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Louisville Metro could take another stab at regulating short-term rentals

Screenshot of map of Louisville with colored dots scattered across
Airbnb
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There are currently more than 1,300 short-term rental properties registered with Louisville Metro.

Louisville Metro Council is considering a new set of regulations for short-term rentals. If it passes, this will be the third time the city has put limits on property owners who use platforms like Airbnb and VRBO.

Metro Council first approved guidelines for short-term rental operators in 2015 and amended them in 2019. In this latest effort, city officials are looking to crack down on people who operate short-term rentals in neighborhoods they don’t live in. They’re also trying to strengthen rules that discourage a high concentration of these kinds of businesses in certain parts of Louisville, like Nulu, the Highlands and Clifton. There are roughly 1,300 short-term rentals currently registered with the city, according to data from the Office of Planning & Design Services.

Ben Reno-Weber, a District 8 Democrat, said the proliferation of Airbnbs in the Highlands is one of the most common complaints he hears from his constituents. Reno-Weber, who’s sponsoring the ordinance, said the problem is multifaceted.

“If it is not your private residence and you are operating it as a hotel, residents don’t have an immediate and easy way to register when something is not going right,” he said. “The other piece is neighborhood cohesion.”

Metro Council’s Planning and Zoning Committee approved the changes last week in a 6-1 vote. The next step would be for Metro Council to approve the ordinance at its next full meeting on Sept. 14.

Sponsors, however, are still hashing out the details of some last-minute additions to the ordinance. Reno-Weber said council members are discussing how to deal with renters who want to post their apartments on Airbnb or VRBO during big events in Louisville such as the Kentucky Derby. They’re also considering how much guidance should be given to planning officials on bed capacity and short-term rentals in rural areas.

Ordinance sponsors could ask to delay a final vote while they work with the Jefferson County Attorney’s Office to craft those additions, Reno-Weber said.

“We are trying to craft this will skill and expertise,” he said. “We are trying to move it expeditiously, but we’re not rushing it.”

The character of neighborhoods

Since June, Louisville has had a de facto moratorium on new short-term rentals. Many property owners who needed a permit saw their applications stalled while Metro Council and the Office of Planning and Design Services worked up new regulations.

The main concern from elected officials this year was the number of short-term rentals popping up in those mixed-use districts and owners getting special permits to operate in residential areas, particularly in the urban core.

At last week’s committee meeting, Democratic Council Member Andrew Owen said, like Reno-Weber, he was surprised by how many residents told him they were concerned about short-term rentals when he campaigned for office last year. Owen represents District 9, which includes Clifton, parts of St. Matthews and the Frankfort Avenue business corridor.

“We used to have this cohesive neighborhood where we all knew our neighbors, and now we have a very transient population of people,” he said. “[Residents] feel that in the character of their neighborhood.”

Currently, anyone can register the home they live in as a short-term rental, including in residential areas, without a special permit. Properties that aren’t owner-occupied, however, are only allowed without permits in parts of Louisville Metro zoned for commercial use or mixed-use office/residential. A permit is required to operate a short-term rental that isn’t owner-occupied in an area only zoned for residential use.

Under the proposed regulation structure, properties that aren’t owner-occupied would no longer be allowed in mixed-use office/residential areas without a special permit.

It would also be harder for prospective operators to get a permit for a home they don’t live in.

Metro Council President Markus Winkler, a Democrat who represents District 17, said the proposed changes will hopefully close “an unintended loophole” that allowed operators to avoid permitting in the first place.

“There were some bad actors who were essentially paying a college kid $100 and saying, ‘Hey, you’re the host, say you live here,’” Winkler said. “They would get a permit for the Airbnb as ‘host-occupied,’ but that kid never set foot within the property.”

The proposed ordinance removes any reference to hosts, instead designating short-term rentals as either owner-occupied or not.

Any properties that are already registered and licensed would be grandfathered in.

People who want to rent out a property where they don’t live would also face more restrictions aimed at limiting the concentration of short-term rentals.

The 600-foot rule

Short-term rentals that require a special permit are currently subject to a density restriction known as the “600-foot rule.” That means two properties requiring special permitting can’t operate within 600 feet of one another.

The goal of the 600-foot rule was to ensure there weren't more than a couple hotel-like short-term rentals on a city block, according to Winkler.

Short-term rental operators in these circumstances would face additional challenges if they’re asking Louisville’s Board of Zoning Adjustment to make an exception for them. The changes are meant to address Metro Council members’ concerns that too many exceptions have been handed out in recent years.

Property owners seeking an exception to the 600-foot rule would have to explain why they believe their proposed short-term rental wouldn’t contribute to “an overconcentration of short-term rentals in the immediate area.” They’d also be required to show proof that their operation won’t affect the availability of affordable housing in the neighborhood.

The proposed regulation would also tie the hands of Board of Zoning Adjustment members in certain situations. They would be prevented from granting any exceptions where two or more short-term rentals with special permits are already located within 600 feet in a residential area.

Increased registration costs

The proposed ordinance would also increase the annual registration fee for a short-term rental, from $100 to $250.

Reno-Weber said the additional funding would allow the Office of Planning and Design services to more proactively enforce the regulations. He said it will cover the cost of hiring one full-time employee to manage applications and compliance.

Planning officials will also be able to purchase third-party software that can scrape data from short-term rental platforms and identify unregistered operations.

Roberto Roldan is the City Politics and Government Reporter for WFPL. Email Roberto at rroldan@lpm.org.