Austin City Council votes to phase out some short-term rentals

After months of debate that culminated Tuesday in a march of HomeAway advocates on Austin City Hall, a divided City Council revamped its rules on short-term rentals to phase out a certain kind of units from neighborhoods by 2022.

The provision applies to Type 2 units, which are owned by someone who doesn’t live on site and are leased for less than 30 days at a time to guests throughout the year — giving rise to what some residents have described as “party houses” in the heart of neighborhoods. Austin has 434 such units licensed throughout the city, though it is unclear how many exist in commercial areas where they would be allowed to remain.

“It’s been a long road,” said Palmer Quaroni, who lives next door to a short-term rental in District 10, where some of the complaints about party houses originated last summer. “When we bought our house, we never knew we’d be moving in next to a hotel.”

But the decision disappointed the owners and supporters of short-term rental properties, who say the problems have been limited to a few bad actors. They said the city should focus on addressing those violators, not banning Type 2 units from all neighborhoods.

“We feel that the enforcement laws they have, they need to give it time to work and go after the bad actors that aren’t paying their taxes and having big parties,” said Dennis Artale, who said he has obeyed city laws and paid taxes while operating two Type 2 properties for four years.

Austin-based vacation rental company HomeAway, which provides listings for such rental properties, hoped to head off the change with a program announced last week that included a complaint hotline and the ability for the company to remove listings for problem properties.

On Tuesday, Mayor Steve Adler offered a last-ditch amendment that would have postponed a decision on the fate of Type 2 properties until the current moratorium on new units ends in April 2017. But that measure failed on a 6-5 vote, with Council Members Ora Houston, Delia Garza, Sabino “Pio” Renteria, Greg Casar, Leslie Pool and Kathie Tovo voting to keep the phase-out provision.

Tovo argued that allowing short-term rentals in neighborhoods added to the pressures that drive up Austin housing costs and push out families with children.

Short-term rentals “allow valuable housing stock to be converted into mini hotels,” Tovo said.

Austin also has more than 700 licensed “Type 1” properties, in which the owners live on the same site as the rental unit. Type 1 units are still allowed in residential areas, but other regulations passed Tuesday will apply to both kinds of properties, including the provisions to ban advertising without a license and restrict occupancy to a maximum of 10 people.

The overall ordinance, approved by a final 9-2 vote, also gives code officials the ability to inspect problem properties, levy fines, issue citations and revoke licenses. Council Members Don Zimmerman and Ellen Troxclair voted against the entire package.

“This whole short-term rental issue came up because we had public disturbance ordinances that were not being enforced,” said Zimmerman, calling for better enforcement of existing rules instead of new restrictions.

Because the council heard public testimony at previous sessions, none was taken Tuesday. However, supporters and opponents filled the Council Chambers, and more than 100 employees from HomeAway showed their opposition by marching from their Fifth Street office to City Hall.

“We want to make sure the owners and managers know we’re supporting them,” HomeAway spokesman Adam Annen said.

To step up enforcement, the city’s Code Department added staff last year to its short-term rental team, sending staffers out on weekends to inspect properties. Inspectors also recently started monitoring Internet sites for advertisements from unlicensed properties, sending notices and starting administrative hearings. According to a memo from the city’s code compliance director, Carl Smart, the team responded to nearly 400 complaints about short-term rentals in the first quarter of 2016 — 215 of these were repeat complaints.

Correction: This article has been updated to indicate that the minimum distance requirement between Type 2 units would not apply to existing units that are already licensed.

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