Movement to ban STR's

97 Replies

I've been trying to follow what is happening on the STR front nationwide and would love to hear from BP members about what's happening in your particular city/location as far as restrictions? When we bought our property in Colorado Springs, I knew there was a chance we only had a window to do STR's in as I saw Nashville beginning the start of a ban. A year and a half ago, the city of Colorado Springs was extremely STR friendly. After we closed on our property, we heard about restrictions being discussed and I was very involved in that whole process. The permitting process and rules which were instituted at the start of this year seemed very fair and reasonable to people on both sides of the issue. Somehow in the past several months, all on our city council except for two members have decided they pretty much want to ban any further STR's other than owner/occupied despite the lack of any verifiable data showing any issues (no permits have been revoked and very, very few complaints to code enforcement). I do believe they will grandfather in those who currently have a permit. We had quite a bit of success at the start by banding together and forming an alliance of owners, but that influence doesn't seem to be helping at this point. I did see the Texas State Appeals Court just struck down the city of Austin's attempts at banning non-owner occupied which could mean more STR owners will turn to the legal system if they feel the city isn't treating the issue fairly. If you are an STR owner, I'd love to hear what your city is doing?

Zero happening in my market. No rules, no permits, not much of anything. Nothing but vacation rentals around here. If they got rid of them everyone would starve to death. 

Not much changing in my market. County had us register to make sure Vrbo was sending them the accommodation tax.

I do hear of more and more locations making moves to restrict or ban STRs.

What does STR stand for? I the biggerpockets library says it stands for on-street parking, but I am not sure if that is being described here

The market for furnished rentals is a lot larger if you think of it as a "furnished rental" rather than as a "short term rental."

When a nurse is in town on a 3 month contract gig, where are they staying (healthcare is a big employer in my area)? When an actor is in town for a play that's going to be in rehearsals for a month then run for 2 months, where are they staying? That wedding planner has a short list of suggestions for where the bride and groom should stay, are you on that list as an option (near me is wine country => lots of weddings happen there)? XYZ Medium Sized Company takes on 3 unpaid interns per year but covers their lodging, who do you know at XYZ Medium Sized Company? Almost any industry or region you can name has stuff like this. Hotels dominate these things b/c they are markets that typical AirBnB hosts don't even know exist, meanwhile the hotels are building corporate B2B relationships (& not giving a cut of their action to AirBnB to boot). 

The DC area's 4 largest jurisdictions of Montgomery County (1.1 million people), Fairfax County (1.1 million), Washington DC (700k) and Prince George's County (900k) all have short term rental restrictions in place.  All have passed legislation within the last 18 months or so.  All lobbying on the issue has been done by home owner organizations, civic groups etc. No lobbying by short term rental owners or hotel industries have occurred.  Response has been overwhelming, and I  believe the vote in each jurisdiction has been reached with unanimous consent from each county council.

@Chris Mason our back up plan has always been to do furnished rentals to traveling nurses or executives for the 30+ days if STR's were to be completely banned here. Right now I'm not too concerned about ours as it's in an R4 zone (they are only talking about R1 or single family zones right now) and they have indicated they would grandfather in existing permits. But after seeing the situation where the Texas state court of appeals overruled the city of Austin, I was just really curious what is going on around the country when it comes to this situation.

@Russell Brazil Interesting that no STR owners are speaking up. Maybe they are quite happy to convert to LTR.

Our city isn't doing anything yet.  They have been in the process of changing zoning laws, and the process has been going on long enough that STRs weren't considered at the time of the initial draft.  It is somewhat unnerving to know that a law could be passed overnight that could put your business model at risk.

It seems to be one of those issues that is easy for local governments to kneejerk on if they have a few vocal residents complaining.   In the news, all they hear about are the impacts to housing affordability, transient neighborhoods, and noise/party houses. Politically, its just much easier for them to enforce strict rules that err on the side of caution.  They don't have large enough incentives to defend host ability to operate that would outweigh the political risks of taking insufficient action on an issue they have been told can have drastically negative impacts on the residents of their city.

I think the question we as host need to be able to answer is how we can change the equation for the elected officials?  What incentives can we provide them to support our positions?

