Movement to ban STR's

Movement to ban STR's

Real Estate Agent · Colorado Springs, CO · Member since 2017 · 224 posts · 201 votes

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any further STR's other than owner/occupied despite the lack of any verifiable data showing any issues (no permits have been revoked and very, very few complaints to code enforcement).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?

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Chris MasonPro Member
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Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
6y

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). 

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  • Member since 2019 · 6 posts · 0 votes
    6y
    Originally posted by @Chris Mason:

    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). 

    Fair points but there are some important differences between traditional corporate housing and Airbnb crossovers looking to crack that market.  Large facilities like Oakwood have scaled amenities like a convenience store, gym, conference facilities, pool/spa, and networking spaces.  They have 24 hour security and controlled access  They are located close to prime locations that serve their customers (the Oakwood across the street from Universal Studio's backlot here in L.A. comes to mind).  And they have a nationwide footprint and huge head start in corporate marketing.  An Airbnb host is limited to Facebook (or the like) and its guest is priced out of multi month stays given the 9% vig it charges guests for all reservations.  You'd have to be nimble and find a niche that is specific to your facility and neighborhood.  Not saying you can't do it but it requires a certain degree of finesse.

    Not sure how the wedding party fits into your thesis--theirs would be a short term stay that is already primed for Airbnb although as you say marketing to a multi level channeler like a planner is good idea.

  • Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
    6y
    Originally posted by @Nolan Clark:

    I still see listings in cities with strict regulations or bans so my take is that it doesn't matter. Hosts are going to list their property whether it's legal or not. As long as Airbnb and other STR platforms protect their privacy, what can they do about it?!

    Illegal STR's are definitely still flying under the radar, especially in larger cities like NYC where there are so many it's hard for code enforcement to catch them all (which is why one of the recent lawsuits between NYC and AirBNB sought to compel AirBNB to self-enforce), however there's always a significant risk of getting caught. NYC issues a lot of $999 fines for the first offense and up to $7,500 per instance for subsequent offenses. In small to mid-sized cities like Colorado Springs, code enforcement often knows what's happening around town a lot more than in big cities, basically on a house to house basis a lot of times, and it's actually super easy for smaller towns to enforce. All they have to do is look at listings online and cross-check if they have the required license. I believe there's even existing software that code enforcement agencies are using to scrub listings and identify illegal ones more easily now too. I've heard of several people here in Boulder receiving $12,000 fines for violating STR rules. Denver is even doing sting operations and charging people with felonies: https://denverite.com/2019/07/... I think Miami Beach has the harshest penalties and for awhile was issuing $20,000 fines, with one unfortunate STR landlord receiving 3 of them: https://www.miamiherald.com/ne...  I wouldn't feel comfortable trying to fly under the radar personally because you've got to advertise online where anyone, including code enforcement, can see it. 

  • Investor · Napa, CA · Member since 2016 · 97 posts · 62 votes
    6y

    Here in Napa Valley, California the county just issued a $100,000 fine to an STR who was operating without a license.  In July of 2018 the city of Napa actually arrested and imprisoned a man for running a non-licensed STR! Napa Valley currently has 126 active licensed STR permits. At one time the number was well over 200 but many were phased out by the lack of license transferability to a new owner. Additionally, there are some neighborhoods that allow STR without a permit. For a high tourism area, Napa Valley is highly regulated.  

  • Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
    6y
    Originally posted by @Mike Bolen:

    Here in Napa Valley, California the county just issued a $100,000 fine to an STR who was operating without a license.  In July of 2018 the city of Napa actually arrested and imprisoned a man for running a non-licensed STR! Napa Valley currently has 126 active licensed STR permits. At one time the number was well over 200 but many were phased out by the lack of license transferability to a new owner. Additionally, there are some neighborhoods that allow STR without a permit. For a high tourism area, Napa Valley is highly regulated. 

     Damn $100k that's 20 bottles of white Screaming Eagle. 

  • Investor · Napa, CA · Member since 2016 · 97 posts · 62 votes
    6y

    @Steve K. Screaming Eagle is some fine vino, owned by Los Angeles Rams team owner Stan Kroenke. 

