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Other Cities Warn Metro Louisville of Airbnb Regulation Pitfalls | By: Courier Journal

 Roberto Roldan, 4:52 p.m. EDT July 30, 2015

Following disagreements over how best to regulate Airbnb and other short-term rentals that are becoming popular across the city, Louisville Metro Council is looking to cities already regulating the service for answers.

But at a July 22 committee meeting, Louisville Assistant County Attorney Paul Whitty delivered a message to the council from Nashville Zoning Administrator Bill Herbert, who said enforcing regulations on short-term rentals had been “a nightmare.”

“His openings words were, ‘This is a nightmare. I wish we would have never done it,’ ” Whitty said. “He says it has been a monumental strain on their staff resources.”

Cities such as Nashville, Tenn., and Austin, Texas, warn that effectively regulating the online service has proved evasive and has required costly proactive approaches. Officials from San Francisco also say regulations are “unenforceable” without more cooperation from the largest short-term rental sites like Airbnb and VRBO.

The proposed ordinance currently before the Louisville council is nearly identical to the regulations adopted by Nashville in February. Both ordinances require renters to pay permitting fees and pass health and safety checks similar to that of a commercial bed and breakfast.

Enforcing these regulations has forced Nashville inspectors and zoning enforcement employees to devote a large part of their time just to check on short-term renters. What the city thought would be permitting for 200 individuals and investors turned into more than 1,000 applications.

“Since we set our first date for permitting, it has absolutely inundated our department,” Herbert said in an interview with The Courier-Journal.

BACKGROUND: Read more about Louisville's effort to regulate Airbnb

A similar situation unfolded in Austin, where more than 6,000 rooms and properties are listed on Airbnb. Austin Code Enforcement currently has two full-time employees solely for short-term rental enforcement.

Marcus Elliott, a division manager within Austin Code Department, said even more resources have been requested from the city — additional funding and employees — to help tackle enforcement. If Louisville wants to ensure effective regulation, Elliott said, it needs to be ready to devote additional resources to code enforcement.

“City council said go out and license these properties, but we didn’t have the available staff to do it,” Elliott said. “It’s been a struggle from day one.”

The city of San Francisco also set up an entire department within city government specifically for enforcing and proposing amendments to San Francisco’s Airbnb law.

While scraping together resources for regulations has been challenging enough for local governments, the larger issue has been finding a way to enforce transactions that occur in mainly private homes and on the Internet.

Public can weigh in on Airbnb rules Aug. 5

Under the proposed Louisville ordinance, enforcement of regulations and licensing would only occur when someone files a complaint with the code enforcement office. Renters are free to operate without a license so long as no neighbors complain.

While almost 1,000 Nashville residents have applied for a permit, more than 1,600 properties or rooms are being rented on Airbnb alone, according to numbers provided by the company. A similar deficit between permits and renters has been seen in Austin, San Francisco and Chicago.

Austin’s short-term rental ordinance passed in fall 2013 requires renters to include their permit number in any online ad posting. Two code enforcement officers spend a part of their day combing popular short-term rental sites for Austin renters without permit numbers.

Elliott said without proactive enforcement it becomes too easy for residents to skirt short-term rental regulations and render the ordinance ineffective. He also said Louisville lawmakers should be wary of the domino effect that could be sparked by only enforcing regulation reactively.

“Anything that is reactive is behind the curve,” Elliott said. “The few people will look at others who are making money not abiding by regulations and think, ‘Why shouldn’t I just go underground like them.’ ”

Louisville Code Enforcement and Metro Council officials have said at previous Public Safety Committee meetings that Louisville’s regulations will likely be enforced through complaints.

The current debate between council members who sit on the committee reflects the issues seen in cities nationwide. At the July 22 meeting, Councilwoman Jessica Green, D-1st, questioned the need for strict regulations on Airbnb renters who live in the home they advertise and asked what resources the city would have to devote to tracking down otherwise law-abiding citizens.

Councilman James Peden, R-23rd, is a sponsor of the ordinance and said the tone of the debate seems to be shifting to focusing more on renters who advertise second homes or investor properties that change the character of residential areas.

Peden said he hopes enforcement would be a priority for the city, but is unsure whether Louisville is willing to devote the resources other cities have said are needed for effective regulation.

The next meeting of the Public Safety Committee, on Aug. 5, will be open to the public, and Committee Chair David Yates, D-25th, said Metro Council is taking a cautious approach to the regulations. The entire hourlong meeting has been opened up for public comment.

Herbert said having this debate and drafting clear regulations rather than pushing to put something on the books might help keep Louisville’s ordinance from falling into some of the same pitfalls other early adopters of Airbnb regulations have fallen into.

“Really proceed very cautiously and do your level best to mold it into something that is truly workable for Louisville,” Herbert said. “Learn from what we’ve done well and what we’ve done poorly.”

Public comment

Members of the public can voice their opinions on the proposed rules during a 3:30 p.m. public hearing Aug. 5 in the Council Chambers, 601 W. Jefferson St.

The following guidelines will be followed for the Wednesday public hearing:

•The public will be permitted two minutes to speak.

•Each speaker will need to sign in with the clerk’s office on the third floor of City Hall beginning at 2:30 p.m.

•Speakers will be called in the same order in which they registered.

•Any person unable to speak during the allotted time can provide a written statement detailing his or her concerns and opinions to the clerk’s office.

View remotely

All Metro Council meetings are carried live on Metro TV, Time Warner Cable Channel 25. Viewers can also watch the meetings online by going to the Metro Council homepage at and clicking the “Watch Meetings Online” link.  (Kentuckiana Real Estate Investors Association) does not give legal, tax, economic, or investment advice. KREIA disclaims all liability for the action or inaction taken or not taken as a result of communications from or to its members, officers, directors, employees and contractors. Each person should consult their own counsel, accountant and other advisors as to legal, tax, economic, investment, and related matters concerning Real Estate and other investments.   

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