Get Prepared Now: Navigating the Regulatory Landscape

Matthew Curtis
2/27/2020

On August 16 in Austin, Texas, I looked out from the stage at a summit on short-term rental regulations and saw some two-hundred government policy makers, travel industry leaders and vacation rental stakeholders in fully engaged conversation, crossing the room to speak to one another and working together to find solutions.

It was an incredible sight of collaboration and a sincere effort to find solutions.

In an effort to help find solutions in your community, consider the words of one of our Founding Fathers, Benjamin Franklin, who said “By failing to prepare you are preparing to fail.”

"By failing to prepare, you are preparing to fail."

The vacation rental (or short-term rental) regulatory conversation is moving quickly through communities around the world. Government policy makers are stymied about how to find solutions for community concerns and many of them are basing their local rules on examples from cities that, while already passing laws, have not been able to achieve compliance through those laws.

Our elected policy makers and their staffs need to know what we know: that effective local rules can be created, but without the input and advice of vacation rental managers, many destination cities will be racing to the on-ramp of bad policies without any option to turn or back up.

To help local leaders create rules that can benefit a community the vacation rental managers need to be fully engaged in policy discussions, now. Not later, when policy making is at full speed and in one direction. Or, to paraphrase Ben Franklin, “get prepared now.”

During the short-term rental regulations summit, there was discussion on a variety of issues − and it all started with registration.

Registration

Registration allows local governments to maintain a list of contacts for people who want to rent or manage properties for short-term stays. It’s an easy way for locals to understand the degree of taxes they may collect, track any trends or have an easy list from which to quickly disseminate new information.

Vacation rental managers can work with the community to ensure a registration system is convenient and allows for the greatest access with the lowest burdens. The goal should be to bring the highest level of compliance with registration – and, to do that, managers can show your local government that onerous registration processes will only drive down participation.

Tax Remittance

One of the greatest benefits to most communities is the taxes generated from the travel and tourism industry. Austin Mayor Lee Leffingwell called these types of the taxes “the ultimate green industry.” He went on to say that people visit a community, leave lots of money in the local coffers and the city doesn’t have to build schools, hospitals or other infrastructure for the visitors.

Hotel occupancy taxes, or transient occupancy taxes, can go by different names in different corners of the world. For vacation rental managers these taxes are a no-brainer. It’s one of the reasons managers get paid – to ensure taxes, and other rules, are followed.

By working with local government, a vacation rental managers can show the receipts of taxes generated by this activity. When combining tax receipts from a variety of managers and operators, these figures begin to convey real data, creating an understanding for cities that this business is a big benefit to the community.

Safety and Insurance

Professional vacation rental managers stay ahead of safety and insurance issues. Therefore, they are the best to help local government establish how rules should address these concerns.

Are inspection regulations something that should be included in local ordinances?

Should some level of education for vacation rental operators be mandated?

Is there a level of insurance that would be appropriate for visitors?

 

Because professional vacation rental managers engage in these issues and stay educated through industry conferences and other opportunities, they are the best resource a local government could have in creating rules that work.

Noise, Parking, Trash and Occupancy

A local government policymaker is operating in a vacuum when designing industry rules. They may look to other city rules as examples ─ but if those guidelines were created without industry understanding then the example is broken and compliance is lost.

Noise can be addressed through house rules and innovation. New technologies (such as noise monitoring systems) can help the vacation rental managers by addressing any offending guests quickly, before it becomes a problem for a neighbor.

Of course, by establishing clear rules, noise guidelines and examples of effective communication with visitors in the rental contract—plus a message in the home—a vacation rental manager can minimize the possibility of noise becoming a factor.

Parking rules can be best addressed by the vacation rental manager based on the nuance of the property – is this vacation destination a crowded beachfront, or a desolate mountain cabin?

Trash and occupancy rules, when addressed alongside a policy maker, can not only be a local regulation but also a benefit to a manger.

Economic and Housing Impacts

A United States Conference of Mayors resolution in 2014 stated:

“Economic impact studies conducted in 2014 show and overall economic impact by the traditional short-term rental activity in Myrtle Beach, SC at $200.7 million and 2,587 jobs, and overall economic impact to St. Joseph, Michigan of $24 million and 300 jobs, and the Coachella Valley, California communities of $272 million and 2,539 jobs.”

In other words, the vacation rental industry is big business to many communities.

By working with local government, a vacation rental manager can go over past hotel occupancy tax receipts. They can pool these receipts with other managers to see a better representation of the industry impact on a community. And, when working in collaboration with other managers and operators, they can survey visitors to add a layer of daily spending by travelers – another factor in overall economic impact.

These numbers will help policy makers understand that vacation rentals support jobs, small local businesses and lots more.

Housing Impacts

A local government staff or elected official can hear a lot of chatter about many issues in a given week. They are often over worked and far under paid. One common concern in vacation communities is the call that vacation homes are reducing the access to workforce, or affordable housing.

To help them avoid the misunderstanding that occurs in some communities, a vacation rental manager can work to show the average value of their properties. By compiling the average valuation, a manager can demonstrate that these expensive vacation properties would not otherwise be considered affordable or accessible.

Furthermore, housing studies have shown that vacation rentals, or short-term rentals, have no impact on local housing affordability.

During the summit on short-term rental regulations, the housing analytics firm RCLCO relayed the results of some studies, including one in Austin, that showed there was no impact on housing affordability by short-term rentals.

A vacation rental manager can use this information, or data compiled locally, to help governments create good regulations that address concerns and achieve compliance. A vacation rental manager can be a local policy maker’s best friend – helping them create rules that no longer copy bad laws and only cost a community more to enforce. Additionally, this can help a city create an atmosphere where visitors happily bring dollars into the local economy while still maintaining the authenticity of their local culture.

The summit on short-term rental regulations drew a crowd from the United States and Canada. Watching the guests engage with one another to identify the best ways forward for their communities was one of the most incredible things I’ve seen.

The greatest way to follow the lead of the Summit attendees is to engage now. Be at the table helping your local leaders write impactful rules and regulations and follow the path of Ben Franklin when he said, “An ounce of prevention is worth a pound of cure.”

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