HomeMy WebLinkAbout172-19 RESOLUTIONOF FPY ETrF
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113 West Mountain Street
Fayetteville, AR 72701
(479) 575-8323
Resolution: 172-19
File Number: 2019-0348
SHORT TERM RENTALS:
A RESOLUTION TO REQUEST THAT CITY STAFF STUDY AND DEVELOP AN ORDINANCE TO
REGULATE SHORT-TERM RENTALS IN THE CITY OF FAYETTEVILLE
WHEREAS, the Fayetteville Unified Development Code classifies short-term home rentals as hotels
which makes renting a house for fewer than seven days illegal in all zoning districts except in
commercial and mixed-use districts that allow hotels by rights; and
WHEREAS, there are currently over 500 short-term rentals listed on Airbnb in the City of Fayetteville
with hundreds more listed on other short-term rental websites; and
WHEREAS, there are many benefits from regulation of short-term rentals including increased sales tax
revenue; reduced noise, parking, traffic and trash problems in neighborhoods; ensuring a level playing
field between traditional homes, hotels, and illegal short-term rentals; ensuring compliance with
building safety regulations; improving responsiveness to neighbor complaints; and sending a clear
message to residents that the City takes short-term rental problems seriously.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
FAYETTEVILLE, ARKANSAS:
Section l: That the City Council of the City of Fayetteville, Arkansas hereby requests that City staff
study and develop for the City Council's consideration an ordinance to regulate short-term rentals in the City
of Fayetteville.
Page 1 Printed on 7/17/19
File Number: 2019-0348
Resolution 172-19
PASSED and APPROVED on 7/16/2019
Attest:
Sondra E. Smith, City Clerk Treasurer %%J11111111111/'
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Page 2 Printed on 7/17/19
City of Fayetteville, Arkansas 113 West Mountain Street
Fayetteville, AR 72701
�- (479) 575-8323
- Text File
File Number: 2019-0348
Agenda Date: 7/16/2019 Version: 1 Status: Passed
In Control: City Council Meeting File Type: Resolution
Agenda Number: C. 8
SHORT TERM RENTALS:
A RESOLUTION TO REQUEST THAT CITY STAFF STUDY AND DEVELOP AN ORDINANCE TO
REGULATE SHORT-TERM RENTALS IN THE CITY OF FAYETTEVILLE
WHEREAS, the Fayetteville Unified Development Code classifies short-term home rentals as hotels which
makes renting a house for fewer than seven days illegal in all zoning districts except in commercial and
mixed-use districts that allow hotels by rights; and
WHEREAS, there are currently over 500 short-term rentals listed on Airbnb in the City of Fayetteville with
hundreds more listed on other short-term rental websites; and
WHEREAS, there are many benefits from regulation of short-term rentals including increased sales tax
revenue; reduced noise, parking, traffic and trash problems in neighborhoods; ensuring a level playing field
between traditional homes, hotels, and illegal short-term rentals; ensuring compliance with building safety
regulations; improving responsiveness to neighbor complaints; and sending a clear message to residents that
the City takes short-term rental problems seriously.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
FAYETTEVILLE, ARKANSAS:
Section 1: That the City Council of the City of Fayetteville, Arkansas hereby requests that City staff study and
develop for the City Council's consideration an ordinance to regulate short-term rentals in the City of
Fayetteville.
City of Fayetteville, Arkansas Page 1 Printed on 711 712 01 9
Garner Stoll
Submitted By
City of Fayetteville Staff Review Form
2019-0348
Legistar File ID
7/16/2019
City Council Meeting Date - Agenda Item Only
N/A for Non -Agenda Item
5/31/2019 DEVELOPMENT SERVICES (620)
Submitted Date Division / Department
Action Recommendation:
2019-0348 Resolution on Short-term rentals: Submitted by the Development Services Department requesting
direction from the City Council to study and develop a short-term rentals ordinance.
Budget Impact:
Account Number Fund
Project Number Project Title
Budgeted Item? NA Current Budget $ -
Funds Obligated $
Current Balance $ -
Does item have a cost? No Item Cost
Budget Adjustment Attached? NA Budget Adjustment
Remaining Budget $ -
V20180321
Purchase Order Number: Previous Ordinance or Resolution #
Change Order Number: Approval Date:
Original Contract Number:
Comments:
CITY OF
FAYETTEVILLE
ARKANSAS
MEETING OF JULY 16, 2019
TO: Mayor and City Council
CITY COUNCIL AGENDA MEMO
THRU: Don Marr, Chief of Staff
Garner Stoll, Development Services Director
FROM: Andrew Garner, City Planning Director
DATE: May 31, 2019
SUBJECT: 2019-0348 Resolution on Short-term rentals: Submitted by the Development
Services Department requesting direction from the City Council to study and
develop a short-term rentals ordinance.
RECOMMENDATION:
Staff recommends approval of a resolution requesting staff to study and develop a short-term
rentals ordinance.
BACKGROUND:
There are currently over 500 short-term rentals in Fayetteville, the majority listed on Airbnb.
Vacation rentals are a rapidly expanding part of Fayetteville's economy. However, it is estimated
that nationwide less than 10% of short-term rentals pay all their hotel taxes. There are many
benefits for local governments to regulate short-term rentals:
■ Increased sales tax
■ Reduced noise, parking, traffic and trash problems in neighborhoods
■ Ensure a level playing field between traditional homes, hotels, and illegal short-term
rentals
■ Eliminate party houses
■ Ensure building safety
■ Improve city responsiveness to neighbor complaints
■ Send a clear message to citizens that the city takes short-term rental problems seriously
In Fayetteville's Unified Development Code, short-term rentals (renting a house or room for less
than seven days) are classified similar to a hotel. This makes renting a house for less than seven
days illegal in all zoning districts, except in commercial and mixed use districts that allow hotels
by right.
Mailing Address:
113 W. Mountain Street www.fayetteviIle-ar.gov
Fayetteville, AR 72701
DISCUSSION:
Staff and City Administration feel that the city needs to create a short-term rental code.
Additionally, a monitoring program would be necessary to enforce the code. The general
approach would be to first have one or two community meetings to obtain input on policy
objectives behind the code. After a consensus is gained through the public input, code would be
drafted to achieve the policy objectives.
BUDGET/STAFF IMPACT:
Staff would utilize existing budget for a local planning consultant already on retainer to assist in
the community meeting and drafting the code. If the code adoption process becomes complicated
or drawn out, additional budget may be needed for the code writer. After the code is adopted, a
monitoring program would require funding in an amount to be determined, and enforcement of a
short-term rental program would require additional staff resources.
ATTACHMENTS:
■ White Paper on Short-term Rentals
Whitepaper
A PRACTICAL GUIDE TO EFFECTIVELY REGULATING
SHORT-TERM RENTALS ON THE LOCAL GOVERNMENT LEVEL
By Host Compliance
https://hostcompliance.com/resources-gallery/a-practical-quide-to-effectively-regulating-short-term-rentals-on-the-local-government-level
Introduction: The meteoric rise of "home -sharing" and short-term rentals
Sharing our homes has been commonplace for as long as there have been spare rooms and comfortable
couches. Whether through word of mouth, ads in newspapers or flyers on community bulletin boards,
renters and homeowners alike have always managed to rent out or share rooms in their living spaces.
