We have had an eventful week.
The first two hearings for a conditional use permit for an unhosted short-term rental (STR) (both Airbnb’s) before the Board of Adjustment failed on 3-2 votes on September 11. Neighbors from the Chinoe Road and Eastway Drive areas argued successfully that STRs would have an adverse impact on their neighborhoods. Another applicant for property on Lane Allen asked for and received a postponement of his hearing until October. These were the first three applications for an unhosted STR conditional use permit since the passage of the STR Ordinance in Mid-July.
In addition, the latest Committee working on the expansion of the Urban Services Boundary to facilitate development has selected 5 possible areas for boundary expansion. To see a map of the possible expansion areas and to fill out a survey giving your opinion on expansion, go to either of the links below:
This is very important if you haven’t already participated. FCNC recommends that you advocate the minimum expansion of 2,700 acres (or less) and not a 5,000 acre expansion (the maximum). It’s very important that you do this immediately, as the committee continues work next week on its selections.
About short-term rentals, we have much to say: New York City issued new STR regulations this month limiting the occupancy maximum of short-term rentals to no more than two guests and raising the fine for violations of city STR requirements to $5,000. NYC did this because it has a serious housing shortage. Obviously, Lexington moved in a very different direction even though we already have over 1,200 short-term rental properties and a serious housing shortage.
Below is an analysis of the short-term rental licensing ordinance by provision that the Urban County Council passed in mid-July. There are two short-term rental ordinances, one dealing with licensing under the Division of Revenue and one dealing with zoning under the Division of Planning. Both Ordinances are very important.
This is the second analysis of STRs in Lexington from FCNC. The next will be on the zoning ordinance. The official location of Lexington’s zoning ordinances is at municode.com, and Lexington has not yet posted the ordinances passed in mid-July so we cannot be 100 percent sure of final content. If you have any questions, please call the phone number for the Division of Planning, 859-258-3160. FCNC believes the Ordinances have significant deficiencies. The Council has said that it will address problems later. FCNC recommends that you start discussions on deficiencies and corrections with your representative Council Member(s). Please remember that at-large Council Members are also your representatives. See the analysis below.
Walt Gaffield, President
Fayette County Neighborhood Council, Inc.
Short-term Rental Ordinance NO. 080-2023, Selected Parts, Division of Revenue Licensing Ordinance
SECTION 13-76 DEFINITIONS
(c) A “hosted” short-term rental (STR) has to include a primary “resident” within the principal residence on the STR property.
(g) An “owner,” “operator,” or “agent” of the owner or operator may be the “host” or primary resident. The owner does not have to be the “host.”
(i) An STR has a maximum occupancy duration of less than thirty (30) days by state statute.
(l) An “unhosted” STR does not have a primary resident in the primary residence.
Comment–The definitions are problematic because a “hosted” STR does not require an “owner” to live there. The “owner” can be replaced with an “operator” (presumably a management company) or an owner-approved “agent.” The basis for the decision is a ruling in the Federal 5th Circuit Court of Appeals impacting Texas, Louisiana, and Mississippi. Kentucky is in the 6th Circuit, and the 6th Circuit has not ruled on similar STR issues.
The broadening of the term, “host” potentially allows STR owners to avoid public notice and engagement because most hosted STRs will be “by right” instead of requiring a public hearing before the Board of Adjustment and the approval of a conditional use permit.
SECTION 13-77 SHORT-TERM SPECIAL FEE LICENSE
Section 13-77 contains a plethora of information that applicants need to provide to obtain a short-term rental license. One issue that remains undefined is the extent to which the information available on the license application will be available to the public. FCNC prefers that all information on the application be available to the public by street address and accessible without an open records request. There is no particular reason that any information on an application needs to be confidential.
13-77b(2)&(3) requires the names, addresses, and phone numbers of the applicant (owner) and the “operator,” if different. Given the concession that LFUCG will consider an owner-approved agent to be a “host,” the Ordinance should require the name and contact information for all “hosts.” How will the Division of Revenue know if an allegedly “hosted” STR is actually “hosted”?
13-77b(4) requires that an emergency contact has to live within 25 miles of an STR property. If this is truly an “emergency” contact, when will said contact be available? Many management companies are available only from 8:00 a.m. to 5:00 p.m. Monday through-Friday. The Division of Revenue should provide emergency contact information to neighbors.
13-77b(5) requires approval from the Division of Planning prior to licensure.
13-77b(6) sets maximum occupancy without a Conditional Use Permit (CUP) of 2 occupants per bedroom plus 4 more individuals to a maximum of 12 short-term renters. Conceivably a one bedroom STR could have an occupancy of 6 short-term renters. Professional Planning staff recommended a maximum occupancy of 8 persons, but Council Members insisted on 12. An occupancy of 12 would still be possible even if the maximum were set to 8 or at a lower number if there were a hearing before the Board of Adjustment (BOA) and the Board allowed an official increase. The average size of an STR in Lexington at the time of passage of the ordinance was only 2.5 bedrooms, so the maximum of 12 short-term rental occupants is unreasonable and only helps real estate investors be less accountable to the public. Lowering the maximum number of occupants and eliminating the number of tourists without a bedroom would be an improvement. FCNC recommends a lower maximum occupancy standard.
13-77b(7) requires a site and floor plan and the number of cars that can legally park on the property. However, 13-77(9) and (10) require only that Affidavits confirming that health and safety requirements are met and that the applicant complies with building codes, fire codes, and all applicable federal state, and local laws or regulations. Licensing should require LFUCG inspections. Owners who comply with safety, health, and building codes have nothing to fear from such a requirement.
