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Santa Fe raises cap on vacation rentals


SANTA FE—More homes and apartments will legally be available as short-term rental units in Santa Fe after the City Council unanimously voted late Wednesday to nearly triple the number allowable under a city ordinance and leaving room to add more.

The original ordinance limited the number of short-term rental permits to 350, but a new version introduced by City Councilor Joe Maestas and sponsored by Mayor Javier Gonzales and Councilor Peter Ives increases the limit to 1,000. But the legislation allows the City Council to increase the limit “whenever demand for short-term rental units exceeds the number permitted.”airbnb

An amendment added Wednesday after more than two hours of discussion requires a public hearing to be held before the council considers increasing the limit.

The city acknowledged since the ordinance first passed in 2008 hundreds of short-term rentals have been operating illegally and that it did not have the resources to regulate what was becoming a blossoming cottage industry capitalizing on Santa Fe’s appeal as a tourist destination.

The action taken by the City Council adds two full-time positions to the Land Use Division, one for code enforcement and another to serve as program manager while also performing code enforcement duties.

Currently, the city employs one person to handle code enforcement.

The same year the city first passed the ordinance Airbnb came online and other services found on the Internet emerged, opening the door for property owners to cushion the impact of the recession by renting rooms, homes, apartments and casitas. Though difficult to measure, Randy Randall, executive director of Tourism Santa Fe, said as many as 1,200 such units were being offered as short-term rental units. As a result, the city was missing out on perhaps millions of dollars of lodgers’ and gross receipt taxes annually.

The proposed 2016-2017 budget City Manager Brian Snyder submitted last month indicated the city expects to collect an additional $1 million through fees and taxes. A study commissioned by the city government last year estimated the city was losing up to $2.1 million in lodgers taxes annually from unlicensed short-term rentals, and that associated uncollected GRT could be between $500,000 and $2.5 million.

City officials then said that study made some “aggressive assumptions.” At that time, it was estimating it was losing out on $672,000 in lodgers taxes, $195,000 in license and permitting fees, and nearly $800,000 in GRT, a total of about $1.66 million.

Maestas said the idea behind the ordinance wasn’t to collect additional revenue, even as the city is working to close a projected $15 million budget deficit next year. He said the influence of the online services vastly changed the landscape and “we’re just trying to catch up.”

Mayor Gonzales agreed, saying the shared economy has gotten ahead of legislation. He said the purpose was to “create a level playing field” for the short-term housing market, “bringing it our of the shadows.”

However, he agreed with some members of the public that the short-term rental market had a negative impact on the affordable housing market in Santa Fe by reducing the inventory. He said it was his hope that some of the additional revenue the city raised under the revised ordinance could be directed to affordable housing program.

While the council’s vote was unanimous, sentiment was divided among the roughly 18 people who spoke during a public hearing beforehand.

Kurt Hill of the Santa Fe Association of Realtors said that group was supportive of the ordinance but had concerns that the permits wouldn’t be transferable to the new owner when a home was sold.

Preston Ellsworth, who operates the youth hostel on Cerrillos Road, said he has had a favorable relationship with Airbnb for several years. But he wondered if there was enough incentive for people to now begin following the law.

“I see a lot of stick in the proposed ordinance, but I don’t see a lot of carrot,” he said.

Anyone found in violation of the ordinance is subject to a fine of up to $500, increasing to $250 per day if not corrected after two weeks.

Christine McHugh said she has been an Airbnb host for about a year. She said she’s grateful for the opportunity to serve as a host and do it legitimately.

But others argued that the short-term rentals were hurting the city.

John Pen La Farge said the units had “torn apart” the fabric of the neighborhood where he grew up, turning it into a row of bed and breakfasts.

Bernice Rose told of having to fight with two landlords of short-term rental units near her home over problems she had with noise and tenants breaking rules and complained about the lack of enforcement.

Karen Heldmeyer, a former city councilor, made several points, including the impact the short-term units had on neighborhoods. “Don’t do this for Airbnb,” she said. “It should be for the people of Santa Fe.”

Thursday, she said by email: “The city got itself into this situation by
failing to vigorously enforce the existing law and allowing unpermitted
(short-term rentals) to proliferate.  And it does not look like enforcement of anything except revenue collection will be any better under the new ordinance.”