Traditionally these transactions were decidedly analog, local and limited in nature, but with advance of
the internet and websites such as Airbnb.com and HomeAway.com it has suddenly become possible for
people to advertise and rent out their homes and spare bedrooms to complete strangers from far -away
with a few mouse -clicks or taps on a smartphone screen. As a result, the number of homes listed for
short-term rent has grown to about 4 million, a 10 fold increase over the last 5 years. With this rapid
growth, many communities across the country are for the first time experiencing the many positive and
negative consequences of an increased volume of "strangers' in residential communities. While some of
these consequences are arguably positive (increased business for local merchants catering to the
tourists etc.) there are also many potential issues and negative side-effects that local government
leaders may want to try to mitigate by adopting sensible and enforceable regulation.
How to effectively regulate home -sharing and short-term rentals has therefore suddenly become one of
the hottest topics among local government leaders across the country. In fact, at the recent National
League of Cities conference in Nashville, TN, there were more presentations and work sessions
dedicated to this topic than to any other topic. Yet, despite more than 32,000 news articles written on
the topic in recent years, surprisingly little has been written on how to implement simple, sensible and
enforceable local policies that appropriately balances the rights of homeowners with the interests of
neighbors and other community members who may only experience the negative side-effects associated
with people renting out their homes on a short-term basis. This guide seeks to address this knowledge
gap and offer practical advice and concrete examples of short-term rental regulation that actually
works.
Why regulate home -sharing and short-term rentals in the first place?
There are many good reasons why local government leaders are focused on finding ways to manage the
rapid growth of home -sharing and short-term rental properties in their communities. To name a few:
1. Increased tourist traffic from short-term renters has the potential to slowly transform peaceful
residential communities into "communities of transients' where people are less interested in
investing in one another's lives, be it in the form of informal friend groups or church, school and
other community based organizations.
2. Short-term renters may not always know (or follow) local rules, resulting in public safety risks,
noise issues, trash and parking problems for nearby residents.
3. So-called "party houses" i.e. homes that are continuously rented to larger groups of people with
the intent to party can severely impact neighbors and drive down nearby home values.
4. Conversion of residential units into short-term rentals can result in less availability of affordable
housing options and higher rents for long-term renters in the community.
5. Local service jobs can be jeopardized as unfair competition from unregulated and untaxed
short-term rentals reduces demand for local bed & breakfasts, hotels and motels.
Short-term Rentals White Paper
Hostcompliance.com
Page 1 of 14
6. Towns often lose out on tax revenue (most often referred to as Transient Occupancy Tax / Hotel
Tax / Bed Tax or Transaction Privilege Tax) as most short-term landlords fail to remit those taxes
even if it is required by law.
Lack of proper regulation or limited enforcement of existing ordinances may cause tension or
hostility between short-term landlords and their neighbors
The existence of "pseudo hotels" in residential neighborhoods (often in violation of local zoning
ordinances etc.) may lead to disillusionment with local government officials who may be
perceived as ineffective in protecting the interests of local tax -paying citizens.
In short, while it may be very lucrative for private citizens to become part-time innkeepers, most of the
negative externalities are borne by the neighbors and surrounding community who may not be getting
much in return. The big questions is therefore not whether it makes sense to regulate short-term rentals
and home -sharing, but how to do it to preserve as many of the benefits as possible without turning
neighbors and other local community members into "innocent bystanders". In the next sections we will
explore how to actually do this in practice.
Effective home -sharing and short-term rentals regulation starts with explicit policy objectives and a clear
understanding of what regulatory requirements can be enforced
As with most regulation enacted on the local level, there is no "one size fits all" regulatory approach that
will work for all communities. Instead local regulation should be adapted to fit the local circumstances
and policy objectives while explicitly factoring in that any regulation is only worth the paper it is written
on if it can be enforced in a practical and cost-effective manner.
START WITH EXPLICIT POLICY OBJECTIVES!
As famously stated in Alice in Wonderland: "If you don't know where you are going, any road will get
you there." The same can be said about short-term rental regulation, and unfortunately many town and
city councils end up regulating the practice without first thinking through the community's larger
strategic objectives and exactly which of the potential negative side effects associated with short-term
rentals that the regulation should try to address. As an example, the Town of Tiburon in California
recently passed a total ban of short-term rentals and home -sharing without thinking through the
severely negative impact of such regulation on its stated strategic policy objective of revitalizing its
downtown. Likewise the City of Mill Valley, California recently adopted an ordinance requiring short-
term landlords to register with the city, while failing to put in place an effective mechanism to shut-
down "party -houses" although there had been several complaints about such properties in the past.
Such oversight was clearly unintentional but highlights the fact that the topic of regulating short-term
rentals and home -sharing is extremely complicated and it is easy to miss the forest for the trees when it
comes time to actually writing the local code. To avoid this pitfall, local government leaders should
therefore first agree on a specific list of goals that the new short-term rental regulation should
accomplish before discussing any of the technical details of how to write and implement the new
regulation. Any draft regulation should be evaluated against these specific goals and only code
requirements that are specifically designed to address any of those concrete goals should be included in
the final ordinance. Below are a few concrete examples of what such lists of concrete policy objective
could look like for various types of communities:
Short-term Rentals White Paper
Hostcompliance.com
Page 2 of 14
EXAMPLE A: LIST OF SHORT-TERM RENTAL POLICY OBJECTIVES FOR AN AFFLUENT RESIDENTIAL
COMMUNITY IN ATTRACTIVE LOCATION
* Ensure that traditional residential neighborhoods are not turned into tourist areas to the
detriment of long-time residents
• Ensure any regulation of short-term rentals and home-sharingdoes not negatively affect
property values (and property tax revenue)
• Ensure that homes are not turned into pseudo hotels or "party houses"
• Minimize public safety risks and the noise, trash and parking problems often associated with
short-term rentals and home -sharing without creating additional work for the local police
department
• Give permanent residents the option to occasionally utilize their properties to generate extra
income from short-term rentals and home -sharing as long as all of the above mentioned policy
objectives are met
EXAMPLE B: LIST OF SHORT-TERM RENTAL POLICY OBJECTIVES FOR AN URBAN COMMUNITY WITH A
SHORTAGE OF AFFORDABLE HOUSING
• Maximize the availability of affordable housing options by ensuring that no long-term rental
properties are converted into short-term rentals
* Ensure that short-term rentals and home -sharers are taxed in the same way as traditional
lodging providers to ensure a level playing field and maintain local service jobs
• Ensure that the city does not lose out on hotel / bed / transient occupancy tax revenue that
could be invested in much needed services for permanent residents
Minimize public safety risks and the noise, trash and parking problems often associated with
short-term rentals and home -sharing without creating additional work for the local police
department
• Give permanent residents the option to occasionally utilize their properties to generate extra
income from short-term rentals and home -sharing as long as all of the above mentioned policy
objectives are met
EXAMPLE C: LIST OF SHORT-TERM RENTAL POLICY OBJECTIVES FOR A WORKING-CLASS SUBURBAN
COMMUNITY WITH AMPLE HOUSING AVAILABILITY AND A STRUGGLING DOWNTOWN
• Give property owners the option to utilize their properties as short-term rentals and for home -
sharing to help them make ends meet
• Encourage additional tourism to drive more business to downtown stores and restaurants
Minimize public safety risks and the noise, trash and parking problems often associated with
short-term rentals and home -sharing without creating additional work for the local police
department
Short-term Rentals White Paper
Hostcompliance.com
Page 3 of 14
• Ensure that the city does not lose out on tax revenue that could be invested in much needed
services for permanent residents
EXAMPLE D: LIST OF SHORT-TERM RENTAL POLICY OBJECTIVES FOR BEACH TOWN WITH A LARGE
STOCK OF TRADITIONAL VACATION RENTALS
• Ensure any regulation of hoe -sharing and short-term rentals does not negatively affect the value
of second homes (and thereby property tax revenue)
Encourage increased visitation to local stores and restaurants to increase the overall availability
of services and maximize sales tax collection
+ Minimize public safety risks and the noise, trash and parking problems often associated with
short-term rentals and home -sharing without creating additional work for the local police
department
Once clear and concrete policy objectives have been formulated the next step is to understand what
information can be used for code enforcement purposes, so that the adopted short-term rental
regulation can be enforced in a cost-effective manner.
