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SF may tighten short-term rental regulations

Vacation rentals, like this one owned and managed by Casas de Guadalupe near downtown Santa Fe, would be subject to new regulations now being considered by the Santa Fe City Council. (Eddie Moore/Albuquerque Journal)

SANTA FE, N.M. — Short-term rentals have long been a controversial topic in Santa Fe and a new ordinance proposed by the Santa Fe City Council has done little to ease those tensions.

Due to companies such as Airbnb, the number of short-term rentals in New Mexico’s capital city has proliferated in recent years. A 2019 study found the number of short-term rentals in the city had 1,444 units operating in the city in 2018, a three-year growth of 380%.

However, many of those units have no permit with the city to operate. While the exact number of short-term rentals varies over time, only around 900 are currently permitted with the city, Land Use Director Eli Isaacson told the Journal.

The city has set its cap on short-term rental permits to 1,000, but enforcing that number has proven challenging for local officials. Isaacson said that previously the city could only enforce its ordinances through criminal proceedings, which often complicated the process.

Most of Santa Fe’s short-term rental properties are located downtown, like this one above the O’Farrell Hat Company. (Eddie Moore/Albuquerque Journal)

“It was not a good fit,” he said. “There was no real opportunity to for us to do a lot of follow-up and actually work to get folks into compliance.”

The new ordinance aims to give the city more teeth in enforcing those requirements.

The ordinance – sponsored by Mayor Alan Webber, Councilor Renee Villarreal, Councilor Carol Romero-Wirth and Councilor Signe Lindell – would once again limit the amount of short-term rental permits to 1,000, but would only allow one permit for each person. The reason is to hopefully curb speculation on properties in the Santa Fe area.

Signe Lindell

In places where short-term rentals are abundant, some purchase multiple investment properties and convert them into short-term rental units as another source of income. Lindell said she believes speculation is occurring in Santa Fe, pointing to the fact that 40% of permits are registered outside the city.

But not everyone agrees with that perspective.

Fran Maier, of the Santa Fe Short-Term Rental Alliance, said in her experience that most property owners she know only operate a handful of properties.

“It’s not that many people that own more than two rentals,” Maier said.

However, that same study from 2019 found that 15 hosts held nearly 60% of the short-term rental permits at the time. Those units comprised about one-quarter of Santa Fe’s entire short-term rental market.

The issue of speculation has driven much of the ire surrounding short-term rentals. Their critics claim the proliferation of such units limits the supply of long-term rentals and homes for sale in a given area, invariably driving up the price.

Maier disagreed and said most short-term rentals are located in and around Santa Fe’s downtown area, an area already prohibitively expensive for many.

“Many of these homes would not be considered affordable, because they’re in more desirable parts of Santa Fe,” she said.

While there are short-term rentals in all parts of Santa Fe, a map of units on AirDNA shows the vast majority are located in the downtown, South Capitol and Eastside neighborhoods, all of which have close proximity to the Santa Fe’s main tourist attractions. Isaacson said as many as 90% of short-term rentals in the city are in this area.

Lindell, whose district covers much of the downtown area, said there is no data to suggest short-term rentals would be unaffordable if they entered the housing market.

Santa Fe has long struggled with a shortage of rental units, especially those considered affordable – some estimates have put the gap as high as 5,000. The supply of homes for sale also remains quite low, with the Santa Fe Realtors’ Association recently stating there were less than 400 for sale during the last quarter.

But that saturation of short-term rentals in one part of town plays into another key aspect of the ordinance. If passed, it would require newly-permitted properties to be at least 50 feet from the nearest short-term rental unit.

Lindell said she has received many calls from constituents who say they feel “surrounded” by short-term rentals in their neighborhood.

“They didn’t buy that house intending to live in a commercial zone,” she said.

Isaacson said in some downtown areas there is a significant saturation of short-term rentals and that rules regarding proximity should fix the issue over time.

“Over time, what I think we’ll see is fewer and fewer people,” he said. “It will make more permits available to other areas in the city.”

To help enforce the rules, the city also has new software that can more easily identify active short-term rentals in the city so officials can compare it to a list of permits issued.

Those owning more than one permit or are within 50 feet of another short-term rental would be exempt from the new rules, but it would impact an ability to expand to other units.

Michael Garcia

Similar to other tourism-driven industries, the short-term rental market has struggled during the COVID-19 pandemic. March and April, when the virus first hit New Mexico, saw a wave of cancellations that left some property owners fearing their ability to continue operating. Many switched their units to long-term rentals as a result.

Owners like Mariam Browne, who operates a casita unit near Canyon Road, saw a small rebound in the market during summer months. She said even though she mainly rents to those from New Mexico, she has found it easy to book her rental recently, as more people plan to visit for the holidays.

But as irksome as short-term rentals may be for some, their large presence in Santa Fe suggests they’re here to stay.

“This industry is not going away,” Councilor Michael Garcia said. “It absolutely is not.”

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