Whether or not your municipality can create and enforce its own laws regulating short term rentals (STRs) depends on what your state allows. While local governments (Cities and Counties) want to retain the right to create ordinances and methods of compliance appropriate to their respective situations, other parties that profit from STR growth seek to pre-empt these rights. Recent legislation in five different states illustrate how local governments need to stay informed about what is happening at their state capitals.
Efforts in three states to restrict the power of local STR regulation:
Florida: At the end of 2019, a bill was filed with the State House and Senate (SB 1128 and HB 1011) which would delegate all licensing duties to the Florida Department of Business & Professional Regulation (DBPR), taking that power away from cities and counties and replacing it with a state regulatory structure. Supporters seek a unified set of regulations for the entire state, despite a state-wide survey released last January which found that 75% of Floridians preferred having their local city or county regulating vacation rentals in their neighborhoods.
The new legislation could potentially override any existing arrangements cities and counties have made with Airbnb, replacing functioning local enforcement with the already overburdened DBPR. A 2017 study conducted by a Grand Jury from Miami-Dade County found that the DBPR was already understaffed and often failed to enforce regulations and resolve disputes between condominium owners and their associations. Casey Cook, of the Florida League of Cities, confirms these findings, arguing that State enforcement efforts have been “inadequate” in meeting its current responsibilities.
Georgia: Similar to the proposed regulation in Florida, HB 523 also seeks to prohibit by preempting local governments from regulating STRs. If passed, municipalities would not be able to regulate licensing, occupancy limits, inspection or any form of permitting. After failing to move forward during the previous legislative session, the bill was reintroduced by Rep. Kasey Carpenter, R-Dalton, who called the current ban and attempts at local regulation “attacks” on personal property rights. In 2011, home owner Christine May was sentenced to 30 days in jail, six months’ probation and a $500 fine for renting out her home on a short-term basis in defiance of the county ban. (She successfully appealed the case.) May’s sentencing and subsequent lawsuit drew a great amount of attention to the issue of the rights of property owners and inspired support for HB 523.
North Carolina: Passed last July, “Vacation Rental Act Changes” (S.483) reduces the regulatory power of local governments while still allowing some restrictions. Short-term rentals by primary owners will be allowed in all districts, while non-owner-occupied rentals are only permitted in commercial zones. Local governments can perform inspections “when there is reasonable cause to believe that unsafe, unsanitary, or otherwise hazardous or unlawful conditions may exist in a residential building or structure.” However, owners or managers of rental properties no longer need to register or obtain permission from the local government unless there is a history of violations, crime or disorder problems, nor do they need to participate in any government program to obtain a certificate of occupancy. STRs will not be subject to any additional fees or taxes unless expressly authorized by general law or is charged against a unit with a high level of violations.
Reversing the trend: Arizona restores some regulatory power to local municipalities:
Since the passing of a 2016 law that forced local governments to allow STRs, Arizona residents have complained about disruptive party houses and a loss of long-term housing from the real estate market. A 2019 measure to curb special events at these properties has failed to adequately address residents’ concerns, leading to the introduction of a new bill that would repeal protections for STRs. Despite objections from Airbnb, HB 2001 was passed 8 to 1 in January in a scaled-down form.
First steps in exploring the tax impact of STRs in Colorado:
In Colorado, a newly-proposed bill will classify all STRs as non-residential properties, which would raise the property tax rate for homeowners from 7.96% to 29%. Sen. Bob Gardner, R-Colorado Springs, says he hosted a session for SB 20-109 this February with no expectations that it will pass, but simply to raise awareness about how STRs are assessed, how the tax revenue will affect local communities, and whether classifying STRs as residential properties are fair to other local businesses that must pay over three times the assessment rate in property taxes. If passed, the bill will require owners to live at their properties for at least 30 days per year to avoid the non-residential classification. The aim is to distinguish commercial operators from homeowners looking to use their second homes to earn extra income.
Broad state laws can’t cover all of the problems that can arise with STRs in local communities, which makes it important for local groups to stay involved in the drafting of new laws and to influence legislation in ways that best serve the needs of their residents.
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