Austin looks to crack down on “bad actor” short term rental owners

Austin

AUSTIN (KXAN ) — The Austin City Council wants to do do something about the small number of short-term rental properties which continue to violate city rules, costing time and money from the city’s Code Department.

Short term rentals (or STRS) are residential dwellings or accessory dwelling units (ADUs)  that are rented temporarily for periods of less than 30 days. 

Thursday, the council approved a resolution directing the city manager to quantify the staff time and resources used to address short term rental issues, especially among properties that the code department is repeatedly called out to. The city manager is asked to report back to the council with these findings no later than June 20, 2019. 

“With some of those properties, I believe the research is going to show we’re not even coming close to capturing the true cost of enforcing,” said Mayor Pro Tem Kathie Tovo.

Tovo brought the resolution forward because a small number of short term rental properties — maybe a dozen or so– are taking up the resources of code enforcement officers. Some of those properties, she explained, are operating without any kind of permit at all. 

Austin’s Code Department said that there have been 1,659 complaints against STRs so far in 2018, and the resolution states that a small number of repeat-offender properties have made up more than 140 complaints during the year.

“We have several properties, including some that are in my district, where you have code officers going out, sometimes every weekend to try and enforce violations,” Tovo explained. These properties often bring their cases to the city’s administrative hearing process which requires more time and resources, Tovo added. 

“So it’s really not fair that those are being assessed the same level of fines as properties are not as demanding,” she said. 

Tovo said one solution could be increasing the fines against these “bad actors” so that those who follow the rules aren’t forced to make up the difference through permitting fees.  

She explained that the revenue that is coming into the city’s STR program has to pay for the cost of the program. 

“So if we’re putting more staff into enforcing our ordinance for bad actors, those costs have to be passed along, and that’s really not fair, we need to make sure we’re holding accountable the people who are driving up that cost and not the good actors,” Tovo said. 

The resolution explains that code officers have struggled to enforce the rules because the officers must witness a violation in person in order to issue a citation. Code officers often visit individual properties multiple times to witness a violation happening, which keeps them from moving forward with the process and ties up their time. 

Another problem for the city is the number of properties offering STRs without a license. As of the date of this report, the Code Department said there are 2,268 active STR licenses. 

For comparison, the resolution referenced reporting from the Austin American Statesman which showed there are as many as 8,000 STR listings in August alone on Airbnb. 

“What it’s saying is that it’s harder than ever to go get a permit,” said T.J. Clark, Co-Founder and CEO of TurnKey Vacation Rentals, commenting on the number of unlicensed properties in Austin. “We know that short term rentals aren’t going away and the city is now really admitting that they can’t enforce the laws they have on the books.”

Clark’s company helps homeowners get their homes into the STR process and offers short term rentals in a variety of places, including hundreds of rentals in Austin. 

He explained STRs can bring big benefits, it can offer guests from around the world affordable travel options and it can bring in extra income for property owners. 

Clark noted that the permitting fees for STRs increased in 2018, he wonders if increased code enforcement played a role in that. 

The fees for licensing, renewal and inspection for STR’s in Austin already amount to between $300 and $519 for the 2019 fiscal year, according to the resolution. 

Clark said that permitting fees and occupancy taxes are to be expected, but he believes the process now for getting licensed in Austin is challenging. 

Austin passed rules for STR’s more than 2 years ago.  By 2022 the ordinance will eliminate Type 2 STRs in residential areas, though they can continue to be built in commercial areas. These Type 2 STRs are dwellings where the owner doesn’t live on site or isn’t associated with the site. Under these rules homeowners who live on their property and want to rent it out for a short time can still do so.  

Clark believes these new rules limit options for people who own a second property and want to rent it out. He anticipated that code compliance would decrease as a result of the rules. 

“The city is finding that these small number of bad actors should be where they focus their attention and try to solve those problems, we think this is a fresh approach, hopefully they will take,” he said. 

Clark is hoping to see more public and private partnerships to crack down on the “bad actors” noting that platforms like TurnKey, HomeAway and Airbnb have tools within their platforms that can report property owners who aren’t playing by the rules and prevent them from doing business. 

Clark also noted that the Third Court of Appeals is seeing a case arguing that the City of Austin’s STR ordinance is unconstitutional. 

However, Tovo stands behind the city’s current rules. 

“We made a decision as a council and I think its a great one, that we’re not going to allow that [residential Type 2 STR] use any more, that we want to preserve housing for renters,” she said. 

“Over the last several revisions of that ordinance we’ve empowered staff to take more aggressive actions against those property owners who are running short term rentals without the ability to do so,” she said.  

Tovo referred to the Type 2 STR’s as “mini hotels in our neighborhoods.”

“And those are being phased out,” she added confidently. 

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