Cities look at rules to cover short-term rental properties
Short-term rental properties are a growing industry in Arkansas, which is leading some cities to look at ways to implement regulations on the properties.
Online marketplaces such as Airbnb and Vrbo have found a niche listing short-term rental properties that are often used for vacation or other activities, but the rise in popularity comes with concerns about how the properties affect local tax revenue.
Short-term rentals are attractive to property owners because they often offer a better return than longterm rentals, according to Nick Gatlin, who along with his wife, Danielle, operates Housing NWA.
“We think this is the future,” Nick Gatlin said. “Definitely feels like that, the way vacations and vacation rentals are going, because even though there isn’t as much service as a hotel, it’s still your own private place, usually in a good location, and the feel of it people seem to love.”
Gatlin and his wife listed eight properties on Airbnb about eight years ago, and since then Housing NWA has grown into a full-service vacation rental management company with more than 20
properties statewide.
“We just now opened up to manage other people’s properties in January and added 14 properties,” he said. “We actually expanded to Hot Springs and are taking on another four properties in Texarkana, and took on one in Florida as well. We are growing exponentially.”
Yet along with the rise of such properties nationally comes an increase in the number of cities concerned about the effect that shortterm rentals are having on local tax revenue, as well as how the industry can turn residential homes into commercial enterprises with little government oversight.
Gatlin said short-term rental organizations such as Airbnb and Vrbo collect state taxes automatically, but municipal taxes have been left up to individual cities.
“That is one of the major reasons they are creating ordinances, so they can tax them like a hotel,” he said.
Maumelle’s City Council last Monday voted down an ordinance that would have required that properties offered for short-term rental be registered with the city and regulated in relation to events permitted on the properties.
City code doesn’t currently specify which rental properties are required to register as businesses.
The need for regulation arises out of concerns about noise complaints and unregulated events that could be held in neighborhoods, City Attorney Melissa Krebs said.
“We have seen on social media houses being rented out for parties where they are charging money for entry,” Krebs said. “It’s difficult to track right now to tell if this house is an Airbnb or not. Wedding venues have also been rented out like this as well, and it’s not fair to the people who have invested in homes that they thought were going to be in a residential area.
“The concern is events will grow if it’s not addressed.”
Multiple City Council members said during the meeting that they would not vote for the ordinance because they didn’t want Maumelle to be the city leading the charge when it comes to regulation of short-term rentals.
“I don’t think we should be the city that blazes the trail,” Council Member Terry Williams said. “We should follow others because we don’t have the market that other, larger cities have.”
Fayetteville’s City Council voted last month, after several amendments, to approve regulations for short-term rentals. Anyone operating such a rental in a zoning district that doesn’t allow hotels will have to obtain a business license and a building safety inspection from the city.
Operators also will have to pay the city’s 2% hotel, motel and restaurant sales tax, get insurance and have a representative who can be on-site within three hours in case of emergency.
A maximum of two people per bedroom can stay in a home. No parties are allowed, and parking is limited by the underlying zoning district.
Hot Springs has proposed a draft ordinance that would cap the number of shortterm rental businesses at 1,000 in the city’s five residential zoning designations.
An ordinance adopted in March put a four-month moratorium on short-term rental licenses; prohibited short-term residential rental businesses, which the ordinance defined as accommodations offered for periods of not more than 30 days, from operating in the city without a business license; and established an annual tax of $50 per bed.
Little Rock is expected within the next several months to review an ordinance on setting regulations for short-term rentals.
The short-term rentals working group of Little Rock’s Planning Commission held its first meeting April 20. At that meeting, Jamie Collins, the city’s director of planning and development, said the group intends to hold two public meetings in late May or early June and will go out into neighborhoods to present its proposed ordinance before bringing the measure to the Planning Commission.
Under the proposed ordinance, owners of short-term rental properties would have to obtain licenses. Purveyors of short-term rental dwellings would not be allowed to list properties online before obtaining their licenses.
Nathan Hamilton, a North Little Rock City Council member and an Airbnb host, said it’s understandable that cities want to keep an eye on the industry.
“Residents have a right to be interested in how their neighborhoods change,” Hamilton said in an email. “You want to have a community that encourages visitors, but you don’t want every other house as rental property and ruin the close knit community that make so many places special. As with so many things finding the right balance is important and that balance will be different for each neighborhood.”
Gatlin said he believes that fear of parties being held at short-term rental properties is mostly unfounded.
“I think that people are more worried about that being a thing than it actually being a threat,” he said. “In general, most of the neighbors that we have been in contact with have been pretty happy about the situation.”
Gatlin said smaller cities such as Maumelle should keep short-term rentals as deregulated as possible.
“They need to allow the industry to take root and allow it to grow into what it’s going to be first,” he said. “Have a business license requirement and limiting per area is the first things you should do, and let it go from there as far as you can.”
Hamilton said the future of short-term rentals will probably vary from city to city.
“In some places I hope to see more of them because they do provide lodging options near some places where traditional hotels just won’t ever go,” he said. “In other places — Hot Springs for example — I think less is more at this point.”
Maumelle’s City Council last Monday voted down an ordinance that would have required that properties offered for short-term rental be registered with the city and regulated in relation to events permitted on the properties.