ONLY ADOPT POLICY REQUIREMENTS THAT CAN AND WILL BE ENFORCED!
While it may seem obvious that only enforceable legislation should be adopted, it is mind-boggling how
often this simple principle is ignored. To give a few examples, the two California towns previously
mentioned not only failed to adopt regulation consistent with their overall strategic policy objectives,
but also ended up adopting completely unenforceable rules. In the case of Tiburon, the town council
instituted a complete ban of all short-term rentals and home -sharing within its jurisdiction, but not only
failed to allocate any budget to enforce it, but also failed put in place fines large enough to deter any
violation of the ban. As a result, the number of properties listed for rent has remained virtually
unchanged before and after the ban.
In the case of Mill Valley, the town's registration requirement turned out to be completely
unenforceable as the town's personnel had neither the technical expertise, time nor budget to track
down short-term landlords that failed to register. As a result, the town has had to rely exclusively on
self -reporting, and unsurprisingly the compliance rate has been less than 5%.
As for local governments that require short-term rental property owners to pay tax to the local
jurisdiction without allocating budget to enforcing such rules, they have found themselves in similar
situations, with compliance rates in the 5% range.
KEEP IT SIMPLE!
Another common mistake is for cities to adopt complicated rules that are hard for citizens to understand
and follow and that require large investments in enforcement. As an example, despite setting up a
dedicated department to enforce its short-term rental regulation, the City of San Francisco has only
achieve a 10-15% compliance rate as its regulation is so complicated and its registration process so
agonizing that most people give up before even trying to follow the rules. Below is flow -chart that
illustrates San Francisco's cumbersome short-term rental registration process.
Short-term Rentals White Paper
Hostcompliance.com
Page 4 of 14
Sharing our homes has been commonplace for as long as there have been spare rooms and comfortable
couches. Whether through word of mouth, ads in newspapers or flyers on community bulletin boards,
renters and homeowners alike have always managed to rent out or share rooms in their living spaces.
Traditionally these transactions were decidedly analog, local and limited in nature, but with advance of
the internet and websites such as Airbnb.com and HomeAway.com it has suddenly become possible for
people to advertise and rent out their homes and spare bedrooms to complete strangers from far -away
with a few mouse -clicks or taps on a smartphone screen. As a result, the number of homes listed for
short-term rent has grown to about 4 million, a 10 fold increase over the last 5 years. With this rapid
growth, many communities across the country are for the first time experiencing the many positive and
negative consequences of an increased volume of "strangers" in residential communities. While some of
these consequences are arguably positive (increased business for local merchants catering to the
tourists etc.) there are also many potential issues and negative side-effects that local government
leaders may want to try to mitigate by adopting sensible and enforceable regulation.
How to effectively regulate home -sharing and short-term rentals has therefore suddenly become one of
the hottest topics among local government leaders across the country. In fact, at the recent National
League of Cities conference in Nashville, TN, there were more presentations and work sessions
dedicated to this topic than to any other topic. Yet, despite more than 32,000 news articles written on
the topic in recent years , surprisingly little has been written on how to implement simple, sensible and
enforceable local policies that appropriately balances the rights of homeowners with the interests of
neighbors and other community members who may only experience the negative side-effects associated
with people renting out their homes on a short-term basis. This guide seeks to address this knowledge
gap and offer practical advice and concrete examples of short-term rental regulation that actually
works.
Short-term Rentals White Paper
Hostcompliance.com
Page 5 of 14
SHORT-TERM RENTAL REGISTRATION PROCESS
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While hindsight is 20/20, it is worth noting that the registration requirements were probably well -
intended and made logical sense to the council members and staff that adopted them. The problem was
therefore not ill -will but a lack of understanding of the practical details as to how the various short-term
rental websites actual work. As an example San Francisco's short-term rental regulation require that
property owner's display their permit number on any advertising (including online listings) whereas
Airbnb's website has built-in functionality that specifically prevents short-term landlords from doing so
and automatically deletes all "permit sounding" information from the listings in most locations.
Likewise, San Francisco's legislation bans anyone for renting their homes for more than 90 days per
calendar year, while none of the home -sharing websites give code enforcement officers the ability to
collect the data necessary to enforce that rule. To make matters worse, the listing websites have refused
to share any property specific data with the local authorities and have even gone as far as suing the
cities that have been asking for such detailed data. Local government officials should therefore not
assume that the listing websites will be collaborative when it comes to sharing data that will make it
possible for local code enforcement officers to monitor compliance with complicated short-term rental
regulation on the property level. Instead, local government leaders should seek to carefully understand
the data limitations before adopting regulation that cannot be practically enforced. To get a quick
overview of what information that can be relied on for short-term rental compliance monitoring and
enforcement purposes, please see the diagram below that shows which:
1. data is publicly available on the various home -sharing websites
Short-term Rentals White Paper
Hostcompliance.com
Page 6 of 14
2. information that can be uncovered through the deployment of sophisticated "big data"
technology and trained experts (or time-consuming and therefore costly detective work
conducted by a town's own staff)
3. property specific details that are practically impossible to obtain despite significant investment
of time and money
Data that can be acquired
Data that is
through the use of sophisticated impossible to obtain
Publicly available data technology or laborious (costly) for majority of
for majority of properties detective work
Interior photos Address # of nights rented per
Listing description Owner name month/quarter/year
Location within half a mile of Permit information Rental revenue per
actual location month/quarter/year
So where does that leave local government leaders who want to put in place enforceable short-term
rental regulation? In the next section we will explore, describe, and assess the viable regulatory tools
available for local government leaders to effectively address the key issues related to taxation,
regulation, social equity and economic development.
Viable regulatory approaches to managing short-term rentals and home -sharing
As mentioned earlier, the first step to creating effective short-term rental regulation is to document and
get agreement on a set of clear and concrete policy objectives. Once this has been accomplished putting
together the actual regulatory requirements can be simplified by referring to the "cheat sheet" below,
which lists the regulatory levers that can be pulled to accomplish those goals in a practical and cost-
effective manner while factoring in the data limitations highlighted in the previous section.
SHORT-TERM RENTAL POLICY OBJECTIVES AND THE ASSOCIATED VIABLE REGULATORY APPROACHES
Short-term Rentals White Paper
Hoslcompliance.com
Page 7 of 14
Adopt a formal annual permitting
Failing to clearly specify what rules law
Give law abiding and
requirement and a process for revoking
abiding and respectful short-term
respectful citizens the
permits from "trouble properties". As an
landlords and their renters must
option to utilize their
example a local government can adopt a "3
comply with. Adopting regulation that
homes as short-term
strikes rule" whereby a permit is
does not clearly define the criteria and
rentals
automatically revoked for a number of years
process for revoking a short-term
in the event the local government receives 3
rental permit.
