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Santa Fe’s proposed short-term rental rules are on the right track

Airbnb co-founder and CEO Brian Chesky speaks during a 2018 event in San Francisco. The Santa Fe City Council is considering new rules for short-term rentals, such as Airbnbs. (Eric Risberg/Associated Press)

Santa Fe city government is once again diving into the thorny issues raised by the burgeoning phenomenon of such vacation rentals as Airbnbs.

Love ’em or hate ’em, short-term rentals (STRs) have become crucial for a city whose economy largely depends on tourism. Many travelers now prefer the vacation rental option over hotels or other traditional lodgings, such as bed and breakfasts.

STR rooms or houses can offer a cheaper (sometimes) alternative and such amenities as a fully equipped kitchen and parking just out front. Vacation-stay houses also accommodate larger groups of travelers in a single space – why rent two or three hotel rooms when everyone can be together in a single STR house? And STR units in nice residential areas can just feel more comfortable and private than a hotel.

Of course, as many Santa Feans attest, there are downsides. Residents say neighborhoods near downtown have become “outdoor hotels” because of the high saturation of Airbnbs. There are complaints about STR “party houses.”

Perhaps most significantly, STRs reduce the residential housing stock in Santa Fe and, by the simple math of supply and demand, drive up housing costs.

There is no arguing that there are a lot of STRs in Santa Fe. While the city has about 900 permitted STRs and a theoretical cap of 1,000, a local study in 2018 reported there were 1,444 being offered here. Last year, a national company that assists with the financing, sale and purchase of second homes found that Santa Fe had 1,627 active Airbnb listings – the 12th-highest number per capita among U.S. cities.

City Hall is considering several options to reign in STRs somewhat. To reduce speculative purchase of homes for conversion to STRs, the proposed amendments would limit STR permits to one per person in residential neighborhoods, although existing owners of multiple STRs would be grandfathered in. The 2018 study found that 60% of permitted STR rentals were held by just 15 hosts.

The new rules also would require newly permitted properties to be at least 50 feet from the nearest STR unit and put more teeth into enforcement of the permit requirement (which has clearly been widely ignored up to now).

The ordinance changes will come before the City Council in December. Generally speaking, they follow the original idea of Airbnbs as part of the “sharing economy.” People could benefit from “sharing” part of their home site, like an extra room or a guest house, to make additional income.

STRs have clearly become more than that. Even hosts are describing their short-term rentals as just another business, not just a nice side benefit of having a tourist-town home with extra space to offer to travelers.

Purchase of properties simply so they can be used for STRs is clearly happening, with testimonials from investors themselves in news reports over the past few months about how COVID-19 travel restrictions have hurt vacation rental operations.

There should be some wiggle room in the council’s discussions. Is one permit per person too strict, for example? But as long as current multiple permit holders are grandfathered in, no one who’s previously shelled out the bucks for an Airbnb property would be damaged by such a rule.

A recent study commissioned by STR advocates says vacation rentals generated $163 million in direct spending last year. That’s an impressive number, although it’s hard to say how much of that amount was shifted away from local hotels.

There also are legitimate questions about how many Airbnbs is too many. Is 1,000 a good limit to try to enforce or would some higher number be appropriate and more realistic?

There are real public concerns the council is trying to wrangle with here – the maintenance of the residential character of neighborhoods, Santa Fe’s chronic need for more longterm rental housing and the exploding costs of buying a home in this town.

The proposals now before the City Council are on the right track. There should be reasonable limits on the push to expand STRs as business operations in residential neighborhoods.

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