- By Editorial Board
Austin still has thousands of unlicensed short-term rentals. Too many party houses disrupt family-friendly neighborhoods with drunken and sometimes vulgar displays. Numerous homeowners remain frustrated by the city’s permitting process. And an untold amount of hotel tax revenue is going uncollected.
In short, Austin faces some of the same problems that prompted the 2016 overhaul of rules for short-term rentals, also known as STRs.
While there is no simple solution to some of the thorny issues highlighted in Statesman reporter Elizabeth Findell’s recent series on short-term rentals, there are a couple of major steps the city and vacation rental companies, such as HomeAway and Airbnb, can take toward fixing longstanding problems.
The city should work with the vacation rental websites to require STR operators to include their city license number in order to post their property listings online. City officials should also develop straight-forward agreements for the websites to collect millions of dollars in hotel occupancy taxes that should be paid by the guests at these rentals. A significant amount of revenue isn’t being collected now because it’s up to individual STR operators to send it in.
Austin’s 2016 revamp of the STR rules was significant: It phased out, by 2022, the so-called Type 2 units that are rented out year-round to a succession of guests without the homeowner living on site, and it set up limits on the number of guests, noise levels and other nuisance issues. The City Council largely designed those provisions to shut down the party houses that host a new crew of revelers each weekend. But as Findell’s reporting showed, many properties simply operate outside of the city’s rules altogether.
Various searches indicate Airbnb alone had more than 8,000 Austin listings in August, while city records show only 1,900 properties have active short-term rental licenses. The two code officers dedicated to STR complaints can’t always catch renters at unlicensed properties in order to write a citation, and even when they do, the $300-$1,000 fine for the owners of some lucrative rentals is just a cost of doing business.
Austin’s ordinance requires people to have a city license in order to list and operate a short-term rental. But as a practical matter, people are able to post their properties on vacation rental platforms without such a license. That needs to change.
In cities that have required it, such as Chicago and San Francisco, Airbnb and HomeAway have added a field to their online rental forms for hosts to include their city license number. Austin should work with the vacation rental platforms to make such a field mandatory for properties being listed here.
We applaud the city’s other efforts to beef up enforcement: Austin recently hired four more code officers who will respond full-time to short-term rental complaints, as well as a full-time staffer who will research vacation rental postings to find unlicensed ones. Within the coming year, the city also expects to start using new software to identify unlicensed STRs.
Council Member Kathie Tovo, whose Central Austin district sees many of the problem rental properties, says the city made important gains with the 2016 ordinance. But she also recognizes more robust enforcement is needed.
Tovo has asked staff to provide more information on the city’s enforcement costs on STRs so the council can consider increasing the fines, particularly for repeat offenders. We agree with Tovo: Violators should shoulder more of the enforcement costs, particularly as the city brings more code officers and new software to the fight. Steeper financial penalties would also serve as a stronger incentive for properties to abide by the rules.
Finally, the city should ensure it gets as much hotel occupancy taxes as possible by empowering Airbnb and HomeAway to collect that surcharge for visits booked on their platforms and remit the money to Austin.
The city’s ordinance requires individual rental properties to send the 9 percent surcharge to the city. Austin received about $4 million in hotel taxes from short-term rentals over the past year, but there’s good reason to think many rentals aren’t paying up. In 2016, Airbnb alone estimated it could collect $7 million a year in such taxes if Austin enlisted the website’s help. HomeAway has not provided such an estimate, but we suspect the rentals on its platform could easily provide millions more.
While the state of Texas and hundreds of other cities around the country have signed deals for the vacation rental websites to collect and remit these kinds of taxes, Austin has been holding out for a grand bargain that would also compel HomeAway and Airbnb to provide detailed rental data that the platforms don’t want to divulge.
That is unwise. Austin should tackle these issues separately. The city should proceed now with the hotel tax collection agreements, which Airbnb and HomeAway have said they’re willing to do, so Austin can collect more of the revenue it’s been leaving on the table. Then both parties can negotiate the more complex questions around data sharing, which have implications not only for the city’s enforcement efforts but for the privacy of hosts and guests on the vacation rental platforms.
Austin’s 2016 ordinance faces a court challenge from hosts who say the rules are too restrictive, and the Legislature will likely consider reining in, if not dismantling, local STR rules in the next session.
From the porches of many Austinites, however, the problem isn’t too much regulation but not enough enforcement. By making sure only licensed rentals are posting on the platforms, and wielding the big stick of heavier fines, the city can push more of the bad actors in STRs to check out.