  • Investor · Colorado Springs, CO · Member since 2015 · 40 posts · 40 votes
    6y

    I am an attorney in Colorado Springs. I am currently representing a client in a neighboring city that is being charged criminally for operating a STR without a business license. While I am cleaning up the issue the city is having him pay his retro city taxes, lodging taxes, etc. Also they forcing him to convert from residential water rates to commercial and to pay the retro fees on those fees. All fees have late fees, failure to file fees, etc.

    Moral of the story, if the government smells money they will find it. It may take them some time but they will.

  • Real Estate Agent · Napa · Member since 2019 · 15 posts · 7 votes
    6y

    @Dustin Allen yes thank you for the clarification.

  • Real Estate Agent · Napa · Member since 2019 · 15 posts · 7 votes
    6y

    @Joe Kim Great question. My understanding is that there are a limited number of STR licenses (in the 40-50 range) in Napa. Outside of that there isn't really a "ban" but more so a 30 day minimum rental period, for non-license holders, which in effect is supposed to serve as the ban. City tries to monitor with 3rd party services, fines are issued. Fines start small though and some folks just pay them and consider them cost of doing business. Neighbor watch is part of it too. Sonoma is more lenient, especially in Sonoma County (not sonoma town) so we typically direct investors focused on STR to Sonoma.

  • Hatfield, PA · Member since 2012 · 1k+ posts · 629 votes
    6y
    Problem here is probably not the city but the person who's trying to  not follow  whatever version of code or zoning  there is.  If there's nothing on the books to prevent it,  then the city has no case.  If there is, then there is no pity on people who don't follow it.

    we had an idiot in the town that decided to open a bed and breakfast, because it's a permitted use. didn't even bother checking apparently. That just means it doesn't have to go through the zoning board but you still have to check with the zoning officer. There were set back and property size and signage and parking requirements that this person totally didn't bother to check. A couple months later, the sign came down and it magically turned into a vacation rental.

    Originally posted by @Tim Priebe:

    I am an attorney in Colorado Springs. I am currently representing a client in a neighboring city that is being charged criminally for operating a STR without a business license. While I am cleaning up the issue the city is having him pay his retro city taxes, lodging taxes, etc. Also they forcing him to convert from residential water rates to commercial and to pay the retro fees on those fees. All fees have late fees, failure to file fees, etc.

    Moral of the story, if the government smells money they will find it. It may take them some time but they will.

  • JD MartinBusiness Member
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    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    6y
    Originally posted by @Trey Farmer:

    @John Morgan  Texas' state court just ruled that Austin's limitations on STRs are unconstitutional.  Not exactly settled yet, but might affect things in Arlington as well...https://www.kvue.com/article/m...

    It only rules that parts of it are unconstitutional. It does not say that cities do not have the right to limit or regulate short-term rentals. As STR is a commercial enterprise I have no doubt Austin will go back and rewrite the code to remove the unconstitutional parts.

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  • JD MartinBusiness Member
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    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    6y
    Originally posted by @Robin Searle:

    @Ken Latchers I’m a Realtor and I absolutely believe in everyone’s right to quiet enjoyment of their home. I also believe in private property rights which I would think every investor in this site would be of the same mind. What you are talking about should be addressed by regulation and code enforcement not outright bans in my opinion. You might be all for government overreach until it affects something you want to do with your own property that was not only allowed but encouraged by your city when you purchased!

    There's no reasonable way to "code enforce" STRs, which is why commercial enterprises such as motels are regulated differently than residential activities. No town or city has enough police presence to police STRs all over the town/city. Further, how exactly do they enforce it? The "renter" is typically only there for 1-5 days. It is entirely possible that every other day the police would be at a house providing a new "warning" to the "renter", whereas in a typical rental situation that renter can be held to any other standard as a resident of the community.

