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.”

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15 Comments on "Short-term home rental regs rile operators"

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Ashley Smith

This is ridiculous. “I’m not trying to create legislation against you; I’m trying to create legislation that allows you all to exist legally.” Olinger.

Uh, Olinger, sir, we don’t need laws to validate existence. What an absurd mentality coming from a “Free Nation”. This authoritarianism needs to stop. I don’t operate short term rentals, but I know they are vastly beneficial to society and our community. They don’t need legislation for validation either. Stop the nonsense.

Michael Dodson

They are following the laws set up by the General Assembly. Localities HAVE TO adopt ordinances to govern their use or they are illegal. PERIOD!

One can debate what should go in the ordinance but we need something on the books.

Fred Squire

Alright, I’ll bite on your dramatic comment.

Can you explain how having an unregulated short term rental system is beneficial to our society and community?

Since you state that you “know,” what are your examples of how our community is currently being failed by too many short term rental regulations?

From everything I read and hear, it seems quite the opposite. Members of our very community want protections (via new, stricter or better defined regulations) to limit short term rentals in their community.

What are we all missing in this picture?

charles Frankenhoff
I’ve got no skin in the game, but the idea that everything is forbidden unless the government allows it sounds un-american. I don’t want my life run by government, and especially not the city of Richmond govt. I don’t mind reasonable regs on air b & bs, but the slumlord across the street has a bigger impact. I live in the city, and expect a multiplicity of uses. Those who want to live in the suburbs and gated communities really should make that choice and live there, not try to make the city look like a second rate short pump
Fred Squire

I agree, the City of Richmond can’t run a hotdog stand let alone an actual City. Given their tax rate, it’s an absolute shame for those who pay them.

I was just more curious how a regulated short term rental program was going to contribute to the downfall of society. That’s what I thought was comical.

Maybe it’s all tied into Brexit, the plight of the Hooded Vulture and the NBA draft, who knows. Still waiting for a response from the first poster.

charles Frankenhoff

I can’t speak for them, but I don’t think the world is better for being over-regulated. We need reasonable regulations, and then we need to stop. Every person in this country shouldn’t have to be a lawyer in order to keep up with the regulations on them.

Steve Simmons

You can’t do anything without a bureaucrat wanting a piece of the pie so they can piss it away!

Billy Stinson
As an investment property owner who runs a short term rental in the fan I’m definitely disappointed in the first proposal by the city. I’ve got no problem with the city imposing regulations but I wish the city would embrace short term rentals as a means to increase tourism while also increasing revenue through either permits or an occupancy tax on the rentals. This current proposal would wipe out 40% – 50% of the pool of operators as they don’t live in the actual units. These are the operators that treat their properties as a business and drive a majority… Read more »
David Humphrey
You may be a good operator, but there are definitely plenty of bad operators out there who run their investment properties as party houses. These disrupt residential communities and detract from property values which is a kick in the bottom line to the City. That is what they are hearing from residents and it is what they are seeing in the news. It is up to you and other operators to convince them it is not the case or try and come up with a compromise that would allow your kind of good operation and not allow the bad kind… Read more »
Jake Germel
Plenty of bad operators? Party houses? This is merely conjecture unless you can cite a reference for this statement that provides necessary data to arrive at such a conclusion. The data would also need to be compared to “party houses” owned by long term rental landlords as well as compared against the number of properties that are rented on long term basis and are falling down, not maintained , etc. These are issues with the operator/owner whether it is short term, 30 day, 12 month, 5 year etc. There are bad landlords across the entire spectrum of rentals so to… Read more »
David Humphrey
If someone is in a long term rental situation then it is their home address and the current regulations can be used to deal with them. While the City is by now means perfect they have been approving some new tools to use that could start making a difference. For instance, an increased ability to tear down blighted buildings. But if someone is renting a house for one night then they are gone before they can be dealt with. and that is totally different and what they are trying to deal with under these regulations. Staying for one night is… Read more »
Dan Warner
As someone who willing broke the law in order to turn a profit, your argument about being a responsible business with high standards falls flat. It’s right there in the article, if you want to operate a full time rental you can go apply for a SUP right now. It’s been that way for years. This proposed legislation gives people like you who are operating illegally a choice: it gives you the right to operate a part time rental, or the option of applying for permission to operate a full time rental. This would give you more rights than you… Read more »
Jake Germel

Dan – the city asked for feedback as part of this process. That’s why people are talking about proposed regulations. Does that make sense ?

Matt Faris

I wonder how many complaints have been filed for having a non-conforming use. I would think that if a property was a nuisance the city would already know about it.

Debra Carlotti
Debra Carlotti Not too long ago, I visited The National Building Museum in DC. There was a very interesting exhibit on “Flexible Housing” and how current zoning laws are out of step with current needs. One example, is the ability to “age in place”. People are living longer and don’t want to leave their homes. They should be able to create small living spaces for them selves in their homes so that they can bring others in to live and provide extra income. Also, In the fan and other parts of the city, prices for housing have skyrocketed. Young families… Read more »