City considers new STR rules requiring oversight from platforms

The city’s proposed overhaul of regulations for short-term rental properties could tighten licensing requirements, impose new restrictions on ownership, and shift enforcement responsibilities onto rental platforms. Members of City Council and the Planning Commission got a detailed look at the possible changes last week during a joint meeting that served as the first public hearing needed to move forward with any amendments to city ordinances.

If adopted, the new regulations would be some of the most significant changes to the city’s STR economy, where unlicensed sites far outnumber those complying with existing registration requirements. By increasing the number of licensed operators, the city would be able to address safety and some quality-of-life issues and collect more Hotel Occupancy Tax revenue, but city staff cautioned there will still be challenges to comprehensively enforcing city code on the industry.

The proposal introduces new eligibility requirements that would classify short-term rentals as an accessory use for all residential properties, provided they obtain a valid license. For parcels with three or fewer dwellings, only individuals – defined as human beings rather than corporations – would be permitted to own and operate short-term rentals. In multifamily properties such as apartment complexes at least one unit but no more than 25 percent of the units per property could be used for short-term rentals.

Existing licensed operators would be allowed to continue renting their properties under the new regulations, provided they do not become a nuisance and their ownership remains unchanged.

City officials are also seeking stronger oversight for STR platforms such as Airbnb and Vrbo, which would be required to ensure that all hosts display a valid license number in their listings. The proposed rules would also mandate that platforms collect and remit hotel taxes directly to the city, provide quarterly tax documentation to hosts, and remove listings that do not comply with licensing requirements within 10 days of a city request. Additionally, platforms would be prohibited from collecting booking fees from unlicensed short-term rentals.

Hosts would face new compliance measures under the revised regulations, including the completion of an online training course and the posting of an evacuation plan and fire extinguisher locations inside rental units. Property owners would be required to maintain at least $1 million in liability insurance and designate a local contact who must respond to complaints within two hours.

City officials have also proposed mitigation measures for repeat violations, such as requiring noise monitoring devices and additional trash collection services.

The city first established a regulatory framework for STRs in 2012, distinguishing between owner-occupied and non-owner-occupied rentals while imposing density caps on the latter. In 2016, City Council attempted to phase out non-owner-occupied short-term rentals in residential areas and implemented stricter occupancy limits, but those measures were struck down in Zaatari v. City of Austin, where a state appellate court ruled that banning a previously legal land use violated property rights.

More recently, the city’s prohibition on new non-owner-occupied rentals was invalidated in Anding v. City of Austin, a decision influenced by a federal ruling in Hignell-Stark v. New Orleans, which found that requiring a homestead exemption for short-term rental licensing unlawfully discriminated against out-of-state property owners.

Officials estimate that while there are approximately 2,200 licensed short-term rentals operating in Austin, the majority of listings remain unlicensed. Complaints to the city’s 311 service indicate that 94 percent of reported issues involve properties operating without a license.

City staff say the new regulations are designed to improve compliance while addressing concerns about affordability, noise and neighborhood impacts. The city also plans to contract with third-party firms that use data-scraping technology to identify unlicensed properties, a strategy intended to close enforcement loopholes that have persisted under the current system.

The Planning Commission is scheduled to discuss the proposed changes on Feb. 11, followed by a City Council meeting on Feb. 27, when the ordinances could be formally adopted. The city has created a directory that is intended to hold all of the questions and answers asked to city staff regarding the proposed changes and the possible implementation process.

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