Sooner or later, nearly every city will need to address the rapid spread of short-term rentals. Though the activity itself is not new, in recent years, companies including Airbnb, VRBO, Flipkey, and Homeaway have facilitated and mainstreamed short-term rentals to a point where local governments are taking note, and taking action. 1
Recommended Reading
ATL Neighbors reasearched how other municipalities deal with STRs to find out what might work well in Atlanta. ATL Neighbors recommends these:
The economic costs and benefits of Airbnb from the Economic Policy Institute looks at the costs and benefits of Airbnb and concludes that “Airbnb should have to play by the same rules as other lodging providers”. 2 The Economic Policy Institute (EPI) is a 501(c)(3) corporation that receives 20% of its funding from labor unions. EPI claims to be the “premier think tank” focusing on middle and low income issues.
LodgingRevs is a Short Term Rental Compliance company based in Colorado that tracks more than 20 STR sites and focuses on automating STR compliance for municipalities. LodgingRevs has a prescriptive guide for Best Practices in Regulation and Taxation of Short Term Rentals. The LodgingRevs paper suggests that good policy should do three things:
Make compliance requirements clear and easy to achieve
Make it evident to hosts that non-compliance is expensive and futile
Control the cost of monitoring compliance
A look at other municipalities
The critical questions for policy makers seeking to protect housing are: when does STR make more efficient use of unused resources and when does it incentivize the conversion of residential space to tourist use? 3
Most of the largest Metro areas in the US have STR regulation, but Atlanta isn’t on the list. ATL Neighbors took a look at their policies with the help of sites like 2ndAddress.com to see what characteristics are typical of STR policy in large American cities. 4567891011
Tax
ATL Neighbors found that all municipalities have taxes, however there is some variation in the type of taxation:
Sales tax
Use tax
Business personal property tax
Hotel tax (a/k/a Transient occupancy or transient lodging tax)
Occupation tax
Fines
All of the cities that 2nd Address looked at have hefty fines for violations with daily accrual.
Licensing
Most major metros also have licensure and license fee requirements for hosts.
Seattle 12 and Chicago 13 require the Short Term Rental platforms themselves to obtain a license.1415
Primary Residence & Presence
Five of the seven require the hosts to be present or only permit hosting at a primary residence.
Definitions
City residents likely suffer when Airbnb circumvents zoning laws that ban lodging businesses from residential neighborhoods. 16
The SELC and LodgingRevs suggest starting with a definition of terms. These definitions are from the SELC guidebook:
Short-Term Rental (STR) is the rental of a primary residence or portion there of for a period of less than 30 nights, for which the guest compensates an owner or lessee of the unit. LodgingRevs states that 30 nights is the most common threshold for defining a STR.
Primary Residence: A housing unit in which an owner or lessee resides for the majority of the year.
Hosted Primary Residence STRs: An STR unit is a Hosted Primary Residence STR if the owner or lessee who is hosting a short-term guest occupies that dwelling unit as his or her primary residence for the majority of the year, and if the owner or lessee hosts one or more guests in a bedroom or some portion of the unit and is generally present for the duration of the rental period.
Un-Hosted Primary Residence STRs: A unit is an Un-Hosted Primary Residence STR if the owner or lessee occupies the dwelling unit as his or her primary residence for the majority of the year, but leaves his or her unit for a period of time – for example, over a weekend, when traveling for work, or while on vacation – and rents out all or part of the unit in his or her absence.
Vacation Rentals: A Vacation Rental is an entire residential unit that is not a primary residence and is rented to guests on a short-term basis, typically under 30 nights.
Potential Rules
Because Airbnb is clearly a business competing with hotel lodging, it should be subject to the same taxation regime as hotels. 17
This section reflects a number of potential rules suggested by LodgingRevs or SELC that are in place in other municipalities. Further rationale behind these rules are available in one of those two papers. These rules would notionally apply to all types of STRs and vacation rentals.