@David Bergmann our Colorado Springs Short Term Rental Alliance leaders have done a phenomenal job of providing the council with stats and helping organize letter writing campaigns, etc. The overwhelming majority who show up at the council meetings here are Pro-STR with a very, very small vocal minority in the anti-STR ring. There are some politically connected B&B owners who have the ear of several council members so I'm not sure if that's what's driving this sudden change or not (they obviously see STR's as competition). I think it comes down to holding politicians accountable for what they say during a campaign and then what they do once elected. COSTRA tried interviewing all running members -one refused to talk which should have been a heads-up to all voters (Really? You're not going to state your position on an important issue?) - and one stated plainly he was totally in favor of STR's and now has completely reversed positions. I feel that's wrong. If he was against them, he should have stated that up front and the council member who refused to state a position at all should have never been elected. It feeds into why so many people don't trust politicians at all. Now that the STR owners in Austin have won a legal fight, I think we will see more legal action happening.

Originally posted by @Brian Spies :

What does STR stand for? I the biggerpockets library says it stands for on-street parking, but I am not sure if that is being described here

Short Term Rental

As it stands, the city started requiring registration and annual safety inspections a couple years ago. Now the county is considering the same but they will likely stop at registration. 

The problem is, who's going to track and enforce? There are only 100 STR registered in City limits and I suspect there are quite a few more than that flying under the radar.

@Chris Meadors

South Lake Tahoe has banned STR in residential neighborhoods. They will be phased out over the next couple of years but will still be allowed in commercial and tourist core areas inside city limits. Outside the city limits, the county is making more requirements for STR but is currently still allowing them.

These towns are ridiculous. Folks its called revenue!!!! I'd bet all of these towns are having budget issues and the like. The complaints of STR's are all one-off issues (similiar to Uber). If you don't take care of your property the people should hammer them with bad reviews. If you don't read the reviews who's fault is it. Thank god for our local governments if it wasn't for them I'd drown on my own spit (sic.).

I haven't seen or heard of anything like that in my area. But it does seem like more and more cities are either restricting them or have a full on ban. If you are considering on continuing to invest in STR you might also take into consideration the rents in the area as a backup in case STR goes south.

They're pushing for it here in Richmond. I have friends who do STRs here and in other parts of the country, who are doing very well. I stay in STRs all the time myself, so naturally I want them to remain legal. However, it looks like most medium to major metros are trying to shut them down. One of the many reasons I'm sticking to buying longer term rental properties.

In MN, the talk is to rezone properties from residential to commercial, which will triple the property tax, in our case, a 8000 per year swing.  It just showed up on our local paper a couple of weeks ago. I haven't heard much else about it, other than that 1 article. It will be a game changer if it happens. Would be the 2021 tax year. That doesn't count the state license,  or the sales tax, or the lodging tax. 

@Robin Searle

They got banned here in Arlington, TX as of October. My buddy sold his profitable SFR in 2018 and did a 1031 exchange into two really nice 4 bedroom homes just a couple miles from the entertainment district. He spent over 70k on furniture and his homes looked like the nicest ones on the block. He took pride in them and it showed. Then...It seemed like the city shut down STRs overnight. All of them were banned for good unless they were less than a mile from the Cowboys stadium/six flags area. He had to sell them both since they couldn't turn a profit with the rent range they were in if he turned them into SFRs. He lost about 40k on this venture after selling both homes for about what he paid for them or less.

I think the writing has been on the wall as far as STR regulation goes ever since the epic NYC vs. AirBNB lawsuits going back to 2011. The brutal losses for AirBNB set the precedent that it's a legit zoning issue and STR's can be considered as commercial activity in residential areas, leaving them open to regulation by municipalities pretty much carte blanche as they see fit, at least in terms of how they can write ordinances. It's been dominoes since then, and by now most major cities and many minor ones, not just in the US but also in Europe, have regulations in place. However AirBNB and other STR platforms haven't given up, they're still fighting (and occasionally winning) legal battles with NYC and lots of other cities like Boston, San Diego, Miami to name a few. However these days they're not usually fighting to avoid regulation itself as that battle is mostly lost, but rather smaller battles such as to avoid having to turn over their data to enforcement agencies including their host's names, addresses, and number of bookings on a monthly basis (AirBNB recently won against NYC in such a case as a federal judge ruled that would be unconstitutional). They're also fighting and winning to avoid having to collect the occupancy taxes on behalf of cities as well as to avoid having to self-enforce the regulations levied by cities or being responsible for ensuring the rooms and homes listed on its sites comply with zoning or health regulations like hotels are required to do. So although AirBNB may have lost the full frontal war, they may be winning the guerrilla war. On top of that, even though NYC famously defeated AirBNB in court, there are still a ton of illegal STR's in that city as there are in many other areas where they are "banned", so there's a big difference between being regulated and having those regulations effectively enforced.