Short-term Rentals White Paper
Hoslcompliance.com
Page 7 of 14
Ensure that speculators
do not buy up homes to
turn them into pseudo
hotels while still giving
permanent residents the
option to utilize their
homes to generate extra
income from short-term
rentals and home -
sharing
Ensure that homes are
only occasionally used as
short-term rentals (and
not continuously rented
out to new people on a
short term basis)
(substantiated) complaints about a property
within a certain time frame (i.e. a 24 month
period). Alternatively, a local government
can adopt a rule" by which a permit is
automatically revoked in the event the town
receives conclusive evidence (police report,
video evidence etc.) that a city ordinance
has been violated.
Adopt a formal permit requirement and
Adopting a permitting process that
make it a condition that the permit holder
does not formally require short-term
verifies residency on an annual basis by
rental permit holders to verify that
submitting the same documentation as is
they are permanent residents of the
required to verify residency for public school
permitted property
attendance purposes
It is unfortunately not practically possible to
enforce any formal limits on the number of
times or number of days that a particular
property is rented on an
annual/quarterly/monthly basis, but
adopting a permanent residency
requirement for short-term rental permit
holders (see above) can ensure that there is
a practical upper limit to how often most
properties areany property is rented out
each year (most people can only take a few
weeks of vacation each year and they are
therefore practically restricted to rent out
their homes for those few weeks). There is
unfortunately no easy way to deal with the
tiny minority of homes where the
"permanent resident" owners have the
ability to take extended vacations and rent
out their home continuously. That said, if
the above mentioned "permanent residency
requirement" is combined with rules to
mitigate noise, parking and trash related
A formal limit on the number of times
or number of days each property can
be rented on an
annual/quarterly/monthly basis is not
enforceable as occupancy data is
simply not available without doing a
formal audit of each and every
property.
Short-term Rentals White Paper
Hostcompliance.com
Page 8 of 14
Ensure homes are not
turned into "party
houses"
Minimize potential
parking problems for the
neighbors of short-term
rental properties
issues, the potential problems associated
with these few homes should be
manageable. Adopting a ""permanent
residency requirement" also comes with the
additional side benefit that most people
don't want to rent out their primary
residence to people who may trash it or be a
nuisance to the neighbors. The "permanent
residency requirement" can therefore also
help minimize noise, parking and trash
related issues.
Adopt a formal permit requirement and put
in place a specific limit on the number of
people that are allowed to stay on the
property at any given time. The "people
limit" can be the same for all permitted
properties (i.e. a max of 10 people) or be
correlated with the number of bedrooms. In
addition, the regulation should formally
specify that any advertisement of the
property (offline or online) and all rental
contracts must contain language that
specifies the allowed "people limit" to make
it clear to (potential) renters that the home
cannot be used for large gatherings. While
not bullet-proof, adopting these
requirements will deter most abuse. In
addition it is possible to proactively enforce
this rule as all listing websites require (or
allow) hosts to indicate their property's
maximum occupancy on the listings.
Adopt a formal permit requirement and put
in place a specific limit on the number of
motor vehicles that short-term renters are
allowed to park on/near the property. The
"motor vehicle limit" can be the same for all
permitted properties (i.e. a max of 2) or be
dependent on the number of permanent
parking spots available on the property. In
addition, the regulation should formally
Adopting any regulation that does not
clearly define what types of uses are
disallowed will be ineffective and likely
result in misinterpretation and/or
abuse.
Adopting any regulation that does not
clearly define a specific limit on the
number of motor vehicles that short-
term renters are allowed to park
on/near the property.
Short-term Rentals White Paper
Hostcompliance.com
Page 9 of 14
specify that any advertisement of the
property (offline or online) and any rental
contract must contain language that
specifies the allowed "motor vehicle limit"
to make it clear to (potential) renters that
bringing more cars is disallowed. As with the
"people limit" rule mentioned above,
adopting these parking disclosure
requirements will deter most abuse. In
addition it is easy to proactively enforce this .
rule as most listing websites require or allow
their hosts to describe their property's
parking situation on the listing.
• Require that all short-term rental
contracts include a copy of the local
sound/trash/parking ordinances
and/or a "Good Neighbor Brochure"
that summarizes the local
sound/trash/parking ordinances and
what is expected of the renter. ul>
Adopting any regulation and
enforcement processes that do not
explicitly specify how non -emergency
problems should be reported and
addressed.
Short-term Rentals White Paper
Hostcompliance.com
Page 10 of 14
• Require that short-term rental
permit holders list a "local contact"
that can be reached 24/7 and
Minimize public safety
immediately take corrective action
risks and possible noise
in the event any non -emergency
and trash problems
issues are reported (i.e. deal with
without creating
suspected noise, trash or parking
additional work for the
problems) ul>
local police department
and code enforcement
Establish a 24/7 hotline to allow
personnel
neighbors and other citizens to
easily report non -emergency issues
without involving local law/code
enforcement officers. Once notified
of a potential ordinance violation,
the hotline personnel will contact
the affected property's "local
contact", and only involve the local
law and/or code enforcement
personnel in the event that the
'local contact" is unsuccessful in
remedying the situation within a
Adopting any regulation and
enforcement processes that do not
explicitly specify how non -emergency
problems should be reported and
addressed.
Short-term Rentals White Paper
Hostcompliance.com
Page 10 of 14
reasonable amount of time (i.e. 20-
30 minutes).
Ensure that no long-term
Adopt a permanent residency requirement
rental properties are
for short-term rental permit holders (see
converted to short-term
above) to prevent absentee landlords from
rentals to the detriment
converting long-term rental properties into
of long-term renters in
short-term rentals.
the community
Ensure that residential
neighborhoods are not
inadvertently turned
into tourist areas to the
detriment of permanent
residents
Ensure the physical
safety of short-term
renters
Implement one or both of the following
regulatory approaches:
Adopting a permitting process that
does not formally require short-term
rental permit holders to verify that
they are permanent residents of the
permitted property will be ineffective
in preventing absentee landlords from
converting their long-term rental
properties into short-term rentals.
• Adopt a formal permit requirement
and set specific quotas on the
number of short-term rental permits
allowed in any given neighborhood, Adopting a complete ban on short -
and/or term rentals, unless such a ban is
• Adopt the "permanent residency heavily enforced.
requirement" for short-term rental
permit holders (mentioned above)
to ensure that there is a practical
upper limit to how often any
property is rented out each year
Adopt a physical safety inspection
requirement as part of the permit approval
process. The inspection can be conducted by
the municipality's own staff or the local
fire/police force and can cover various
amounts of potential safety hazards. As a
minimum such inspection should ensure
that all rentals provide a minimum level of
protection to the renters who are sleeping
in unfamiliar surroundings and therefore
may be disadvantaged if forced to evacuate
the structure in the event of an emergency.
Adopting a self -certification process
that does not involve an objective 3rd
party.