    Your desire to make money from a neighborhood house that was never designed for commercial activity should not trump my right for peaceful enjoyment of my property, which includes the right to be part of a neighborhood, interact with my neighbors and have some idea who is living around here - that is one of the reasons for the "sex predator" registries, for example - so that people who live in residential areas have some idea who their neighbors are. Can STRs screen for sex predators? Doubtful. Can motels? Doubtful, but that's why they are in their own commercial areas.

    I don't doubt that STRs are going to be around for a while but I also predict that virtually every community will eventually have enough costs and regulations surrounding it that the profitability will be dubious at best. I think there's a reasonable argument to be made for having STRs, especially in areas lacking any/enough motel/hotel facilities, or in areas where transience is a fact of life - oil fields, for example. But STRs should be thus zoned like any other activity and the people who have vested their lives in these areas should have the opportunity to decide for themselves what kind of neighborhood they want to live in, instead of having these commercial activities foisted upon them by largely out-of-town capitalists who don't have to live next door to their activities.  

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  • Rental Property Investor · Union, ME · Member since 2018 · 161 posts · 104 votes
    6y

    My city permits them, they give out a certain number of permits and you have to apply to get it. Once you have it, all you have to do is renew it by a certain date and you do not need to reapply. The problem is that they limit it to 100 units in a city of around 15,000.00, and my area is almost entirely tourist based. Completely restricted the market. Neighboring towns now have the corner on AirBnB's and they were nicer areas to begin with. Stupid decisions. 

  • JD MartinBusiness Member
    Moderator
    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    6y
    Originally posted by @Bryan Clement:

    My city permits them, they give out a certain number of permits and you have to apply to get it. Once you have it, all you have to do is renew it by a certain date and you do not need to reapply. The problem is that they limit it to 100 units in a city of around 15,000.00, and my area is almost entirely tourist based. Completely restricted the market. Neighboring towns now have the corner on AirBnB's and they were nicer areas to begin with. Stupid decisions. 

     By allowing it and permitting it at all, if someone decided to make an issue out of it it is likely they would have to provide some rationale for what sounds like a completely arbitrary number (why 100? why not 10 or 1000?). Most cities/towns are going to have a lot of difficulty with this issue if they don't approach it from a fact & rationale approach when it comes to licensing and permitting; they'd be on safer ground banning it altogether as commercial activity in residential zoning. 

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  • Rental Property Investor · Union, ME · Member since 2018 · 161 posts · 104 votes
    6y
    I think they are permitting them as single-unit hotels, meaning, as you said, the rationale is they are permitting an exception to the zoning, rather than just coming up with an arbitrary number. Although I agree, it does seem like a rather arbitrary number!
    Originally posted by @JD Martin:
    Originally posted by

    My city permits them, they give out a certain number of permits and you have to apply to get it. Once you have it, all you have to do is renew it by a certain date and you do not need to reapply. The problem is that they limit it to 100 units in a city of around 15,000.00, and my area is almost entirely tourist based. Completely restricted the market. Neighboring towns now have the corner on AirBnB's and they were nicer areas to begin with. Stupid decisions. 

     By allowing it and permitting it at all, if someone decided to make an issue out of it it is likely they would have to provide some rationale for what sounds like a completely arbitrary number (why 100? why not 10 or 1000?). Most cities/towns are going to have a lot of difficulty with this issue if they don't approach it from a fact & rationale approach when it comes to licensing and permitting; they'd be on safer ground banning it altogether as commercial activity in residential zoning. 

  • Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes
    6y
    Originally posted by @Chris Mason:

    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). 

     Most people wouldn't consider someone staying 30+ days a "short term rental".  The term is now colloquially used to mean people renting their homes out on sites like airbnb/vrbo for sub 30 days to mostly vacationers to take what would normally be hotel stays. 

    Most places that ban STR still allow 30+ day rentals.

  • Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes
    6y
    Originally posted by @JD Martin:
    Originally posted by @Bryan Clement:

    My city permits them, they give out a certain number of permits and you have to apply to get it. Once you have it, all you have to do is renew it by a certain date and you do not need to reapply. The problem is that they limit it to 100 units in a city of around 15,000.00, and my area is almost entirely tourist based. Completely restricted the market. Neighboring towns now have the corner on AirBnB's and they were nicer areas to begin with. Stupid decisions. 

