City board’s STR ruling draws court challenge

The Hot Springs Board of Directors’ first ruling on the city’s vacation rental controversy won’t avoid judicial scrutiny.

The owners of 288 Lake Hamilton Drive have asked a court to review the board’s denial of the permit they need to apply for a vacation rental business license, filing an administrative appeal last week in Garland County Circuit Court.

The board’s 4-3 vote at its Jan. 17 business meeting overruled the planning and development department and Board of Zoning Adjustment’s determination that Stacey and Michael Assheuer met the requirements for a special use permit at their five-bedroom lake home.

The permit is a prerequisite for a short-term residential rental business license in areas zoned for residential use. Operating a short-term rental in the city without a license is prohibited. The petitioners have asked the court to overrule the board and make the city issue the permit.

The board inserted itself into the appeals process in August, making it the venue of first resort for appeals of BZA rulings on special use permits. BZA appeals went directly to circuit court prior to the change. The board has overruled city staff and the BZA on two of the three special use permits that have come before it.

The Assheuers’ petition for review said the density rationale the four-director majority cited in support of its denial wasn’t based on the comprehensive short-term rental regulatory scheme the board adopted in 2021.

The city has issued more than 40 STR business licenses on Lake Hamilton Drive. More than 30 are in horizontal property regimes, residential buildings with individual units that can be bought and sold separately, that don’t count against the annual cap on licenses in residential areas.

Several directors said the number of STRs the city approved on the affluent lakefront road was turning the neighborhood into a commercial area. The petitioners asked how one more STR would erode the residential character of the neighborhood.

“There are already several shortterm rentals approved and operating on Lake Hamilton Drive,” they said in the filing. “The board did not articulate how one additional short-term rental ‘changed the character’ of the neigh

borhood or in any way violated the act establishing short-term rental restrictions.”

Neighbors who appealed the special use permit cited crime they said was linked to the growth of STRs in their neighborhood. The petitioners said the neighbors failed to establish a connection between the two, arguing that only anecdotal evidence had been presented at the hearing.

“Moreover, there were no examples of criminal behavior or nuisance from the plaintiff/ appellant’s property,” they said in the filing, noting that 288 Lake Hamilton Drive wasn’t operating as an STR when the incidents alleged by the neighbors occurred.

The petitioners said the board’s decision was “political in nature” and not based on city code. They said they met all the requirements of the STR ordinance, but the board considered factors beyond the code.

“The opinion of other residents, when it does not reflect logical and reasonable concerns, should not be an appropriate factor for a city board of directors to consider in any request for a special use permit, especially when the applicant met all the requirements established by the board of directors in the first place,” the filing said.

“The mere fact of public opposition to a special use permit will not and should not supply a rational basis for denial of an application. Any public opposition must reflect logical and reasonable concerns,” it said.