Council will likely delay implementing new STR rules pending legislative action

Austin City Council today will consider an overhaul of the city’s short-term rental regulations but is expected to delay implementing most changes until the summer.

At Tuesday’s work session, Mayor Kirk Watson suggested pausing the new rules pending the outcome of several STR-related bills before the state Legislature.

“There are some key aspects of what it is that we want to do that could change during this legislative session,” Watson said. Most Council members agreed that delaying implementation would prevent the need for another lengthy revision process to align with state law.

Council Member Chito Vela, noting that other Texas cities are also in a holding pattern on their STR regulations, agreed it makes sense for the city to spend a few months “understanding the environment” after the legislative session before moving forward on a suite of changes.

The Council set July 24 as the date it will revisit the proposed changes for possible action.

The pause would cover proposed changes to key policy provisions related to licensing and other regulations. Only one of the three STR agenda items would take effect immediately – a proposed requirement of STR operators and platforms, such as Airbnb and VRBO, to collect hotel occupancy taxes for the city. “I think we’d be in a position to probably move forward on that with just a little more work between now and Thursday,” Watson said.

“We’ve missed out on almost a decade of Hotel Occupancy Taxes from STRs,” Vela later added. “I don’t know what that number is but it’s a lot of money. We are about to move forward with a $1.2 billion convention center redo … this money will pay for that and our cultural arts and historic preservation, which our hotel tax also funds. We know what the struggles are for artists in the community and their need for support.”

Depending on what transpires at the state level, the city’s ultimate goal with an STR overhaul is to resolve neighborhood compatibility issues, encourage responsible STR ownership through “user-friendly” licensing requirements, improve collection of hotel occupancy taxes, and make enforcement of regulations more consequential. According to the city, third-party data shows that most STRs in Austin are unlicensed. The highest concentrations are in District 9’s Central Austin and District 3’s East Austin.

As currently proposed, the changes would include reclassifying short-term rentals as an accessory use in all residential zoning districts, requiring a 1,000-foot distance between STRs owned by the same individual, unless the STRs are on a site with four or more dwelling units, and prohibiting an STR holder to own more than 25 percent of short-term rentals on a site with four or more dwelling units.

Like other cities, Austin has suffered legal setbacks in its past attempts to regulate short-term rentals in response to community concerns ranging from unlicensed STRs, to noise complaints, to potential impacts on housing supply.

Photo by Raysonho @ Open Grid Scheduler / Scalable Grid Engine – Own work, CC0, Link.

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