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State Appeals Court Strikes Down Austin Rules On Short-Term Rentals

The Crestview neighborhood
Jorge Sanhueza-Lyon
A state appeals court has struck down parts of an ordinance regulating short-term rentals in Austin.

A state appeals court has declared some elements of Austin's rules governing short-term rentals unconstitutional, including provisions banning non-owner-occupied rentals and occupancy limits.

In 2016, the City Council passed sweeping new regulations of short-term rentals, like those you find through Airbnb or Homeaway. The rules included a phased-in ban on what are called "type 2 STRs" — those that are not occupied by the owner. That ban would be in place by 2022.

The court said a ban on type 2 STRs would not prevent any of the concerns the city cited, and that many of those concerns – about disorderly conduct, public urination and noise – were already prohibited by the law.

The city's ordinance also limited occupancy to two adults per bedroom and banned "assembly" — like weddings, bachelor/bachelorette parties and other group events — between 10 p.m. and 7 a.m. 

In the court's opinion overturning those provisions, justices wrote "the ordinance provision banning non-homestead short-term rentals significantly affects property owners’ substantial interests in well-recognized property rights while ... serving a minimal, if any, public interest."

The court also wrote the rules on occupancy and party times "[infringe] on Texans’ fundamental right to assemble because it limits peaceable assembly on private property."

District 9 Council Member Kathie Tovo, who was instrumental in getting the rules passed, said she was "extremely surprised and not pleasantly so."

"The council very rightly made a distinction between residential properties that are used by homeowners as short-term rentals for a very limited period each year and properties that are really serving a commercial purpose," she said. "And short-term rentals, [type] 2's, which the court was responding to, are commercial properties."

In her dissenting opinion, Justice Chari Kelly argued the court’s reasoning misconstrues the state’s constitution and that cities have a right to prevent or restrict behavior that is a nuisance to neighborhoods.

“Loud noise. Obstructing infrastructure. Flouting law enforcement. Public disturbances. Threats to public safety. All these may make an assembly non-peaceable and have nothing to do with civic discourse,” Kelly wrote. “And the City believes that it has evidence of short-term rentals causing all these.”

The city said it was disppointed by the ruling and would consider how to respond. 

This story has been updated.

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