Short-term Rentals White Paper
Hoslcompliance.com
Page 11 of 14
Ensure any regulation of
short-term rentals and
home -sharing does not
negatively affect
property values or
create other unexpected
negative long-term side-
effects
Adopt regulation that automatically expires
after a certain amount of time (i.e. 2-5 Adopt regulation that does not contain
years) to ensure that the rules and a catalyst for evaluating its
processes that are adopted now are effectiveness and side-effects down
evaluated as the market and technology the line.
evolves over time.
In addition to the above targeted regulatory measures, local governments should adopt requirements
for short-term rental permit holders to maintain books and records for a minimum of 3 years so that it is
possible to obtain the information necessary to conduct inspections or audits as required. Finally, it is
imperative that local governments adopt fine structures that adequately incentivizes short-term
landlords to comply with the adopted regulation. Ideally the fines should be proportionate to the
economic gains that potential violators can realize from breaking the rules, and fines should be
ratcheted up for repeat violators. Below is an example of a fine schedule that will work for most
jurisdictions:
rine for auverttsing a property Tor snort- upon the tourtn or subsequent
term rent (online or offline) without first violation in any twenty-four
having obtained a permit or for violating $25month period, the local
any other requirements of the local day per day per day$75per government may suspend or
government's short-term rental regulation day day day revoke any permit. The
including failure to comply with the local suspension or revocation can
listing requirements be appealed.
Notes:
• Any person found to be in violation of this regulation in a civil case brought by a law enforcement agency
shall be ordered to reimburse the local government and other participating law enforcement agencies
their full investigative costs, pay all back -owed taxes, and remit all illegally obtained short-term rental
revenue proceeds to the local government
• Any unpaid fine will be subject to interest from the date on which the fine became due and payable to the
local government until the date of payment.
* The remedies provided for in this fine schedule are in addition to, and not in lieu of, all other legal
remedies, criminal or civil, which may be pursued by the local government to address any violation or
other public nuisance.
Best Practices for Enforcing Home -Sharing and Short-term Rental Regulation
Short-term Rentals White Paper
Hostcompliance.com
Page 12 of 14
To implement any type of effective short-term rental regulation, be it a total ban, a permitting
requirement, and/or a tax, local governments must expect to invest some level of staff time and/or
other resources in compliance monitoring and enforcement. That said, most local governments are
neither technically equipped nor large enough to build the true expertise and sophisticated software
needed to do this cost-effectively. There are several reason why this is the case:
1. Rental property listings are spread across dozens (or hundreds) of different home sharing
websites, with new sites popping up all the time (Airbnb and HomeAway are only a small
portion of the total market)
2. Manually monitoring 100s or 1,OOOs of short-term rental properties within a specific jurisdiction
is practically impossible without sophisticated databases as property listings are constantly
added, changed or removed
3. Address data is hidden from property listings making it time-consuming or impossible to identify
the exact properties and owners based just on the information available on the home -sharing
websites
4. The listing websites most often disallow property owners from including permit data on their
listings, making it impossible to quickly identify unpermitted properties
5. There is no manual way to find out how often individual properties are rented and for how
much, and it is therefore very difficult to precisely calculate the amount of taxes owed by an
individual property owner
Luckily, it is possible to cost-effectively outsource most this work to new innovative companies such as
Host Compliance that specialize in this area and have developed sophisticated big data technology and
deep domain expertise to bring down the compliance monitoring and code enforcement costs to a
minimum. In many situations, these companies can even take on all the work associated with managing
the enforcement of the short-term rental regulation in return for a percentage of the incremental
permitting fees, tax revenue and fine revenue that they help their local government partners collect.
Adopting short-term rental regulation and outsourcing the administration and enforcement can
therefore be net -revenue positive for the local government, while adding no or little additional work to
the plates of internal staff. What's more, getting started generally requires no up -front investment,
long-term commitment or complicated IT integration.
That said, while it is good to know that adopting and enforcing short-term regulation can be net revenue
positive if done in partnership with an expert firm, it is important to note that the economic benefits are
only a small part of the equation and that local government leaders should also factor in the many non-
economic benefits associated with managing and monitoring the rapidly growing short-term rental
industry in their local communities. These non -economic benefits are often much more important to the
local citizens than the incremental tax revenue, so even if the incremental revenue numbers may not
seem material in the context of a local government's overall budget, the problems that unregulated
and/or unmonitored short-term rentals and home -sharing can cause for the neighbors and other
"innocent bystanders" can be quite material and should therefore not be ignored. Or as Jessica C.
Neufeld from Austin, TX who suddenly found herself and her family living next to a "party house"
Short-term Rentals White Paper
Hostcompliance.com
Page 13 of 14
reminds us: "We did not buy our house to be living next to a hotel. Would you buy a home if you knew a
hotel like this was operating next door, if you wanted to set your life up and raise o family?"[u.
Conclusion
It is the responsibility of local government leaders to ensure that as few people as possible find
themselves in the same unfortunate situation as Jessica and her family. In this white -paper we have
outlined how to make it happen - in a revenue positive way. To find out more about how we can help
your community implement simple, sensible and enforceable short-term rental regulation, feel free to
visit us on www.hostcompliance.com or call us for a free consultation on (415) 715-9280. We would also
be more than happy to provide you with a complimentary analysis of the short-term rental landscape in
your local government's jurisdiction and put together an estimate of the revenue potential associated
with adopting (or more actively enforcing) short-term rental regulation in your community.
New York Times article: "New Worry for Home Buyers: A Party House Next Door", October 10, 2015
Short-term Rentals White Paper
Hostcompliance.com
Page 14 of 14
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Short-term Rental Alternatives: Policy Solutions
for Long-term Success
An Analysis of The City of Fayetteville's Short-term Rentals Policy
(December 2018)
Ryland Arnold, Political Science M.A. Student
Fulbright College of Arts and Sciences
University of Arkansas
jra017@uark.edu
Natalie Bird, Recreation Sport Management Ph.D. Student
College of Education and Health Professions
University of Arkansas
HPER 219
nbird@uark.edu
Lauren Husband, Public Administration M.A. Student
Fulbright College of Arts and Sciences
University of Arkansas
AFLS C123
lhusband@uark.edu
Adam Franky, Public Administration M.A. Student
Fulbright College of Arts and Sciences
University of Arkansas
WJWH 536
afranky@walton.uark.edu
ACKNOWLEDGEMENTS
We would like to thank those who have supported and advised us during this project.
Many thanks to Dr. Geoboo Song, Rachel Moyer, and Leif Olsen of the City of Fayetteville for
their guidance, expertise, and understanding as we navigated the muddy waters of Airbnb data
acquisition and tax analysis.
We are also thankful to those who graciously extended their expertise and data for the
project. Special thanks to the City of Boulder, City of Lawrence, and City of Tempe for their
time and insights, as well as countless contacts from the City of Fayetteville. To those who were
able to attend our presentation at Fayetteville City Hall on December 13, 2018, we thank you for
your presence and feedback on our project.
Gratitude is extended to Josh Bonnell and Hayley Husband for tolerating our presence as
we occupied their home for what seemed to be weeks at a time, as well as the baristas at the Law
Library Arsagas and Puritan Coffee & Beer. We couldn't have done this without ample coffee
provisions. Moreover, the cuddles and entertainment that Sherlock, Mrs. Puff, and Baby Kitty
provided us with as we worked were essential to sustaining morale.
Finally, we would like to thank our fellow classmates for their feedback and
encouragement throughout the semester as we built our project. Their interest and commentary
was invaluable.
