Upcoming Legislation Has Both Positive and Chilling Effects on Local STR Enforcement
A set of Bills currently under review in Florida and Utah, if passed, offers their respective municipalities both advantages and disadvantages in their efforts to regulate short-term rental (STR) activity. Stakeholders in these states will want to contact their representatives to express their views on the legislation while there is still time to do so (contact information for both states is given below). The coronavirus pandemic has made the process of lobbying more complicated by restricting access and upending calendars, but some strategies for remaining visible to policymakers can include:
- Using an online legislative tracking tool to be alerted to new or changing policies,
- Replacing live events and lobby days with virtual events, and
- Developing a communication plan that might include priorities lists or industry impact statements.
Some highlights of the proposed legislation include:
The House Bill is now in the Ways & Means Committee, and in Senate it is now in Appropriations. STR regulations feature prominently in this legislation.
The state would preempt local ordinances. The legislation states that “regulation of public lodging establishments, including vacation rentals … is expressly preempted to the state.” Local municipalities would no longer be able to draft their own laws, ordinances or regulations regarding the inspection of licensing of vacation rentals (in addition to other forms of business). Local governments can still inspect public lodging establishments to make sure that they meet the State building and fire prevention codes, but that’s it.
Furthermore, any local law, ordinance, or regulation that is applied to the activities that take place at a vacation rental are permitted only if they are also applied uniformly to all other residential properties, whether or not they are being used as rentals. (Regulations that were put into place before June 1, 2011, are exempt, but only if they impose fewer restrictions.)
STR platforms, like Airbnb, now have to register, collect and remit “transient rentals tax” from the travelers who use their service. To make this happen means that STR platforms are going to have to do a lot of work verifying the accuracy of their listings, a task that they have previously left to hosts and municipalities.
In addition, any license issued by the state of Florida must be “conspicuously displayed to the public” within the vacation rental property. The STR platforms (grouped under “advertising platforms” in the Bill) in turn are required to display these license numbers in their online listings, as well as applicable Florida Sales Tax registration and Tourist Development Tax account numbers. Tourist Development Tax is typically handled by the Clerk of Courts or the Tax Collector at the County level. The STR Platforms will have 15 business days to remove any listing that fails to include a valid license number. The enforcement of these state laws is then passed onto the Florida Department of Business and Professional Regulation (DBPR).
Unfortunately, the State seems as if it will be in over its head with trying to enforce the new law. Over 300,000 STR listings are located in Florida in the past year (yes, even during the pandemic)! There are currently 50,344 public lodging establishments licensed by the Division of Hotels and Restaurants (a division within the DBPR), but the staff of the entire DBPR in 2017 was only 1,600, only a tiny fraction of which will work on enforcement for short term vacation rentals. This pales in comparison to an estimated 500+ Code Compliance municipal staff in Florida tasked with enforcement of short term rental ordinances (based on estimated membership of F.A.C.E Florida Association of Code Enforcement). A further 100+ full-time staff dispersed amongst the County entities tasked with the fair and equitable collection of that Tourism Development Tax (based on estimated membership of Florida Tourism Development Tax Association). As of this writing, 21 counties in Florida (out of 67) have signed voluntary collection agreements with Airbnb, one of the popular short term rental booking platforms. It seems unlikely that the State agency can absorb the complexity of even those arrangements, let alone those of all the other counties.
These platforms must also submit quarterly reports to the State government that include a list of all vacation rentals located in the state that they advertise, which includes their physical addresses. This however will not stop bad faith STR operators from avoiding detection by
- Using off-platform websites to promote their rentals,
- Putting their listings up at night and removing them by day (“vampire listings”), and
- Rotating a listing among many different platforms, moving it whenever it attracts unwanted attention.
An additional welcome element requires platforms to adopt an anti-discrimination
policy and inform their users of the public lodging discrimination prohibition found in current law.
Whether the Florida government and the STR platforms can keep up with these new demands remains to be seen. Until then, local municipalities would be advised to continue to do their own legwork. There is still a need to monitor off-platform booking activities, and the Tourism Development Tax agency needs to deal with that.
This legislation, also in Florida, was recently filed in the House and has been referred to Government Oversight and Accountability in Senate. If passed, this legislation would end the anonymous reporting of code violations. It states that a code inspector “may not initiate an investigation of a potential violation … by way of an anonymous complaint. A person who reports a potential violation of a code or an ordinance must provide his or her name and address to the governing body of the respective board of county commissioners before an investigation occurs.”
As an example of how this might play out, a resident who would otherwise make use of a 24-hour hotline to phone in noise complaints from STRs may feel too intimidated to use the service if they are required to identify themselves. This is especially so if criminal activities are taking place. That being said, the law does deter certain complaints that are outrageous or unrealistic to enforce, such as “kids splashing in the pool in the daytime”. It is unclear whether “governing body” refers to the City in which the violation occurs, or whether it is a City or County employee that receives the complaint.