Before they became regulated here in Boulder, many long-time residents felt STR's were effecting historic neighborhoods negatively not only by exacerbating an affordability problem but also by converting neighborhoods from communities where neighbors knew each other to something more like hotel districts. So I see why the city imposed some very strict ordinances here (owner-occupied only, limited number of stays per year, application fee, business license fee, annual STR license fee, limited number of STR licenses issued per square mile area, requirement to report income and pay 11% occupancy tax, SmartRegs/energy efficiency standards requirements on the building envelope similar to LEED certification in order to receive a rental license). Boulder County allows non-owner occupied but caps the number of nights and has a bunch of hoops to jump through that make it pretty difficult to get a license. They're currently reviewing whether or not they want to continue even allowing non-owner occupied at all so tricky time to invest in STRs here in BoCo.

Vacation areas seem less prone to being as heavily regulated but if there are enough complaints from full-time resident neighbors, more ordinances are bound to come to those areas eventually as well. We're seeing this starting to happen already here in mountain towns like Breck and Vail which now require someone local to be on call 24-7 to handle any issues with late night partying noise complaints so the police don't have to, which is in response to angry neighbor's complaints taking up too much time for the police. Or like Crested Butte which capped the number of STRs to 30% of housing stock and charges $1500/yr for a license. Or like Routt County which banned STR's altogether recently. Telluride has actually had strict STR restrictions going back to 1980, which was pretty forward-thinking! They updated them in 2010 and currently "the total number of days that a property may be rented on a short term basis in the residential zone districts must be a cumulative of 29 days or fewer in a calendar year no more than three times in a calendar year. For example, you may rent your property once for 15 days, once for 10 days and once for 4 days total in a calendar year."

The STR game seems to be somewhat like a gold rush: it's "boom and bust" and those who get there first and stake a good claim can indeed get rich, until the gold runs out that is. Also like a gold rush, the ones selling "picks and shovels" have a better chance at consistent returns (in this case RE agents selling properties, PM's managing STRs that charge 30-40%, and of course the online platforms themselves as evidenced by AirBNB currently being valued at an estimated $31B which is up there among the biggest hotel chains).

Originally posted by @Robin Searle :

If you are an STR owner, I'd love to hear what your city is doing?

I'm just up the road in Fort Collins. My understanding is you have to be in the "hotel district" (basically College Avenue) in order to be granted STR friendly zone in the City of Fort Collins. We own a rental in "rural Larimer County" but it is a small pocket of 1960's-1980's houses on acreage lots basically "in" Fort Collins but "non-Fort Collins city limits" and they are reviewing STR in these areas. I'm less than 3 miles from the Colorado State University campus for reference. I spoke with one agent in a small business owners group I am in and he basically said I was in the "Wild West for STR and anything goes" but the Larimer County website says 31 days and longer.

Currently the only "open zone" for STR's is Estes Park and Redfeather Lakes districts in Larimer County I believe. But the county obviously sees the revenue potential and I think will go back to allowing STR if you:

1. Apply for a STR license

2. Meet all inspections.  

Both 1 and 2 have fees which the county also sees as a revenue stream.

I may be way off base here, but one strategy for your local market might be to find an area that is deemed "rural county" but still close enough to where the action is in a desirable market. County rules seem to be way different than local city. At least that would be my strategy if focused on STR.

We have had an STR Duplex in San Diego city for 20 years. Around 2 years ago the city council passed some anti STR regulations that would have limited STRs almost exclusively to owner occupied. A petition was started to put it before the voters and the city council rescinded the regulation. At the city level there has been little effort to resurrect any anti STR regulations.

However, the state regularly proposes statewide anti STR regulations that fail to get passed. I believe it is just a matter of time before a statewide anti STR regulation is passed. Fortunately, I expect the initial anti STR regulation will not be extreme, but I suspect will more extreme with the passage of time.

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