Table of Contents
Executive Summary ...........................................................................................4
Introduction..................................................................................................... 5
Current Fayetteville Short-term Rental Climate, Policy, and Enforcement ...........................6
HMRTax Regulations........................................................................................7
Housing Trust Fund Tax......................................................................................7
Peer City Policies and Attitudes.............................................................................7
PolicyGoals...................................................................................................................................10
Political Feasibility.................................................................................10
Efficiency.............................................................................................1 1
Administrative Feasibility .......................................................................... l I
Equity.................................................................................................1 1
PolicyAlternatives...........................................................................................12
StatusQuo...........................................................................................1 2
NoRegulation.......................................................................................1 2
Moderate Regulation..............................................................................1 2
Stringent Regulation...............................................................................1 2
Policy Goals/Alternatives Matrix.........................................................................13
Benefit -Cost Analysis (BCA)..............................................................................14
PolicyRecommendation....................................................................................14
Long -Term Considerations.................................................................................15
Conclusion...................................................................................................15
Executive Summary
With the rapid expansion of the sharing economy to the American marketplace in recent
years, local governments have struggled to keep up with unique issues and opportunities that
peer-to-peer economic activity has introduced. Impeded by the lack of substantial data available
and the subjectivity of the problem, short-term rental home sharing platforms present issues
many cities struggle to address in a timely manner. Factors including personal property rights,
housing safety, residential disturbances, housing affordability and availability, tourism revenue
and growth, data collection, and effects on the hotel market, as well as countless others, must all
be considered when customizing a short-term rental policy to fit Fayetteville's particular needs
and concerns. Because the home -sharing platform Airbnb provides an overwhelming percentage
of short-term rentals available for rent in Fayetteville, we will be using data from Airbnb as our
main source for understanding the problem. Our policy analysis seeks to understand the issue of
short-term housing rentals in Fayetteville, as well is its effects on the city as a whole. We will
also be exploring possible tax revenue opportunities for the City of Fayetteville to consider when
implementing a new policy.
Our policy alternatives include:
1) The status quo policy;
2) A "No Regulation" policy;
3) A "Moderate Regulation" policy;
4) And a "Stringent Regulation" policy.
On the basis of this analysis, we recommend that the City of Fayetteville adopt the
"Moderate Regulation" policy on short-term rentals. As noted in the cost -benefit analysis, the
Moderate Regulation option provides the most long-term flexibility with lower costs to the city
than Stringent Regulation. Moreover, Moderate Regulation provides additional sources of
revenue and data collection to the City, including a possible "Housing Trust Fund Tax" that
could provide extra tourism revenue, as well as address any possible issues regarding housing
affordability and availability that a strong presence of short-term rentals might produce.
Moderate Regulation would offer greater equity for the City of Fayetteville, Fayetteville
residents, Airbnb hosts, hoteliers, and tourists.
While our policy solution provides a good starting point for the City of Fayetteville to
begin regulating short-term rentals, we understand that data collection by the City is essential to
eventually implementing a more custom policy to fit Fayetteville's needs. More data is needed to
better understand exactly how short-term rentals are impacting Fayetteville specifically.
Analyses of peer citie policies can provide ideas for Fayetteville to understand its specific issues
once the climate is more closely assessed; however, each city experiences unique short-term
rental costs and benefits. We are simply providing a safe platform on which the City may expand
in the long term.
4
Introduction
During our analysis of the City of Fayetteville's short-term rentals policy, five major
issues were identified: policy ambiguity, data collection, tax remittance, impact on city housing,
and attitudes of area residents and hotels. According to Johanna Interian (2016) of Boston
College Law School, Airbnb is a major leader in the new sharing economy and should be held
liable for limited actions of hosts that are consistent with the externalities typically associated
with transient home sharing (p.132). Airbnb's functional resemblance to the hospitality industry
raises questions about how to deal with taxation, safety regulations, and other industry rules that
bind traditional companies in the hospitality industry (p.134). Peer cities involved in our analysis
have mentioned hotel industry implications within their local economies, and their methods to
mitigate those issues. Ultimately, policy solutions are necessary is because Airbnb travelers
provide tax revenue and spending within the local economy.
Airbnb claims that inexpensive lodging and increased access to accommodations in areas
less frequented by tourists have helped stimulate the local economy. Airbnb guests stay longer,
on average, than tourists staying in hotels and are more likely to return on later trips (Interian,
2016). Easily enforceable policies suggested by Interian (2016) include: limiting the number of
days per year that a location can act as a short-term rental, which could help alleviate the loss of
affordable permanent housing, and being required to annually register the property with local
authorities to assist in assuring compliance with the annual limit and other applicable local rules,
as well as data collection. Airbnb is notorious for withholding information and it is imperative
the city is able to collect data. This fact alone was the driving force of features within two of our
policy alternatives.
Eliminating policy ambiguity is a goal our policy alternatives hope to provide. Grant
Wills (2017) has investigated short-term rental policies in South Carolina, where regulations lack
clarity. This is a common issue, as many states and municipalities also have vague regulations
that are not properly enforced; this ambiguity can lead to a plethora of problems.
An important consideration included in this analysis is the opinions of property owners
within the Fayetteville. If zoning laws and other forms of government intervention are over
utilized or too harsh, cities could be faced with unhappy property owners; similar zoning cases
have found the government mired in legal trouble (Scanlan, 2017). There can clearly be an
overreach of these policies, but a precedent has yet to be reached on the specific rights afforded
to property owners who decide to utilize their spaces for short term rentals. Given that this is
relatively new problem, each city or state may find that certain policies work better than others
for their specific market but it remains to be seen if any broadly applicable solutions arise from
this spread of short-term rental availability. It is worth noting that the level of population density
and tourism in the cities mentioned, such as New York, will not be seen by the majority of
markets. The spread of short-term rental policies will also not be as viable an economic model or
as large of a factor in housing sparsity outside of these larger markets.
We have analyzed the City of Fayetteville's current short-term rental policy and
developed alternatives that would allow the city to reap additional benefits. Our policy solutions
for short-term rentals are customized to fit the City of Fayetteville. Each policy alternative will
consider Airbnb renters, Airbnb hosts, the City of Fayetteville, and Fayetteville residents.
Current Fayetteville Short-term Rental Climate, Policy, and Enforcement
The City of Fayetteville's current policy restricts Airbnbs and other forms of short-term
rentals to a minimum of one week. Any rentals shorter than 7 consecutive days are illegal, and
are enforced on a complaints basis. Noise complaints are the most prevalent, but city officials
have received 6 total complaints throughout the last three years combined.
Despite the policy, travelers can still purchase shorter stays through the Airbnb app or
website without penalty incurred by the host or renter. Remission taxes are still being collected
by the City of Fayetteville from Airbnb; the tax is added at the time of purchase regardless of
length of stay. City residents and hosts are often unaware of this policy, or are skirting the legal
definition of a dwelling. The Airbnb climate in Fayetteville according to Airdna.co is displayed
in Table 1 below.
Table 1 Airbnb Climate in Fayetteville
Active rentals
504
Average booked properties
460
Occupancy rate
45%
Average booking rate per night
$207.00
Average Airbnb private room price (Fayetteville)
$62.00
Average hotel room price (Fayetteville)
$82.00
Average Airbnb private room price (Downtown Fayetteville)
$97.00
Average hotel room price (Downtown Fayetteville)
$137.00
Map 1 on the following page displays the location of Airbnbs in the Fayetteville area. Map 2
shows the majority of Airbnb listings are in the downtown area within the following parameters:
north of MLK Blvd., east of Razorback Road, south of Maple Street, and west of Mission Blvd.