Apply Transient Occupancy Tax (Hotel Tax) to STRs at equivalent rate to hotels
Require a property owner to provide proof of occupancy for 90 days before being eligible to host at that property
Cap the number of days rented per year for Hosted and Un-Hosted STRs
Cap the number of bookings per year in certain neighborhoods
Require a minimum number of nights for each booking
Require hosts to complete and file a safety checklist
Require liability insurance with a minimum of $1,000,000 in coverage with proof to be provided as part of annual license renewal
Establish and fund a city office with clear responsibility for Short Term Rental licensure and compliance
Establish processes for neighbors to complain about nuisances and STR violations that will be used to determine eligibility for STR license renewal or loss of license
Require notification to neighbors of application for an STR permit similar to building permits, variances or tree permits
Graduated sanctions and fines for non-compliance for hosts and hosting platforms starting with fines and escalating to include loss of license
Establish limits on the total number of guests
Require record keeping for two years for hosts and hosting platforms
Require hosting platforms to remit all taxes and host data on behalf of hosts
Establish and enforce maximum occupancy for each listing
Establish a minimum square footage for each guest
Require HOA to approve each STR
Require a host or representative for STRs with a response time of 30 minutes
Require meeting ADA accessibility requirements
Require posting local ordinances such as noise and trash pickup in the unit
What not to do
To me, there’s not a lot of difference between a short-term rental and a long-term rental; you have bad apples in both cases.18— Georgia Rep. Kasey Carpenter, HB 523 Sponsor
On the surface Rep. Carpenter’s comparison sounds reasonable and he is correct that there are “bad apples” in rentals of any duration. However, long-term renters are by definition long term members of the community while short term renters are transient. Long term neighbors have an opportunity to develop a mutual understanding over time that is not possible with Short Term Rentals. ATL Neighbors believes a much better analog for STRs is hotels and therefore recommends aligning STR policy with hotels. To paraphrase Rep. Carpenter,
To me, there’s not a lot of difference between a short-term rental customer and a hotel customer; in both cases they are passing through and need lodging for a short time. — ATL Neighbors 19
While the failed Georgia HB 523 and revision LC-36-4211S did define a Short Term Rental as “any residence that is offered for occupancy for a fee or other consideration for less than 30 consecutive days” it goes on to exempt residences that have nonresidential use, to define a residence exclusively as an owner occupied unit and precludes local municipalities from regulating any Short Term Rental activity. This redefinition of residence is at odds with residential zoning norms. If the state of Georgia wants uniform Short Term Rental regulation such legislation should follow the best practices referenced above.
Atlanta Hotel Ordinance
Atlanta has an ordinance regulating hotels that is summarized here for your convenience to compare with potential rules for Short Term Rentals.
Sec. 30-752 Every person working as a bellhop must have a permit that requires fingerprinting and good character. The police chief issues the permit and hotels may forfeit their operating license if they employ unlicensed bellhops. Licenses may be revoked.
Sec. 30-753 Doors to upper floors must remain unlocked during the day to allow police access to detect crime.
Sec. 30-766 Every hotel or similar place requires a license.
Sec. 30-767 Written applications with signatures of three citizens testifying to the good character of the applicant are sent to the police. Applications are reviewed by the license review board.
Sec. 30-768 Licenses may be revoked for cause including refusing police entry. Licenses are not revoked until there is a license review board hearing.
It is not unreasonable to argue that Short Term Rentals are similar places to hotels, lodging houses and rooming houses and therefore are required to be licensed under Sec. 30-766. Furthermore, if Atlanta can permit every bellhop in the city, then Short Term Rental permitting seems quite reasonable.
Sec. 150-400 Defines "operators", dockless mobility devices, shareable dockless mobility devices, "dockless permit" and shareable dockless mobility device system.
Sec. 150-401 Requires permits for shareable dockless mobility devices and operators, which are issued through the Department of Transportation. A permit costs $12,000 annually for 500 devices with an additional $50 fee for each additional device. Permits are revocable at the discretion of the commissioner of the Department of Transportation.
