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Santa Fe revisits short-term rental ordinance

Copyright © 2020 Albuquerque Journal

Santa Fe city government is looking to revisit its ordinances covering short-term rentals with a pair of proposed bills, although one of them has been set aside while the bill’s sponsors contemplate other changes.

“I know that there are going to be other amendments as we continue,” said Sally Paez, an assistant city attorney who deals with land use issues.

Casas de Guadalupe near downtown Santa Fe and other vacation rental businesses could be subject to new rules as the city revisits its short-term rental ordinances. (Eddie Moore/Albuquerque Journal)

That bill, initially scheduled to go before the city’s Quality of Life Committee Wednesday, addresses permit limits issued to short-term rental operators, to whom they may be issued, the density of STR units in residential areas, reporting and record-keeping requirements, among other issues.

However, a companion bill relating to enforcement of the short-term rental ordinance will move forward as scheduled.

Perhaps the most significant proposed change in that bill is to amend the land development code to adopt civil penalty provisions and the ability to assess fines.

“Right now, to impose fines is actually a criminal process, like a petty misdemeanor. In order to impose a fine there must be a criminal complaint in a criminal court. There is no civil penalty option, so this bill looks to adopt a civil process,” Paez said.

The civil citation would be issued through the Land Use Department. Anyone issued a citation could request an administrative hearing before a hearing officer appointed by the city manager.

The fine schedule is set at $100 for a first offense, $250 for a second offense and $500 for the third offense. Appeals would be made in district court.

In addition, under the proposal the land use director would have the authority to withhold or revoke a short-term rental permit if the permittee violates regulations – or in the interest of public welfare. The land use director may also impose a one-year application waiting period for any operator who violates the ordinance or fails to pay or report taxes.

The provisions are intended to put more teeth into the existing ordinance, which hasn’t done much to discourage violators. A lack of resources in the Land Use office has been cited in the past as a problem that has led to a lack of enforcement.

“The whole issue is why are you putting things in the law that require enforcement if you’re not going to enforce it?” said Karen Heldmeyer, a former city councilor who now as a citizen has pushed for stricter short-term rental regulations.

Heldmeyer “attended” the June 18 virtual Planning Commission meeting, at which the proposed amendments were discussed.

“Almost everybody said they wanted better enforcement in terms of getting a permit, making sure those people are paying the taxes they are supposed to be paying, and also in terms of nuisances,” she said.

Out of hand

The short-term rental industry exploded in Santa Fe with the emergence of the sharing economy and online host platforms like Airbnb and Vrbo. And with the city lacking the resources to keep up with enforcement, the short-term rental market got out of hand.

Ordinances limited the number of short-term rental permits issued by the Land Use office to 1,000. However, a city-commissioned study sponsored by the housing assistance nonprofit Homewise, funded by the Thornburg Foundation and released last year, calculated the total at 1,444 in 2018. That was a 380% increase from just three years earlier when there were fewer than 400 short-term units.

In addition, the study showed that only 40% of short-term rental units were registered with the city, another sign of enforcement lapses. As a result, the city was missing out on $3.8 million in unpaid taxes from non-paying short-term rental operators, according to the study.

Another study released late last year indicated the number of short-term rentals operating in Santa Fe was even higher.

IPX1031, a national company that assists with the financing, sale and purchase of second homes through tax-deferred property exchanges, put the number of short-term rentals in the city at 1,627.

Another impact the short-term rental explosion had on the city was to deplete the long-term rental market, which city officials have said has reached a crisis stage. Critics maintain that short-term rentals drive up housing costs by reducing the supply. One housing market study from two years ago estimated that Santa Fe had a shortage of about 6,500 housing units and a shortage of 2,400 “affordable” homes or apartments.

Last summer, in an effort to get a handle on the problem, the city entered into a $60,000 contract with Seattle-based Host Compliance, a private company that searches social media sites to help identify short-term rental units that may be operating without a permit.

“That’s an area where we’ve really tried to improve,” Assistant City Attorney Paez said, adding that the service helps identify property owners who are operating without a permit and not paying gross receipt taxes.

Companion bill

Paez said the companion bill may be paused for a couple of months while its sponsors look into adding or revising amendments included in the draft.

She said some of the issues that came up during the Planning Commission meeting pertained to areas zoned as residential and those within the Business Capital District, most of which is within the boundary created by Paseo de Peralta.

According to the draft bill, the purpose of the short-term rental ordinance is to preserve the character of neighborhoods, prevent speculators from reducing the long-term housing market supply, allow law-abiding residents an opportunity to generate supplemental income and to ensure that operators follow regulations.

Subject to change before re-entering the committee process, that bill as written would:

• Establish a definition for a “natural person,” as opposed to a business or organization, who may possess no more than one short-term rental permit. The permits are not transferable to another owner or property. If a short-term rental is sold and the new owner wants to continue renting it, the new owner must submit a new application.

• Require that a local operator be available at all times to respond to complaints.

• Set the maximum number of short-term rental permits at 1,000 (currently, the ordinance states the limit is set by the governing body). After 1,000 permits have been issued, the Land Use Department would create a waiting list.

• Set the application fee to operate a short-term rental at $100 and the permit fee at $290. A business license costing $35 would also be required.

• Mandate that the owner of the rental must provide off-street parking – one space for a one-bedroom unit and two spaces for a unit of two or more bedrooms.

• Limit the number of guests that can occupy a unit to twice the number of bedrooms.

• Require that owners or operators maintain a record of use dating back three years.

• Authorize the city to conduct random inspections of properties.

• With some exceptions, require that short-term rental permits not be issued to units within a 75-foot radius of another short-term rental unit. Currently permitted short-term rental units within that distance would be grandfathered in.

• Require that host platforms like Airbnb and Vrbo have a business license, and provide monthly reports for rental nights and amount of revenue.

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