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Lawmakers Inch Toward Decision On Airbnb, Other Short-Term Rentals

Screenshot of Airbnb

Louisville legislators are getting closer to regulating short-term rentals, such as those found via Airbnb, VRBO and FlipKey.

The Metro Council has been working to establish regulations for the growing industry since last year. In December, local lawmakers approved a set of ordinances to impose basic requirements like registration fees, capacity limits and the need for emergency evacuation plans.

But like many U.S. cities, Louisville is still struggling to strike a balance between the sharing industry and a regulatory apparatus that has been slow to respond to a fast-changing, tech-driven economy. And with little actual data to go on, council members are essentially trying to regulate the unknown.

On Monday, the council's committee on the land development code sifted through the details of another, more controversial ordinance that would govern where short-term rentals can be located, how many parking spaces they'll be required to provide, and which units will have to operate under conditional use permits, which require a separate approval process.

They drew no conclusions, but they did cover ground on key points.

The city's planning commission is recommending short-term rental units be allowed in nearly all zoning districts in the city, with the exception of many industrial districts. Conditional use permits will have to be obtained for certain rental units in some residential districts.

Councilman Glen Stuckel, a Republican who represents District 17, said he's concerned that requiring a conditional use permit could create a backlog of requests in the city's board of zoning adjustment -- which must approve them -- and lead to some hosts waiting months for a decision.

Joe Haberman, the city's planning manager, said that could be an issue.

"We can only get so many items on the agenda," he said.

Committee Chair James Peden, a Republican from District 23, said there may be special meetings of the board called specifically for short-term rental permit applications to allow people to obtain a conditional use permit before they fall out of compliance with city policy.

Haberman said the city's planning commission is also recommending an exemption for owners renting properties during the Kentucky Derby and PGA Championship. Council President David Yates, a Democrat who represents District 25, is proposing an amendment to allow a similar exemption.

Prices surged on Airbnb last week, the city's most tourist-heavy of the year.

But Councilman Bill Hollander, a Democrat from District 9, said exemptions shouldn't be allowed. He said if people aren't required to register their properties, they'll be less likely to pay the required transient occupancy tax -- which is a major point of the regulations.

"Everybody who has a short-term rental, for any period of time, including one day of the year at Derby, needs to pay the transient occupancy taxes," he said. "It's logical, frankly, that people are more likely to pay their transient occupancy taxes if we have some record of who they are."

Peden said while he initially supported such an exemption, he's not so sure now. "I have come to realize what a huge business this is," he said.

For that, he said the industry needs stringent regulation to ensure neighbors to rental properties are protected.

The council doesn't have an estimate for how much revenue the new regulations would generate, according to Democratic Caucus spokesman Tony Hyatt.

In Nashville, where tourism is booming, the Metro Council last year approved new taxes and regulations on short-term rentals. The Tennessee Hospitality & Tourism Association projects $1.2 million in revenues from the lodging tax -- which also applies to hotels and motels -- alone in 2016.

Parking Woes

Parking requirements at short-term rentals also continues to be a contentious topic.

The proposed ordinance calls for an "appropriate" amount of parking per rental unit. But Peden said he's unsure what will be considered appropriate, pointing to some areas of the city -- like the Highlands -- that already struggle with a lack of parking.

Haberman said the city's board of zoning adjustment will consider what is appropriate on a case-by-case basis, depending on neighborhood demands. Owners of short-term rental units could also apply for parking waivers, which Peden said concerns him.

He said it's likely the closer you get to downtown, in neighborhoods like the Highlands and Old Louisville, the more waivers will be sought. Those areas need to have "the most stringent standards," he said.

Still, Peden said he understands that waivers may be acceptable for people looking to rent their apartments on Bardstown Road.

The current ordinance does not allow short-term rentals in multi-family residences or condominiums. And while Peden said he doesn't want to exclude all short-term rentals in apartments, it's necessary to protect more suburban complexes.

The short-term rental ordinance will go before the council committee at least one more time before heading to the full council for a vote.

Jacob Ryan is the managing editor of the Kentucky Center for Investigative reporting. He's an award-winning investigative reporter who joined LPM in 2014. Email Jacob at jryan@lpm.org.

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