     By allowing it and permitting it at all, if someone decided to make an issue out of it it is likely they would have to provide some rationale for what sounds like a completely arbitrary number (why 100? why not 10 or 1000?). Most cities/towns are going to have a lot of difficulty with this issue if they don't approach it from a fact & rationale approach when it comes to licensing and permitting; they'd be on safer ground banning it altogether as commercial activity in residential zoning. 

     Why is the speed limit 65 and not 66, or 100, or 1?   Almost every rule is arbitrary.  We elect on people to come up with those arbitrary numbers since everyone would have their own version of what's ideal. 

  • Rental Property Investor · St Augustine, FL · Member since 2019 · 74 posts · 47 votes
    6y

    @Robin Searle in my area- St Augustine, FL- we have specific zoning requirements which have been set before Airbnb and VRBO became popular. It is a tourist town to a degree.

    Many people and even insititutions entered the STR game and purchased properties at high prices, anticipating returns 5x that of standard long term rentals (1 year, 18m etc). These people didn't look into the zoning requirements and purchased in neighborhoods that only allow 1 rental per 7 day time period. They have been renting on a nightly basis at much higher rates than a one week rental warrants. Our city has just announced that they will enforce the existing law. This has obviously lead people to become worried about their returns.

    I never entered the STR game because these properties sold at overinflated values which wouldn't cashflow, should the gov't enforce the existing law. Now it's happening and I'm just waiting to pick up the cheap properties people sell at a loss because they didnt do their due diligance.

    Side note, people are talking about suing agents because they were “mislead” about zoning. It will be interesting to see how it plays out here.

  • JD MartinBusiness Member
    Moderator
    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    6y
    Originally posted by @Cody L.:
    Originally posted by @JD Martin:
    Originally posted by @Bryan Clement:

    My city permits them, they give out a certain number of permits and you have to apply to get it. Once you have it, all you have to do is renew it by a certain date and you do not need to reapply. The problem is that they limit it to 100 units in a city of around 15,000.00, and my area is almost entirely tourist based. Completely restricted the market. Neighboring towns now have the corner on AirBnB's and they were nicer areas to begin with. Stupid decisions. 

     By allowing it and permitting it at all, if someone decided to make an issue out of it it is likely they would have to provide some rationale for what sounds like a completely arbitrary number (why 100? why not 10 or 1000?). Most cities/towns are going to have a lot of difficulty with this issue if they don't approach it from a fact & rationale approach when it comes to licensing and permitting; they'd be on safer ground banning it altogether as commercial activity in residential zoning. 

     Why is the speed limit 65 and not 66, or 100, or 1?   Almost every rule is arbitrary.  We elect on people to come up with those arbitrary numbers since everyone would have their own version of what's ideal. 

     Not true. Rules *can* be arbitrary - there may be no reason at all why the speed limit is 65 or 66 - or they can have research, data and logic at their core. If you don't believe that, then you live in a world in which you believe all decisions are purely arbitrary. Using your speed limit example, design engineers can determine the maximum controllable speed of a car, truck, or tank, based on road surfaces, curves, and the like, and then other stakeholders can consider ancillary effects - road noise at a certain speed with a certain surface, the likelihood of vehicle interaction with animals, pedestrians, or weather events, etc. and use the aggregate to set a speed that is reasonable for most vehicles in most situations. This is how insurance companies determine risk and rates - the most money they can reasonably charge, within the confines of regulations, that will provide the most profit while maintaining the most customers (eg. prevent people from cancelling because it's too expensive), while covering expected losses, figures determined (hopefully) by research rather than arbitrarily guessing how much they may have in losses.

    All that doesn't mean rules are always well constructed or even suitable for their intended purpose, but if we want to avoid anarchy well reasoned rules and regulations are the least unpalatable alternative.