6
Ah
. North of MILK Blvd. Downtown Area STR Prices
. Eastof Razorback Rd. Airbnb Private Room - $97 - $102
. South of M a p le St. Hotel Private Room - 5137
. West of Mission Blvd.
7
HMR Tax Regulations
Every city has their own hotel, motel, and restaurant (HMR) tax that is applicable to Airbnb
rentals. Fayetteville's Airbnb HMR tax regulations shown below are effective February 1, 2017.
13.75% total for Airbnbs in Fayetteville
• 6.5% Arkansas Gross Receipts Tax
• 1.25% Washington County Sales Tax
• 2% Arkansas Tourism Tax
• 2% Fayetteville Sales Tax
• 2% Fayetteville HMR Tax
In terms of taxes, we recommend adding a 5% HTF tax to be described in the next section.
Housing Trust Fund Tax
Many cities are facing housing crises that are correlated with the presence of short-term
rentals. To avoid this, all three of our policy alternatives include a Housing Trust Fund tax (HTF
tax). This 5% tax will be added at the end of every Airbnb purchase. This will create an effective
long-term housing source for affordable housing. This tax will increase social capital in an effort
to reduce barriers to citizen development and upward mobility. This HTF tax would benefit other
projects considered by the City of Fayetteville and also provide hotel owners an incentive to
support policy changes. Fayetteville residents would not see an increase in taxes as only Airbnb
renters would pay this upon making a reservation. This tax would still keep Fayetteville under a
20% total tax, which is competitive with our peer cities. Maps I and 2 display secondary dollar
figures that include the HTF tax on Airbnb private rooms and show these taxes would not
influence the market.
Peer City Policies and Attitudes
Three peer cities' policies have served as a resource when developing alternatives:
Boulder, Colorado; Lawrence, Kansas; and Tempe, Arizona. Each city has a comparable
population and a university atmosphere. Attitudes of short-term rentals follow, and Table 2
below compares regulation categories.
Boulder, Colorado
Short-term rental operators in Boulder must obtain a valid short-term rental license.
Boulder requires hosts to register by application and paying a $130 fee. This license must be
renewed every four years. Applicants are asked to provide documentation verifying the listing as
primary residence, required to include their short-term license number on the listing, must meet
minimum construction, design, and maintenance standards for buildings, including regulations
on habitability, health, and life safety. A recent restriction passed regarding accessory units --
residents are no longer allowed to offer accessory units as short-term rentals. Complaints have
been raised by Boulder residents regarding property rights and unclear regulations and
requirements. The City of boulder attributes its stringent regulations to managing the current
limited affordable housing availability for Boulder residents.
Lawrence, Kansas
Lawrence, Kansas has no opinion regarding Airbnb properties in their city, but
recognized the necessity of regulation. Land use codes were amended on October 2, 2018 with
an updated short-term rentals policy. City officials have expressed there is a benefit to regulating
STRs, especially after members of the hotel industry became vocal. In an effort to leveling the
playing field, the new policy requires short-term rentals to undergo a safety inspection and
comply to similar hotel -standard codes and taxes.
Tempe, Arizona
The Tempe tourism office of Tempe, Arizona expressed significant distress with the
inability to regulate airbnbs and other short term rentals in their city because of state law
shielding the gig economy from local regulation efforts. Tempe neighborhood advocates,
including the Mayor of Tempe Mark Mitchell, have spoken out against the state's restrictive
legislation. Tempe, home to the infamous party school ASU has a significant problem with
students coming into residential neighborhoods for parties hosted at Airbnbs. The tourism office
suggested restricting Aribnb listings to homeowners who are listing their primary residence
might correct this problem but have no course of action available to implement this suggestion
under current law.
Table 2 Peer City Policy Comparison
Policy Aspect
Boulder, CO
Lawrence, KS
Tempe, AZ
Primary residence
Proof of primary
Must be owner
N/A
residence required;
occupied for more than
accessory units can not
182 days annually
be used for STR
Business license
Yes, $130 every 4 years
Yes, annual
N/A
Guest restrictions
Up to 3 or 4 family
Only 3 or 4 guests at a
None
members plus 2
time depending on
additional persons
license type
Guest length of stay
None
Less than 30 days
None
restrictions
Fax remittance
7.5% accommodations
Sales tax and transient
Local sales tax and a
tax collected by Airbnb
guest tax paid directly
state lodging tax are
by Airbnb, owner must
collected by airbnb and
have proof of payment
payed back to Arizona
equally 7.9%
Salcty inspection
Yes
Yes, annually
N/A
Neighborhood
Not listed online as of
Yes
N/A
notification
12/14/18
STR licensing hotline
Yes
Yes
NA
Policy Goals
The following policy goals and related impact categories will provide a basis for
comparison of the current status quo policy and our proposed policy alternatives. When assessing
these policy goals and impact categories, we are keeping in mind all possible stakeholders and
possible externalities-- specifically the City of Fayetteville, Fayetteville residents and
homeowners, and Fayetteville hotel and business owners.
Political Feasibility
Political feasibility will measure the likelihood of each policy alternatives to be accepted
and successfully implemented by the City of Fayetteville and its residents and businesses. By
identifying the major stakeholders in a potential short-term rental policy, we are able to deduce
that a certain level of acceptance by city officials (what is the likelihood of the policy's adoption
10
by the city?), Fayetteville residents and homeowners (how will residents and homeowners react
to the policy?), and Fayetteville hotel and tourism business owners (will the policy impact
existing hotel and tourism revenue?) is imperative to a successful policy. We predict that harsher
short-term rental policy alternatives will be more attractive to current hotel owners in
Fayetteville, while looser enforcement will be more attractive to residents and homeowners
overall. Moreover, fewer regulations could be easier to implement by the city, but harsher
regulations can present opportunities for tax, permit, and other revenue.
Efficiency
Under this policy goal, we measure efficiency in terms of the benefits and costs, defined
as the total social net benefits, to all stakeholders. The costs include labor and materials, as well
as administrative and enforcement costs. Efficiency factors we have identified at this point in our
research include: business licensing fees and revenues, code enforcement salaries, impacts on
existing hotels, impacts on tourism revenue, impacts on current and future housing pricing and
availability, revenue generated and contained within Fayetteville by local Airbnb hosts (the
multiplier effect), tax and penalty revenue, and other possible items yet to be identified.
Administrative Feasibility
Ease of enforcement and ease of implementation would be high for the Status Quo, No
Enforcement, and Moderate Enforcement policy alternatives. Harsh Enforcement however,
would be low in these impact categories. Status Quo is synonymous with No Enforcement for the
purpose of this paper as administrative officials currently do not have to proactively enforce the
policy. Because short-term rentals are only permitted for a minimum of one week and residents
are responsible for reporting complaints, enforceability and implementation are high; changes to
the current policy would not be required. Moderate Enforcement would require Airbnb rental
owners to purchase a business license and incur fines for not registering. Officials already
conduct similar administrative duties, making ease of enforcement and ease of implementation
high. Ease of enforcement and implementation are both low for the Harsh Enforcement policy.