Sec. 150-402 Enforcement is the responsibility of the Department of Transportation. Citations may be issued up to $1,000 per day for each violation.
Sec. 150-403 Defines safety standards including requirements for helmet use, lights, reflectors and liability insurance.
Sec. 150-404 Establishes restrictive parking requirements and requires 24/7 monitoring by operators.
Sec. 150-405 Specifies where operations are allowed, fleet size, user education requirements, and penalties for non-compliance.
Sec. 150-406 Establishes data sharing requirements both real time API and monthly reports.
Sec. 150-407 Requires a plan to be provided to the Department of Transportation that describes how the operator will provide an equitable distribution of service.
Sec. 150-408 Requires a bond to cover impacts on public space and applicable fees.
Short Term Rental operators are similar to dockless mobility device system operators and should be subject to similar permit, enforcement, safety, location, operation, data sharing, equity, and bond requirements.20
Additional Case Studies
Harrisonburg, Virginia recently revised their short-term rental regulations to streamline the approval process. Residents seeking to host four guests or less must register, but no longer require planning commission or city council approval. The change also defined a zoning category of “homestays” that are no longer required to go through the special use permit process.21
London, UK works with Airbnb to enforce policies to protect its hosing supply for long term residents.
The law is designed to allow Londoners to earn a little extra money by letting their property out when it isn’t being used, such as on weekends or when they are on holiday, whilst protecting London’s housing supply for use by long term residents. 22
Airbnb has capped short-term rentals listed as “Entire place” at 90 nights per year in London. The yearly limit resets every year on January 1. Airbnb will also ban hosts in London from renting out entire homes for more than 90 days a year without official consent beginning in the spring of 2018.23
A number of neighbors have contacted us with additional references from a variety of municipalities.
Asheville, NC allows homestays and requires the full time resident of the property to be present for the “entire time lodgers are staying at the property.”24
Short-term rentals (STRs) have been regulated in Honolulu since 1989. STRs are also known as vacation rentals, and are lodgings that provide guest accommodation for less than 30 days. Ordinance 19-18 (Bill 89)25 seeks to balance the benefits of STRs for hosts and guests with the desire to keep residential neighborhoods from being overrun by STRs.
Honolulu defines two kinds of STRs:
Bed and breakfast homes (B&Bs)
The homeowner or permanent resident is present during the guest stay. Up to two rooms may be rented, with a maximum of four guests. The law caps the number of B&Bs allowed in any given Development Plan area.
Transient vacation units (TVUs)
Commonly known as whole home or unhosted rentals. TVUs are allowed only in resort and certain apartment-zoned districts, unless it has a nonconforming use certificate.
Main points of Ordinance 19-18:
Allows a limited number of new Bed and Breakfast Homes (B&B) in non-resort areas under a new registration process, with annual renewal required.
Continues to prohibit Transient Vacation Units, or “unhosted” rentals, in non-resort areas, unless the dwelling has a Nonconforming Use Certificate (NUC).
Regulates hosting platforms, such as Expedia or Airbnb, requiring monthly reports to be filed with the Department of Planning and Permitting, which will share the information with City Council.
Makes illegal any form of advertising short-term rentals (STRs) which are not in compliance with zoning regulations as provided in Ordinance 19-18.
The following links lead to maps that depict the specific zoned areas designated by Ordinance 19-18 that permit Short-Term Rentals. This only includes land under City and County Jurisdiction. See the Approved STRs for specific addresses and Tax Map Keys that are legal STRs.
With STR regulation in place, Honolulu has 5,501 STR listings responsible for $235,383,056 in annual revenue.26 Atlanta has 7,235 significantly more listings than Honolulu, but lower daily and occupancy rates.27
Volunteers
Please contact ATL neighbors if you are interested in volunteering to help with fact finding efforts. Volunteers with experience in public policy, city planning, law, web development, data science, data visualization, public relations or community outreach are of particular interest.
