Short-term rentals come under Tourism Commission scrutiny, with Council action expected this year – Austin Monitor

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Friday, January 12, 2024 by Chad Swiatecki

Members of the Tourism Commission signaled this week that they intend to ask City Council to pursue new policies covering the short-term rental industry and the proliferation across the city of residences acting as de facto hotels.

At Wednesday’s meeting, commissioners heard from residents, including Stephanie Ashworth, co-founder of the Austin-based Texas Neighborhood Coalition, who spoke about the ongoing disturbances caused by STR properties operating in residential areas. Ashworth said the lack of action by Council in recent years on STR regulations – caused in part by a series of court cases favoring STRs and the online platforms that enable them – has led to more than 13,000 unlicensed STRs around the city.

On top of disrupting the quality of life for neighbors, Ashworth and others noted the city is missing out on potentially more than $20 million per year in Hotel Occupancy Tax revenues that go unpaid by unlicensed sites.

TNC, which has 21 chapters around the state, is calling for the city to implement a host of measures tied to the concept of platform accountability that would hold companies such as Airbnb and Vrbo to tighter standards. The three components of platform accountability are: making it a crime for the companies to profit from illegal activity like enabling unlicensed STR sites, requiring the companies to collect and remit all applicable taxes, and requiring them to share data on all operators doing business on their sites to enable better enforcement of city ordinances.

While representatives from some of the platforms have made offers to city leaders in recent years to increase some enforcement measures, they’ve been unwilling to turn over site-specific data, which to this point has been a deal breaker for the city.

Ashton said tourist hot spots such as San Francisco, Denver, Boston and Washington, D.C., have implemented platform accountability measures in recent years, with the number of STR listings in those cities dropping substantially as a result.

Commissioner Christian Tschoepe said City Council identified STR regulations as a priority for 2024 during discussions last month prior to the passage of the HOME initiative that promotes increased housing density. The commission’s working group expects to bring a list of recommendations on STR regulations to the February meeting.

Ashton said whatever action Council chooses to take may require using outside legal help that would be more motivated to pursue litigation against multibillion-dollar STR companies.

“We need to hire some outside counsel because the city of Austin has had missteps every step of the way,” she said, noting that recent case law favoring the STR economy is often seen as a deterrent to any new city policies. “We need somebody who knows what they’re doing and I think outside counsel with experience in this area and somebody … who’s gone to litigate and knows what they’re doing to represent our interests and tell us what’s what we can and can’t do, because what we get from city legal in my opinion is no, we can’t do that.

Commissioner Ed Bailey said before the city enacts new policies on STR platforms and operators, it should explore other facets of the industry to try to stay ahead of new innovators trying to stay just inside the legal constraints of any regulation.

“What’s important also for us to look at is a business analysis of what is happening to the entire channel right now, where their money’s coming from, who’s investing in it and what they’re casting off if they’re private, versus public,” he said.

“We hear lots of stories about individual houses and all the horrible things that we’re all experiencing with these happening in residential areas. I don’t know how you go after the business channel, and who to go after first or whether you pick off midlevel copycatters, but I’m sure that there’s an entire ecosystem that we’re not talking about that are enabling this to happen.”

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