This alternative would require a business license, a limit on the number of days per year, and cap
on the number of short-term rentals in Fayetteville. These tasks would require a significant
amount of time and likely require creating a new position. Long-term feasibility for each policy
alternative is unknown at this time due to incomplete data.
Equity
When discussing a policy intervention for short term rentals, and specifically Airbnb, it is
difficult not to impede upon the equity of different stakeholders when considering the solutions
provided. Fairness to homeowners is the most equitable in the moderate enforcement, but the
other forms of enforcement could decrease property value or impede upon property rights that
homeowners may fully enjoy. Fairness to existing hotels is most equitable in the moderate and
harsh enforcement policy alternatives, although there is not enough data to conclude that Airbnbs
are having statically significant effects on hotel business, or hotel prices, except in much larger,
destination markets. However, established hotels will surely like to see stronger enforcement due
to the regulations already faced by the hotel industry. Fairness to potential Airbnb users is the
most equitable in the minimal policy intervention states, such as status quo and no policy
intervention, which would provide the most short-term rental options for Airbnb seeking
consumers and increase the ease of short term rental usage. There could quite possibly be an
impact on housing prices and rent, however the associated equity is hard to estimate or predict
because research has not been conducted on areas with more Airbnbs in Fayetteville, but it is
safe to assume that an over saturation possibly provided by status quo or no policy enforcement
options could increase rent prices and decrease availability of housing for renters. Larger markets
have seen increased rent prices but it would be difficult to stretch this data to predict the impact
on Fayetteville's housing market.
Policy Alternatives
Based on the information that has been gathered from August until present, three possible
alternative policies have been created. If any of the following policy alternatives are
implemented or other short term rental policy changes occur, the City of Fayetteville should
promptly notify Airbnb. Each policy alternative also includes the integration of an additional five
percent short term rental tax to put towards a potential housing trust fund or utilized at the
discretion of the city.
Status Quo
The Status Quo alternative would maintain the current city policy. Interventions only
occur when complaints reach an excessive amount; however, "excessive" is not definitively
defined. The current policy only permits reservations that are a minimum of one week, which is
also enforced on a complaints basis. A 4% total tax is collected from Airbnb guests, that then
remitted to the city of Fayetteville (Talk Business, 2018).
No Regulation
No regulation of short-term rentals is synonymous with no monitoring procedures for
new and current hosts. The taxes collected would not differ than that of the status quo, but hosts
would not have to acquire a business license. The complaint system would also be removed.
Moderate Regulation
In addition to the taxes already collected, Moderate Regulation would require Airbnb and
other short-term rental hosts to purchase a standard business license and register their property
with the city. A fine of $200 will be issued upon failure to register each host site. These
procedures will allow the city to learn rental locations and density throughout the city.
Fayetteville already has officials that conduct similar enforcement, therefore hiring a new
employee will not be required, however the cost for the necessary monitoring has integrated into
the cost structure of this policy alternative. Airbnb provides a field for business licenses to be
displayed in each listing description, but a semi-annual listing check will be conducted by a
designated city official. This policy has the potential to provide data of housing prices and
availability in high traffic areas (such as downtown) after a number of years. Similar data is
currently available but would require a subscription fee via Airdna.co.
Stringent Regulation
The Stringent Regulation policy alternative is the strictest policy. A standard business
license would be required for all short-term rental hosts, as well as a yearly safety inspection of
each hosting property. Hosts would only be allowed to utilize their primary residence for rentals.
A fine of $200 will be issued upon failure to register each host site. A new position would be
Iti
required to monitor Airbnb activity within the city of Fayetteville to monitor business licenses
and conduct safety inspections of short term rental host properties. An estimated yearly salary
would be $46,384 for a city official that will monitor and manage this policy and its effect on
low-income housing in the area, as well as conduct a quarterly listing check.
Policy Goals/Alternatives Matrix
Table 3 below details of each policy �dtcrnative as they would relate to to policy goals and their
impact categories.
PolkyGoas
lmpaittiCid"ories
Status Quo
No
Moderate
Stringent
Regulation
Regulation
Regulation
EfflCknCy
Tota! Net Benefits
795,M,09:
1,790,055.18
1,761,339.18
1,579,419.18
Fairness to
Medium
Medium
Medium
Homeowners
Equity
Fairness to Existing
Medium
Nigh
Hotels
Fairness toAirbnb
Medium
Medium
Medium
Medium
Users
Ease of Enforcement
high
High
Medium
Low
Administrative
Feasibility
Ease of Implementation
Nigh
Nigh
Medium
Lowe
Likelihood of Successful
Nigh
High
Medium
Low
Adoption by City
!!
Resident/Homeowner
Medium
Nigh
Medium
Low
Acceptance
Political
Feasibility
Hotel Owner
Low
LOW
Med,u n
Fig
Acceptance
Business Owner
High
high
High
Low
Acceptance
Policy Recommendation
After thorough analysis, our policy recommendation is Moderate Regulation. This policy
has many benefits for the City of Fayetteville and its residents. The purchase of a business
license would provide needed data and help monitor STR effects on the housing market in
important economic areas. Moderate Regulation would provide substantial tax benefits for the
city, especially considering the proposed HTF tax, while respecting the property rights of
citizens. Overall, this policy would provide fewer negative externalities than the other
alternatives.
14
Long-term Suggestions
With the passage of a policy similar to that of the proposed moderate regulation policy,
the Fayetteville can effectively monitor and study the short term rental market in the city, and its
effects on tourism, housing prices, and the economic vitality. The city of Fayetteville can utilize
the growing short term rental market to fill the gap left left by hotels or other accommodation
services in key economic areas, like the Downtown/Dickson Street area. The potential for
levying taxes on an expanding short term rental market, could be customized to fit the city's
needs and could aid in helping fund projects, including a housing trust fund. As data is collected
and carefully analyzed, the city can make further policy interventions if required or scale back
any implemented regulation to accommodate to the market.
Conclusion
In conclusion the issue of policy ambiguity and lack of regulation will require ongoing
changes in the future. As the short-term rental market changes over time, it is likely that policy
regulations must also change. However, by implementing Moderate Regulation policy alternative
and requiring the purchase of business licenses, the city will have the data necessary to explore
potential policy changes, while continuing to encourage the growth of short term rentals in the
city and ensure that the rights of property owners are upheld.
(E
References
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Regulations, 39 B.C. Intl & Comp. Law Review. 129, Retrieved from
http://Iawdigitalcommons.bc.edu/icir/vol39/issl/6.
Scanlon, C. (2017). Re -zoning the sharing economy: Municipal authority to regulate short-term
rentals of real property. SMULaw Review, 70(2) 563-591. Retrieved from
https://scholar.smu.edu/cgi/viewcontent.cgi?article=4691 &context=smulr.
Tuttle, K. C. (2018). Embracing the Sharing Economy: The Mutual Benefits of Working
Together to Regulate Short -Term Rentals. University of Pittsburgh Law Review, 79(4),
803-821. https:HO-doi-or .lg i�ry.uark.edu/10.5195/lawreview.2018.576
Wills, G. (2017). To Be or Not to Airbnb: Regulation of Short -Term Rentals in South Carolina.
South Carolina Law Review, 68(4), 821-843. Retrieved from http://0-
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Farronato, C., & Fradkin, A. (2018). The Welfare Effects of Peer Entry in the Accommodation
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