Short-term rentals may be an unstoppable force in Santa Fe. So far, we don’t know for sure, because the city hasn’t done much to get in their way.
According to a city study released earlier this year and paid for by the Thornburg Foundation, short-term rentals in Santa Fe went from 300 in 2015 to 1,444 in 2018. And a new industry report says we now have 1,627 active listings, enough to give Santa Fe the 12th-highest number of short-term rentals per capita among U.S. cities.
Speaking about the issue this week, Mayor Alan Webber said the city views short-term rentals as a way for owners of homes and casitas to make money from vacant space.
“It’s not supposed to be an industry” with ownership concentrated in just a few hands, Webber said.
But the Thornburg study found that just 15 hosts account for 381 short-term rental units in Santa Fe.
Santa Fe has set a 1,000-unit maximum for short-term rentals, a limit that obviously has not been enforced. In fact, as far as anyone at City Hall can say, Santa Fe has never filed an action to enforce its laws that require registration and an annual fee for hosts, and that they pay gross receipts and lodgers taxes.
The Thornburg report found that the city is missing out on $3.8 million a year in unpaid taxes.
What – if anything – should be done?
Short-term rentals are a double-edged sword for a city with a tourism-based economy, like Santa Fe.
They can be a way for more people to profit from Santa Fe’s attractiveness to travelers. Why shouldn’t regular Santa Feans, such as empty nesters, people who just like to interact with travelers or those who need more income just to own a house, go ahead and join the sharing economy?
The downside is when Airbnbs literally take over neighborhoods. Home prices go up because the short-term rentals reduce the regular housing stock and make what used to be standard residential properties into investment opportunities for owners who just want to run Airbnbs. Monthly revenue from a well-used short-term rental far outstrips what can be made from a regular, long-term lease of the same property.
There’s also the issue of having residents replaced by tourists as neighbors.
We won’t engage in tourist-bashing or singling out people from certain states as undesirable here, and wish no one else would. Argue about the impacts of tourism all you want, but it shouldn’t be debatable that we all should be welcoming with individual visitors when they’re encountered around town, just as we would like to be when we travel.
Along the same lines, many of us have used short-term rentals in our own trips, so how can we complain about them in our own backyards?
But a neighborhood of Airbnbs is a lot different than a community where relationships grow over time and people are committed to the area, and not different in a good way for permanent residents.
The mayor threw out a couple of enforcement ideas last week, such as limiting the number of short-term rentals one owner can operate and making it easier to go after hosts who aren’t paying gross receipts and lodgers taxes by framing the violations as civil matters rather than criminal. The city also has hired a company to scrub the internet for unlicensed short-term rentals in Santa Fe. A preliminary estimate is that between 850 and 950 active permits are in effect.
There don’t appear to be many great options for keeping Airbnbs at levels that could be considered reasonable both for the communities that host them and the travelers who like to use them.
Fast Company, the business magazine founded by Mayor Webber, earlier this year reviewed various regulatory schemes around the country. San Francisco seems to have had the most success by cracking down on illegal short-term rentals with penalties and decreeing that only permanent San Francisco residents can let out homes as a short-term rentals, and for no more than 90 days in a year. Despite all that, the city has apparently improved its relationship with the Airbnb organization.
But a study has found that the changes mostly purged only occasional hosts, had little impact on those letting out multiple units or with frequent rentals and that it appeared few if any Airbnbs actually had been returned to the long-term rental market.
It’s good that Webber is looking at what to do about short-term rentals as part of the effort to encourage more affordable housing in Santa Fe. That should be the issue, not whether Airbnbs can be mined for more tax revenue – although well-regulated fees and taxes also are one way to control the growth of short-term rentals.
Some of the San Francisco ideas – including requiring hosts to be permanent residents – sound promising.
But nothing will work until Santa Fe comes up with a functioning regulatory system. And, so far, we don’t have that.