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  • Rental Property Investor · Savannah, GA · Member since 2018 · 174 posts · 129 votes
    6y

    @Robin Searle

    My market of Savannah, GA has the downtown historic areas zoned out and capped at a 20% STVR limit per area. The certificates for the STVR are maxed out and it’s pretty much impossible to get one if you don’t already have one. They are grandfathered to the buyer of a property as long as they renew it (for $200/year) within 6 months I believe.

    I could see this approach being taken by many larger/touristy cities to help regulate it. What it has done is increased the property values of properties that have certificates (kind of, since we know they are ultimately based of comps, but the demand for properties with a STVR certificate in place has skyrocketed).

    It’s definitely interesting to watch, and making the market even more competitive.

  • Lender · Los Angeles, CA · Member since 2017 · 916 posts · 647 votes
    6y

    @Robin Searle I’m in rent control LA and they banned STRs starting Jan 1 2020. Not even owner occupied for a room in the back. Unless I missed something but the market here is only viable (if that’s the right word) for LTRs.

  • Realtor · Boston, MA · Member since 2019 · 244 posts · 275 votes
    6y

    Boston has put in place very strict rules around STRs, but we haven't banned them completely. They are trying to leave room for owner occupants who want to rent out an extra room or rent out their house while they are traveling, etc. Some of the rules just kicked in yesterday. 

    Personally, I have seen many houses in my neighborhood get converted to Airbnbs. We have parking and noise issues, trash issues, and strangers walking around instead of people that we know. Rents have spiked the last few years, and while that isn't all the fault of STRs, they're definitely contributing to the problem. But at the same time, now that I have a family I like to stay in an actual home with a kitchen and 2 bedrooms when I travel. I don't favor an outright ban, but I do want a lot more restrictions. Hopefully the hotel industry will take note and start creating more options for those of us who don't want to stay in a traditional hotel room.

    Some news stories:

    https://www.cnbc.com/2019/12/03/in-boston-airbnb-tasked-with-removing-thousands-of-illegal-listings.html

    https://www.boston.gov/departments/inspectional-services/short-term-rentals

    https://www.wbur.org/bostonomix/2019/08/29/airbnb-boston-settlement-regulations

  • Rental Property Investor · New Orleans, LA · Member since 2018 · 87 posts · 45 votes
    6y

    @Bryce Bender there is a site for traveling nurses. You pay a 1 time fee I believe to sign up and they you rent to nurses traveling to a new place on contract that need a place to stay. I'd have to get back to you with the name of that site.

  • Investor · La Crescenta, CA · Member since 2016 · 37 posts · 10 votes
    6y

    @Jonathan Taylor

    STRs are allowed in LA if they are registered. In order to be registered the unit must not be rent controlled. Any MF built after 1978 is not subject to rent control. Sfr are not rent controlled and are eligible for STR. The restriction is only for multifamily that is rent controlled. There is even consideration to allow STR in rent controlled units by the tenant if the landlord agreed. Rents are unaffordable and I think the city realizes allowing tenants to STR their rent stabilized unit would help them afford the rent. I'm watching to see if this comes up in the next city planning meeting.

  • Rental Property Investor · North Fork, NY · Member since 2016 · 1k+ posts · 631 votes
    6y

    Traveling Nurse Housing is the Facebook group that goes along with Furnished Finder.com $99 membership for one year and this makes you vetted on the fb group. @Bryce Bender @Dominique Palmer

    @Jacob Kline Is the vote final and with an effective date? 

    What will be your plan if you buy STR housing that has those restrictions? Traveling nurses or LTR?

  • Rental Property Investor · St Augustine, FL · Member since 2019 · 74 posts · 47 votes
    6y

    @Nancy Bachety no vote needed, they are just enforcing the existing zoning code.

    The city has proposed a registration process where the STR hosts will be required to sign up and abide by the rules, taxes will be enforced the same way hotels are taxed- with a bed tax. The taxes will be used to employee a STR committee which will enforce the code.

    They will also enforce a 1 parking space per room rented as STR, which will knock out about 70% of the STRs.

    I’m honestly happy they’re doing this because Airbnb has taken over the nicer neighborhoods and people that have lived there for 30 years are moving because people have parties and clutter the streets.

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