AUSTIN (KXAN) — On Thursday, Austin city council worked through several changes to how the city regulates short-term rentals (STRs) — think Airbnb or VRBO. Ultimately, some major changes proposed by the city were delayed until local leaders can get a better grasp of ongoing lawsuits and what the state legislature may do surrounding STRs.
“I want us to be in consistent dialogue with leaders at the Capitol regarding the best approaches to addressing regulation of STRs,” Mayor Kirk Watson posted on the message board earlier this week.
The proposed changes included moving Austin’s STR regulations from the land development code to its business code. City council voted to push those changes through, but delay the implementation until Oct. 1. That will give staff the ability to ensure the new rules comply with any state law changes pursued by the legislature.
“For a number of years, we have had short-term rentals that are operating in our city that are unlicensed. We’re talking about more than 10,000 STRs running in our city that are not licensed,” Mayor Pro Tem Vanessa Fuentes said going into Thursday’s meeting.
Council members will not delay the implementation of a change surrounding hotel occupancy tax (HOT). The city will begin collecting that tax from short-term rental vendors starting April 1. Fuentes also asked the city to move quickly on finding a vendor that could help streamline the city process for permits and get owners into compliance.
“We want to ensure that we do what we can in a way that that allows us to move forward, to get more short-term rentals into compliance and licensed,” Fuentes said.
What are the proposed changes?
There are several short-term rental ordinances city staff proposed earlier this year. The city defines a STR as somewhere that is rented out “for periods of less than 30 consecutive days.”
Within the amendments, proposed changes include:
- To operate a STR on a property that has three or fewer units, the license holder must be an individual (“corporations would not be allowed to purchase a property under another LLC and then operate it as a short-term rental,” Daniel Word, the assistant director of Austin’s Development Services Department, has explained)
- If that individual wants to operate more than one STR in Austin, those rentals would need to be at least 1,000 feet from each other (in the case of apartments or housing with more than four units, a cap of 25% of the units would be placed)
- The changes would require platforms to collect the same tax hotels do, called Hotel Occupancy Tax (HOT)
“One of the elements of the ordinance is that the platforms will require hosts to provide the license number in the advertisement, and will de-list properties that are not licensed upon request from the city,” Word said.
The city said existing STRs will be allowed to continue under the new rules as long as the properties are not a nuisance and ownership remains the same. That only covers STRs that are currently permitted with the city. There are roughly 2,200 of those right now, Word said.
Again, most of those proposed changes will not go into effect until later this year, if at all. The idea is that city council will revisit the rules after the state legislature has wrapped up.
You can read more about those proposed changes here.
Previous public comment
Earlier this month, the Planning Commission and Austin City Council members heard from members of the short-term rental community, rental hosts and neighbors plagued by nuisance short-term rentals.
“We need the planning commission and the council to understand that these un-staffed hotels are not appropriate for our neighborhoods and that they bring with them a lot of safety concerns and neighborhood compatibility issues,” said Rose Ballard, one of the speakers.
Ballard said there had been several instances of violence, including a shooting, stemming from short-term rentals in her neighborhood.
Meanwhile, hosts of short-term rentals also showed up to ask that the rules not overly restrict them, make hosting more expensive, or in the case of Darrell Gest — who said he has operated a permitted STR with his wife since 2014 — he requested more slight changes to the rules, including maintaining privacy for hosts during the listing process.
“For us and our neighborhood, it’s a small neighborhood, I believe we’re the only STR in there…but the fact that we live in the home and people are coming into our home and staying with us, it reduces a lot of the other problems and concerns that other people may have,” Gest told KXAN.
Several representatives from Expedia Group, the parent company for VRBO, were also in attendance or spoke at that meeting.
“We were grateful for the extensive stakeholder engagement the entire [city of Austin] team has done so far throughout this process. VRBO is proud to be headquartered in Austin and along with other Expedia group brands, proud to play a key role in Austin’s economy… we encourage responsible short-term rental regulations because a diversity of lodging options is an integral part of any thriving tourism ecosystem,” Jaclyn Terwey, the regional manager of government affairs for Expedia Group, said during Tuesday’s meeting.
Terwey said the rules Austin have so far drafted are “clear and without prohibitive barriers for compliance.” Terwey also said the platform is prepared to start collecting Hotel Occupancy Tax, one of the proposed changes, but that they were working with staff to clarify some language in the proposed ordinance.
According to Airbnb, a survey of hosts in Austin from late 2023 to late 2024 showed more than 70% used the extra income they got from hosting to cover personal living costs. More than 50% surveyed told Airbnb that the extra cash helped them stay in their home.
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