Florida has enacted strict COVID-19 restrictions at its State Capitol Complex, forcing lobbyists to rely on Zoom meetings, texting and off-site visits. Stakeholders can find their Representatives and Senators online.
- Utah: S.B. 221 – Short-term Rental Amendments
This Bill was recently introduced to the Senate Rules Committee. The current law in Utah allows municipalities or counties to ban STRs outright. If this Bill is passed, municipalities would no longer be able to prohibit an individual from listing or renting out a part of their residence. The only requirement is that the owner stays on the premises when guests are present.
This primary residency requirement is significant. It automatically eliminates multi-property owners from the pool of STR operators, making it a key deterrent to commercially-operated short term rentals. Harmari has already found that up to a third of STRs in a city can be commercial rentals, which in turn can price local residents out of the housing market.
The Bill also prohibits the use of tax revenue collected from these rentals being used to fund any ordinance that bans STRs. (Utah has a statewide temporary lodging tax of 0.32 percent, plus additional local taxes that can go as high as 4.25 percent.) While the Bill forbids this use of funds, it does not provide municipalities any ability to audit the taxes collected.
This newly-introduced Bill is a welcome development to potential STR operators who have complained that the current rules are so strict that they promote unauthorized, illegal listings. In Salt Lake City, for example, short term rentals are categorized as hotel, motel, or bed and breakfast uses, and their use is banned in residential areas. Opponents to the legalization of STR-platform activity have included hotel industry representatives and residents who want to keep commercial enterprises out of their neighborhoods.
The Utah Capitol Complex is observing social-distancing restrictions in light of the on-going pandemic. Individuals will be denied entry to the complex if they are not wearing a mask, and they must maintain a six-foot distance from other people whenever possible. Committee room capacity will be limited to ensure proper social distancing. State residents can find their State Senator and House Representative by using the Utah State Legislative District Maps.
- Georgia: HB 317 – Excise Tax; Definition of Innkeeper; Provisions
This bill just left a House sub-committee. If passed, it would add a $5 per night excise tax on STRs in addition to the current sales tax. (Extended stay rentals are exempt from this tax.) The funds generated would go toward transportation purposes within the state. This new tax revenue is to be collected by the “innkeeper,” who is engaged in “providing or facilitating the room, lodging, or accommodation.”
In addition to establishing the new tax, the bill also expands the definition of “innkeeper,” extending it to “marketplace innkeepers” that include STR platforms such as Airbnb and VRBO.
The environment for STR regulation in Georgia varies, with owners in some municipalities complaining that regulations are too strict, while residents in other areas suffer from rampant commercial abuses. This bill in question does not directly address how municipalities are supposed to regulate STR activity, but it does appear to demand that STR platforms take on slightly more responsibilities for their users. However, if the wrong amount of tax is collected, HB 317 also relieves these same platforms of penalties if the “error was due to insufficient or incorrect information given to the marketplace innkeeper by the person on whose behalf the sale was facilitated,” and the marketplace innkeeper “made a reasonable effort to obtain correct and sufficient information from such person.” If the bill is passed, the test will be to see how far Airbnb and the like will stretch the definition of a “reasonable effort.”
Like many other places, the State Senate itself had issues with COVID-19 infections and testing compliance. Whenever possible, interested parties should seek to contact their representatives about these issues either online or through socially-distanced means for the time being.
HB 2481 is in Second House Read, and SB 1379 is in Senate Second Read. These two bills, both recently introduced to the State government, approach the issue of how much authority municipalities have over STR properties from two different perspectives, leading to strong grassroots involvement from some STR operators.
The current statute prohibits cities, towns or counties from restricting the use of or regulating STRs based on their classification, use or occupancy. They can only exert the right to regulate in cases of public health and safety, residential use and zoning ordinances, limiting use of property to sex offenders, and requiring owners to provide contact information. In an effort to “get a little bit of control back,” Rep. John Kavanagh’s bill would allow municipalities to create residential use and zoning ordinances related to STRs, require owners to register their properties with the municipality (which would send the information to the Arizona Department of Revenue), restrict occupancy to two adults per bedroom, and forbid property owners from advertising an occupancy number greater than what a property can hold.
STR operators argue that the bill is too restrictive, and in turn are supporting SB 1379. This bill removes the specification that local ordinances must be residential use and zoning ordinances, allows a larger number of adults to share a house if there is sufficient space aside from the bedrooms, and places caps on the fines for advertising violations.
The state senators and representatives have had divisive opinions on mask-wearing during the pandemic, resulting in unclear procedures. Interested parties are advised to reach out to members of the State Congress online.