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Louisville Recommends Changes To City's Short-Term Rental Rules

Airbnb map 2018

Under new rules proposed Tuesday, short-term rental hosts who advertise their properties on websites such as Airbnb and VRBO could be fined if they fail to register with the city.

There are currently about 418 rentals registered in Louisville, a portion of the total that operate here. Short-term rentals in general are increasing in popularity, said Develop Louisville chief Jeff O’Brien in a statement.

District 8 Councilman Brandon Coan said he would prefer a system in which Airbnb prevents hosts from listing their units if they haven't registered with the city. Last year, the company reached a deal with its hometown of San Francisco to help enforce local laws.

No such deal exists in Louisville.

"We're putting the onus on property owners here," Coan said.

Once an unregistered host who advertises is notified of the violation, he or she will be fined $50 for every following day that the listing remains online. Louisville Forward’s Planning & Design Services is responsible for enforcement.

Another potentially punitive change would limit the number of guests in a property to 10, regardless of the size of the property. The proposal said there can be two guests per bedroom, plus two others for a total of no more than 10 guests.

The weekend of the Kentucky Derby is the top earning occasion for many area hosts, when rates can surpass $1,000 a night and people sometimes rent out large homes. Airbnb said Louisville hosts earned $2.3 million and had an additional 5,700 guests during the 2018 Derby weekend.

Fines for first-time violations of the ordinance are $50, rising to $250, $500 and $750 for second, third and subsequent offenses.

Louisville's short-term rental rules have evolved over time, with Metro Council setting limits in 2016 on where rentals would be allowed based on zoning.

The changes recommended Tuesday by Develop Louisville, Louisville Tourism and Coan include expanding the opportunity to rent in non-residential EZ-1 zones. Coan said that could allow for more rentals in neighborhoods such as Butchertown, where buildings may have been historically used for purposes other than housing.

"It makes more sense to allow short-term properties in EZ-1 zones than to force a property owner to seek some sort of zoning change or something," Coan said.

He described that and the proposed waiver of a $25 initial registration fee as positive changes for short-term rental owners. Hosts would still need to pay $25 to renew their registration.

This spring, Airbnb started collecting and remitting an 8.5 percent sales tax in Louisville. It also collects and remits a 6 percent state sales tax and a 1 percent transient room tax.

Airbnb wants to work with Louisville to help users comply with local rules, the company's regional policy director Tom Martinelli said in a written statement.

"We appreciate our ongoing partnership with Metro Louisville to deliver new tax revenue on behalf of our hosts," Martinelli said. "We are always happy to collaborate with cities to develop ways for our host community to easily comply with simple and fair rules."

City officials are collecting public feedback on the proposal. Develop Louisville will present the changes incorporating public feedback to the Planning Commission, which would have to approve them before sending the proposal to Metro Council.

This post has been updated with comment from Airbnb.

Amina Elahi is LPM's City Editor. Email Amina at aelahi@lpm.org.