Short-term home rental regs rile operators

City planning director Mark Olinger fields questions at Tuesday’s meeting on proposed short-term home rental rules. (Photos by Jonathan Spiers)

Property owners wary of proposed city rules that would restrict or allow, depending on one’s perspective, short-term rentals of residential properties in Richmond are airing their concerns and frustrations to city officials ahead of a presentation to City Council later this year.

More than 50 people, most of them rental operators, converged on the DMV headquarters building Tuesday evening for the second of two public meetings on the proposals, which city staff said are aimed at allowing short-term room and home rentals that currently are illegal according to city code.

Rolled out last month, the new rules would require a biennial permit, at a cost of $300, for anyone wanting to rent out a property or room for less than 30 days at a time. They also would restrict such rentals per property to no more than 180 nights per year, and would require rentals with four or more bedrooms to be subject to the city’s 8 percent transient occupancy tax.

Those last two items were among sticking points for attendees who questioned and challenged the proposals at Tuesday’s meeting, describing such restrictions as arbitrarily set and not based on actual data. Others took issue with a requirement that rentals be located on an operator’s primary residence, meaning he or she lives there at least 185 days a year.

Read the draft rules (PDF).

City planning director Mark Olinger and finance director John Wack responded that the rules are designed to keep potential enforcement manageable and are modeled after those proposed or adopted by other localities, including neighboring Henrico County, which is reviewing its own regulations after a change in state law allowed localities to draw up local rules.

“We’re trying to give people a path to being legal,” Olinger said, adding that a challenge in setting such restrictions is a lack of hard data made available from rental platforms such as Airbnb, FlipKey, HomeAway and VRBO.

“I’m not trying to create legislation against you; I’m trying to create legislation that allows you all to exist legally,” he said.

‘You are limiting our source of income’

Olinger, whose department was first tasked by council to draft proposed rules in 2015 – the year Richmond hosted the UCI Road World Championships bike race that saw an uptick in short-term rentals in the city – stressed that the rules are meant to manage what’s considered a business use in residential neighborhoods that may not want such activity year-round.

‘We’re trying to give people a path to being legal,’ Olinger told attendees.

When one woman in attendance asked why the 180-day restriction is needed, Olinger said, “There are other people in the city who are very concerned about having these things become small hotels in the middle of their neighborhood.”

Some in attendance represented that segment, expressing concerns about rentals without regulations and perceived effects on parking and other issues. But most who spoke said the rules would impact what’s become for them a reliable source of income.

A woman who said she’s been a short-term rental operator for 11 years, first in New York City and now in Richmond, argued that the rules should address safety concerns rather than number of nights, referring as others did to a January incident in which the floor of a Church Hill property listed on Airbnb collapsed under the weight of more than 100 people gathered there for a party, resulting in injuries.

“As an operator, as an investor, having the proper smoke detectors, carbon monoxide detectors up on the walls, making sure that the property is up to code, is really what we’re looking at here, rather than limiting to 180 days,” said the woman, who declined to give her name to a BizSense reporter because she said she didn’t want to be “shut down.”

“This is part of a business that a lot of these investors and property owners in this room, this is their main source of income,” she told the group. “You are limiting our source of income that is part of what we came to Richmond for and part of how we operate.”

A map showing short-term rental operations in March of 2018. (Courtesy Richmond Planning & Development Review)

Rentals on the rise

According to the city, Richmond had 835 listings in March 2018, representing 749 unique rental units primarily concentrated in the Fan and Museum districts, Church Hill and downtown. That’s up from the bike race three years earlier, when a search by BizSense found 244 rentals for a one-night, one-person stay in the days leading up to the event.

AirDNA, a short-term rental analytics site, showed 701 active rentals in Richmond as of Wednesday afternoon, with an average daily rate of $125 and a 66 percent occupancy rate. More than 400 of those were homes, just over 200 were private rooms and just a few were shared rooms, with 38 percent of all active local rentals available on a full-time basis.

Such availability is one of several concerns Olinger said the rules are meant to address. He said lengths of stay and number of rental nights per year are among issues still needing to be addressed based on feedback received from the two public meetings and presentations he’s given at councilmembers’ constituent meetings. He said another issue is operators buying up rental properties specifically for use on Airbnb and other platforms.

Currently, Olinger said, city code requires a lease for properties occupied for 31 days or more, but it doesn’t address lengths of stay for 30 days or less. While bed and breakfasts are permitted, Olinger said they’re only allowed through zoning along highways, meaning B&Bs in residential neighborhoods require a special-use permit.

“If someone wants to go the SUP route, there’s nothing in this proposal that says you can’t go the SUP route,” Olinger said, adding that the rules are meant to facilitate rentals more broadly.

Should council adopt the rules later this year, Olinger said the earliest they’d likely take effect would be year-end or early next year, with the city enlisting a third-party vendor to monitor compliance and facilitate enforcement. Olinger said the city budget for next fiscal year that council adopted Monday includes funds to pay for that service.

Enforceable rules

Properties found to be operating as short-term rentals without a permit would be fined $500 and ineligible for permits if they receive more than one violation. Violations of regulations beyond the registration requirement would qualify as a misdemeanor and carry fines of between $10 and $1,000.

The city said it received four complaints about short-term rentals in 2018 – a statistic that some speakers at Tuesday’s meeting pointed to in arguing against local regulations.

“Everyone in here uses Airbnb differently,” one woman said. “There’s a lot of impact. It’s used by a lot of people in a lot of ways, and the regulations are really limiting how people use it.”

Another speaker encouraged attendees to reach out to their representatives on council, which he and Olinger noted would make the final decision on the rules. Wack, the city finance director, stressed that the proposals could be revised based on feedback received at the meetings and in a survey, results of which would be shared after May 31. The survey can be taken here.

“The reason we’re here tonight is to solicit information,” Wack said. “No ordinances have been introduced. Any ordinance to change the taxation, to change the zoning, that would have to go to the planning commission and City Council, and could be significantly amended. We don’t have the data yet for the survey, so we have until May 31 to solicit input.”

After the meeting, several operators huddled together and exchanged phone numbers and emails, asking about their respective situations and encouraging each other that they needed to work together. Among them was Evan Cotter, co-owner of Church Hill gift shop Dear Neighbor, who said he rents out a room at his residence next door and a duplex he and his wife own in the Fan.

Cotter said their rooms were in high demand over Mother’s Day and spring break, and have had a spillover effect on their shop and other businesses. He said the proposals would cut down on their income from the rooms, which he said they typically rent out for more than 180 days a year. Without disclosing dollar amounts, Cotter said the rooms have been bringing in about five times what they rent for.

“It’s been more lucrative,” Cotter said of the status quo. “We’re a gift store, so it helps our business.”