Louisville Metro may explore more changes to short-term rental rules
A Louisville Metro Council member wants city planners to revisit how regulations are enforced on short-term rentals like VRBO and Airbnb.
District 17 Council Member Markus Winkler, who also leads the Democratic Caucus, introduced a resolution earlier this month directing Louisville’s Planning Commission to launch a study of short-term rental laws. The review would include looking at new penalties for operators who fail to register with the city, as well as automatic license revocation hearings triggered by repeat violations of local law, such as the noise ordinance.
Metro Council first passed short-term rental regulations in 2015 and amended them in 2019. Winkler said some residents and officials feel the enforcement of short-term rental rules has not been up to par.
“Now that we are a couple years in, we need to look at if the enforcement is appropriate, if the penalties are appropriate, and then ensure that, if we do have bad actors, ensure we have a process for denying that permit on a go-forward basis,” he said.
Under the city’s current short-term rental ordinance, anyone hosting a short-term rental must apply for a license and pay an annual fee of $100. The license registration number has to be posted alongside any advertisement on hosting platforms such as Airbnb or VRBO. Short-term rental operators also have to register with the Louisville Metro Revenue Commission and pay the transient room tax.
If a host fails to register with the city, they could be fined $125 and will have to come into compliance. But Winkler says the fine is trivial compared to the money short-term rental operators can make.
“If the chance of me getting caught is really small, I can rent for years on end and my greatest risk exposure is that maybe I get hit with a fine, there’s potentially an incentive for me to roll the dice and hope I don’t get caught,” Winkler said.
Louisville’s map of registered short-term rentals shows the majority of listed properties are located near commercial corridors in the urban core, places like the Highlands, Old Louisville, NuLu and around Churchill Downs.
District 8 Council Member Cassie Chambers Armstrong, who represents the Highlands, said she recently put together a short-term rental advisory group made up of neighborhood leaders. Chambers Armstrong said their recommendations also centered on enforcement issues, including automatic revocation for repeat offenders.
“Right now, it is not clear to a lot of folks when a revocation hearing is triggered and, really, what the threshold is for revoking someone’s license,” she said. “Just from a due process perspective, we have to be clear in the law about what the expectations are, so if you’re going to have those hearings, everyone knows what the process is.”
City officials amended the short-term rental regulations in 2019. Among the changes was the “600-feet rule,” which bars someone from opening a new short-term rental within 600 feet of another rental property that’s not the operator’s primary residence. Officials said the rule would prevent the concentration of these types of rentals in residential neighborhoods.
Winkler’s resolution asks the Planning Commission to take a second look at the “600-feet rule” in light of new legislation Metro Council passed last year that allows residents to construct “accessory dwelling units.” These are smaller housing units built on properties with existing single-family homes, commonly referred to as mother-in-law suites or carriage houses.
While existing local law prohibits turning accessory dwelling units into short-term rentals, Winkler wants the Planning Commission to study the potential effect of allowing owners to rent out such units, along with duplexes, on platforms like Airbnb and VRBO.
“We drew a very clear line with the short-term rental ordinance that if I live in the house, that’s different and I can be a host by right,” he said. “But with the advent of the ADU ordinance and duplexes as well, we have some ambiguity in the law.”
This provision of Winkler’s proposed resolution is perhaps the most controversial.
Council Member Bill Hollander, whose district includes neighborhoods along the Frankfort Avenue corridor, said changing the rules around accessory dwelling units could lead to an explosion of short-term rentals.
“I have a concern about any provisions that take housing stock away from people who live here everyday and turn it over to tourists,” Hollander said. “[The 600-feet rule] was designed to limit the total number in the community, because every short-term rental, while they have their place, is taking housing stock out of our market, and we have a shortage.”
Winkler’s resolution would only direct city planners to study the changes. Any amendments to the short-term rental ordinance would require Metro Council approval. But Hollander said he’s concerned about the message a study might send. He stopped short, however, of saying he’d vote against the proposal.
“A lot of times when there is a ‘You need to study this,’ it is an indication of where the council thinks we ought to go,” he said. “But how I’d vote, I just don’t know at this point.”
If the resolution is approved, staff from the Department of Planning and Design Services would lead the study and make recommendations to the Planning Commission. The 10-member commission would then choose what recommendations to forward along to Metro Council.
Spokesperson Caitlin Bowling said Planning and Design Services has not taken an official position on the proposed study and is currently working on “gaining a better understanding of Metro Council’s concerns and questions.”
Metro Council’s Planning and Zoning Committee is scheduled to consider the proposed resolution on Oct. 4.