The Long-Term Problems of Short-Term Rentals in District 9
Austinites are voting in 10 different geographically drawn city council districts this election. We’ve been taking a look at each of those districts.
Today, we’ll a look at District 9, a compact district that touches Oltorf and goes up through downtown and the UT campus to just south of U.S. Highway 290.
At its heart is the Clarksville neighborhood, with its historic freedman's homes. It’s one of many district neighborhoods dealing with a problem some say robs the city of revenue, disrupts neighborhoods and lowers property values in the much-coveted, centrally-located district: short term rentals.
Dan Mottola lives in District 9 in a small 1920s home near UT Austin. His garage is a separate structure on the back of his property with an apartment on top. The building is gray and yellow, very modern. There's a set of black matte furniture in the backyard, and Mottola's chickens walk around.
District 9 features some of Austin’s most coveted real estate, and one issue neighbors here have been dealing with is how the city regulates short term rentals. STR’s, as most people call them, are properties like Mottola's – a garage apartment or a second home that owners rent by the day or month during SXSW or to visiting professionals who don't want to stay in a hotel.
They’re as popular as they are lucrative. They are also not welcome in some neighborhoods.
David King doesn't live in District 9, but his neighborhood is also an STR magnet. He says the city's Code Compliance Department has been hands-off when it comes to enforcing the rules that govern STRs.
“We've been told that no compliance officers work on weekends,” King said at a city council meeting the day the city's short term rental ordinance was adopted last year. Up until now, the city's code compliance department only springs into action once a complaint has been filed. Neighbors like King wonder what good it is to complain if there's no one to complain to.
“Many STR problems occur on the weekends or holidays and neighbors are left to fend for themselves until the code compliance officers are back in the office,” he told the council.
Another challenge is that the city has failed to enforce the registration of STR’s, despite the fact that it's a city ordinance. It costs almost $300 to register, but only about a thousand properties have paid the annual fee, a fact that frustrates Dan Mottola.
“It's a reasonable cost of doing business,” he says. “But, it's unfortunate that I have a lot of competition who is not paying hotel occupancy taxes and that initial license fee.”
STR's must be insured, and city and state taxes must be paid on registered properties. Rental income must also be reported to the federal government, but you can get around that if the property is not registered.
"I'm about to cut a check to the city for almost $500 for this quarter,” Mottola says. “Multiply that by 1,000 [and] that's a lot of revenue.”
The revenue for the city could be a lot more if enforcement was consistent. At least a dozen websites advertise STR’s in the Austin area, with over 1,000 listings on AirBnB in Austin alone.
So, neighbors would like the next Austin City Council do: enforce current STR rules. Among other things, some also want the city to restrict the number of STRs allowed in each neighborhood.
Three candidates are running for District 9, and two are current council members.