Texas proposal would keep cities from restricting short-term home rentals

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A legislative proposal that would limit local government control of short-term home rentals in Texas has reawakened a fight over regulations that has already played out in cities across the state.

Senate Bill 451 by state Sen. Kelly Hancock, R- North Richland Hills, would prevent Texas cities from banning or restricting short-term rentals. Austin, San Antonio and Fort Worth are among the cities that have enacted such restrictions.

Critics of the bill said it would lower property values and allow Texans to rent houses to people who might host disruptive parties and increase traffic in their neighborhoods.

One of those critics, David King, president of the Austin Neighborhoods Council, said houses with no live-in residents are sometimes rented to rowdy visitors. Neighborhood disapproval of these houses led cities like Austin to enact local ordinances that limit their presence.

However, bill proponents say SB 451 would protect homeowners from strict local laws that infringe on property rights while still allowing local regulations that limit or prohibit short-term rentals. Under the bill, local governments could still prohibit short-term renters from housing sex offenders or selling alcohol or illegal drugs to guests.

Through an aide, Hancock declined to comment on his bill. State Sen. Dawn Buckingham, R-Lakeway, the bill’s co-author, said it shields Texas property owners from governmental overreach.

"Private property rights in Texas are sacred," she said.

Vacation rental websites such as HomeAway are supportive of the proposal because it protects short-term rental deals from going “underground,” which could be dangerous, said Matt Curtis, HomeAway’s director of government relations. 

Curtis said the Austin-based company works to make sure hosts are aware of local policies when renting properties to strangers. Hancock's bill, he said, doesn't completely revoke local regulations, it just creates "guardrails" that stop local governments from imposing restrictive regulations over vacation rentals.

This isn't the only local control fight unfolding at the Capitol. Lawmakers are also considering whether to override local ordinances that restrict ride-hailing companies such as Uber and Lyft, as well as those that allow transgender people to use public restrooms that correspond with their gender identity.

Among local policies that would be limited in scope by Hancock's short-term rental proposal: A Fort Worth regulation that requires property owners to obtain a bed and breakfast permit only available to homes built before 1993.

It would also overrule the ordinance in Austin, where the number of short-term rental homes with no live-in owners is capped and and the city is no longer accepting new permit applications. Other kinds of short-term rentals, such as owner-occupied houses and apartments, are not affected by the Austin ordinance.

The Austin ordinance brought respite to some neighbors worried about the effect these homes without permanent residents had on their communities. King said property managers would purchase single-family homes and transform them into short-term rentals, affecting residents' lifestyles and home values and creating neighborhood nuisances.  

“They would create noise, traffic issues, parking issues and trash, rude behavior,” he said. “It became a safety issue.”

Short-term rentals with no live-in owners boomed in Austin following a 2012 ordinance that introduced vacation rental guidelines to city code. In an attempt to control the market, local government capped rental houses with no permanent residents at 3 percent of total single-family residential units in each census tract. Some residents, however, said these measures did little to regulate what happens within these houses.

Last year, a group of Austin neighbors spent over $150,000 in legal fees fighting the manager of a house that was regularly rented out but had no live-in owners. Richard Schley, a real estate agent and homeowner from Northwest Austin, said the house basically functioned as a motel.

“[These rentals] do the same thing a motel does, except there's no supervision, there's no safety compliance and they're in residential neighborhoods,” he said.

Schley said rental homes with no live-in owners in his neighborhood were host to parties where guests would smoke, drink and consume marijuana very late at night. In some cases, he said, visitors would urinate in the neighbors' yards.

HomeAway's Curtis, however, said audits have shown that cases like these are a “very, very rare occurrence.”

“It's not something that is shown through data to really be occurring,” he said.

The Texas Public Policy Foundation sued Austin soon after its short-term rental ordinance was enacted. Robert Henneke, director of the TPPF's Center for the American Future and lead counsel in the lawsuit, said Austin’s ordinance infringes on basic constitutional rights such as the freedom to assemble, protection from warrantless searches and seizures and the freedom of equal protection.

"Nothing about owning or staying in a short-term rental means that you have less constitutional rights than the exact same type of property next door or across the street," he said. "The use of a single-family home as a short-term rental property is a residential purpose. The fact that there may be a rental charge does not make it a commercial use."

Schley insists companies like HomeAway and Airbnb blur the line between commercial and residential uses.

“It’s the same thing as if I bought the house next door to you and I turned it into a hair salon," he said.

Airbnb spokesman Christopher Nulty said home-sharing allows families to earn extra income, which is why his company works with policymakers on "fair home sharing rules that benefit hosts and strengthen communities across the state."

Between October 2012 and August 2015, the city of Austin received 252 complaints about short-term rentals, according to an Austin Code Department report. Twenty-three of those complaints were about noise or parking, and 110 were about alleged illegal activity, including pollution.

Government, Henneke said, has an obligation to deal with "bad actors," but shouldn't create an entire set of regulations that punish “good actors.”

Curtis said HomeAway works with municipal governments to make sure property owners make their renters aware of local laws and policies. He said local government laws limiting short-term rentals can be too restrictive.

“For somebody who is concerned about an occupancy violation or a noise violation, that's still a law in a municipality; that's not going to go away,” he said. “What this state bill says is cities can't create regulations that are so onerous and so burdensome that all it does is drive the activity underground.”

The bill is currently assigned to the Senate Committee on Business & Commerce, which Hancock chairs.

Related to this story:

• Last year, Attorney General Ken Paxton asked to intervene in a lawsuit brought by a group of Austin homeowners after the Austin City Council passed new rules trying to rein in short-term rentals in 2015.