet when someone else dictates the color of your home, what you can park in your driveway, and whether you can hang a Christmas wreath on your door (among other ridiculous restrictions). My husband and I both sat on the boards for a while; and I can attest that there is some strong-arming and personal agenda issues on any board that are futile to surmount.

  8. Like almost every polarizing issue, there is a reasonable balance to be achieved when all sides listen and negotiate in good faith.
    I agree that there is some regulation that should be placed on the STR market to both protect community market values, safety, and health. Limiting occupancy to no more than 2 persons per bedroom and 1 car per bedroom can greatly reduce or even eliminate the chances of a STR becoming a party house. The utilization of rental listing services further reduces this risk because there is a traceable account path for law enforcement to follow if accountability for a crime is necessary.
    The reality is that there are legitimate reasons why short term rentals should be available.
    1. Families displaced due to a disaster in their own home. If a fire, flood or tornado makes a home uninhabitable for a month or two until adiquate repairs can be made, the family has to live somewhere. Imagine if it is your family that needs a house and can’t obtain one? How long will you be comfortable in a hotel? What about the kids who need to keep going to their school?
    2. Unexpected financial stress. STRs can provide a source of income that allows a widower, or owner who has an unexpected job loss, the means to stay in their home. Most of us remember 2009 to 2014 when the country went through this. Having options can prevent a bad situation from becoming deviating.
    3. Market value protection. When real estate takes a downturn, investors are usually the only ones buying. By limiting an investor’s ability to make money, you push that segment of buyer out of your market. Anyone who has sold a house knows that more buyers bring higher prices.
    I am in favor of smart regulation, but wholesale banning of the practice seems to have more downside consequences than benefits.

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Miranda Jaimes
Miranda has been in the North Texas area since she graduated from Oklahoma Christian University in 2014. She reported and did design for a daily newspaper in Grayson County before she transitioned to a managing editor role for three weekly newspapers in Collin County. Now she's in Tarrant County, mostly, and has been an Impacter since 2017 as the editor of the Grapevine/Colleyville/Southlake edition.
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