FCNC believes that 13-77(f) should require that all short-term rental licenses expire on December 31 or upon a change in license or ownership, or upon revocation of a conditional use permit. We are unclear if a change of ownership would require a new license; FCNC feels that it should.
13-77(g) requires that upon receipt of a license, each licensee will be issued a unique local registration number. While this is helpful in keeping track of the performance of individual owners and operators, the Division of Revenue should issue a subset of unique numbers for each STR property to help neighborhoods identify problem properties. That may already be the case but is unknown.
13-77(i) indicates that the Director of the Division of Revenue “may” revoke registration following “two or more” violations of 13-76 to 13-82. Given that the Director “may” or may not revoke registration, then the Director should have the discretion to revoke registration following one violation, not two, if a violation is egregious.
13-77(k) suggests that relevant divisions and departments with necessary information for the Director to perform his or her responsibilities under this article “should” provide such information to the Director “at his or her request.” Members of the public may also provide relevant evidence indicating violation of this article to the Director. The language in this section should change such that relevant divisions and departments “shall” provide relevant information to the Director without being asked for it. That would require work and coordination within the Executive Branch of the Urban County Government and should be required. The current language is administratively cumbersome. “Relevant” departments and divisions should be identified and required to maintain necessary and appropriate records.
13-77(k) also indicates that the public may provide relevant evidence indicating violation of this article to the Director. This should be revised to indicate what information is “relevant,” what is irrelevant, and how it should be submitted. Heretofore, some violations have had to be physically seen by an officer of the LFUCG to be considered as valid. Statements, written documents, video, and audio should also be admissible. The Division of Revenue should submit all relevant information to the Board of Adjustment that has to consider STR requests for conditional use permits. Information flow regarding STRs is unclear.
13-79 DUTIES OF A LICENSEE
13-79(a)(5) requires that the licensee post license information inside each licensed STR. While this is a positive requirement, it increases the importance of providing the same information to the public in a readily available site, preferably online.
13-79(a)(7) requires a maximum of 2 people per bedroom + 4 individuals up to a maximum of 12 short-term renters or as otherwise allowed in the applicant’s conditional use permit. It requires that any permanent resident count toward maximum occupancy. Note that larger STRs are more prone to parties and other nuisances. See our comment on 13-77(b)(6).
13-79(a)(8) prohibits STRs as locations for the commission of various felonies. However, it exempts instances in which the licensee or primary resident is the “victim” of a crime or had no control over the criminal act. It specifically includes “domestic violence” as an example of something over which the licensee or primary resident might not have control. Neighborhoods are concerned about the commission of crimes in an STR, as well as owner responsibility. Specifying “domestic violence” as a specific example of something that could be exempt is just wrong. The language about licensee or resident exemption from responsibility should be removed from the Ordinance. Let the Director have the discretion to make that call based on objective information.
13-79(b) prohibits private events in which the number of participants exceeds the maximum occupancy limit; it allows “events” between 7:00 a.m. and 11:00 p.m. and prohibits “commercial events.” Young children and senior citizens tend to go to bed as early as 9:00 p.m. and “private events” rarely, if ever, occur before 10:00 a.m. Shift workers often require an early evening sleep schedule. Events should be allowed to occur only between 10:00 a.m. and 9:00 p.m. Neighborhoods should have 24/7 emergency contact information with licensees or a designated representative with the authority to immediately cancel a short-term rental contract and remove short-term renters if a situation warrants it. Licensees should post notice that they reserve the right to expel renters immediately upon notice of a violation of any city ordinance. Failure to do so should become a licensing issue.
13-81 states, This article shall be enforced by citation officers within the Division of Revenue and the Administrative Hearing Board. In the interest of improving enforcement, we offer the following comments:
1. The City of Louisville allows the public to submit complaints about STRs to its 311 phone number. FCNC recommends that the Division of Revenue adopt the same method for the submission of oral and written comments, video, and pictures.
2. Software is essential to identify STRs open without a license or in violation of occupancy maximums. Nashville, Louisville, and Covington all experienced scofflaw STRs that failed to obtain a license and/or to follow required advertising standards.
3. Some STRs do not advertise on major platforms. Software will need to be able identify such operations, and neighborhoods should be able to help identify them once they are able to receive information on licensed STRs within their neighborhoods.
4. Affidavits are not sufficient to identify violations of building code, Lexington’s zoning ordinance, code enforcement requirements, and the short-term rental ordinances. At absolute minimum, STR owners should have to hire licensed professionals to certify conformance with all requirements on an annual basis or should have to submit to LFUCG inspections.
5. How will anyone know how many people are attending an “event” and whether or not it exceeds the number of short-term renters? Who will enforce that provision and how?
6. Licenses should not be officially issued until the Urban County Council appropriates sufficient funds for software and persons to manage and monitor it, as well as enforcement staff, and until both are in place. If revenue is not sufficient from license fees, fees for STRs above the current average occupancy of 6.5 should have to pay 2x the current license fees. Similarly, owners of multiple STRs should not receive a discounted rate per STR.
7. CivicLex recently stated that Lexington Police received 6,000 nuisance complaints last year and issued only 33 citations. It is critical that the Division of Revenue compile all STR complaints and consider them in granting licensure.
8. Owners of both long-term rental properties and short-term rental properties should be accountable for issues involving their long-term rentals in applying for a short-term rental license. Otherwise long-term rental properties can easily become short-term rental owners. That could displace long-term renters and expand the reach of negligent long-term rental owners.