October 12, 2023
Short-Term Rentals in Louisville Compared to Lexington
*Please remember the Fayette County Neighborhood Council meeting on Monday evening, October 16, at Tates Creek Christian Church, 3150 Tates Creek Road, starting at 6:30. The topic is upcoming Zoning Ordinance Text Amendments That Will Impact Neighborhoods. *
In November, FCNC tentatively will have another general meeting specifically on short-term rental properties in Lexington and their regulation or lack thereof. We will send information about that meeting, so please be expecting it.
In its latest hearing (Monday, October 9), the Board of Adjustment approved 3 out of 4 newly applied for unhosted STR licenses. Two of the Board Members voted in favor of the STR licenses stating that the current short-term rental ordinance in Lexington prevented them from voting in opposition. At the hearing was substantial representation from the affected neighborhoods opposing the approval of the licenses, however.
You should remember that the Urban County Council moved quickly to formulate and pass the STR ordinance at the recommendation of a work group started in February 2021. We know that at least two Council Members participated in that group, but the Council has declined to identify the other members of the workgroup despite our requests.
City of Louisville Short-Term Rental (STR) Ordinance
Louisville has been regulating STRs since 2015 and over time has added stricter regulations because of problems in neighborhoods. The latest update occurred less than a month ago following the receipt of a study the Louisville Metro Council requested from Metro Planning.
The current STR ordinance in Louisville is too complicated to cover in its entirety. However, here are some highlights and comparisons with Lexington’s ordinance:
1. In general Louisville allows an owner who officially lives in a principal residence to have an STR without applying for and receiving a Conditional Use Permit (CUP). In Lexington, anyone can live in a principal residence as an STR agent of the homeowner, thus allowing the owner to receive an STR license by right, without a CUP. The Louisville Metro Council President recently stated, “There are some bad actors who were essentially paying a college kid $100 and saying, ‘Hey, you’re the host; say you live here.’. . . That kid never set foot within the property.” That situation is why Louisville now requires an owner to live at the same address as the STR. In Louisville an owner-occupied STR cannot be owned by a company, partnership, or corporation in order to qualify as an owner-occupied short-term rental. Lexington’s regulations allow owners to not be owners; Louisville’s do not.
2. Louisville requires a pre-application for a CUP, which involves (1) a conference with its city Planning staff and (2) a neighborhood meeting. If an applicant wants to proceed after the initial feedback from staff and neighbors, the applicant needs to submit a formal application for the permit. Each pre-application requires a $150 pre-application fee and each formal application requires a $560 application fee. Louisville indicates that the approval process takes about 6 months (according to the Metro Louisville web site), depending upon “circumstances” and “docket availability.” Lexington certainly does not encourage or require neighborhood meetings and does not have a readily available application fee schedule.
Louisville uses the funds from such application fees for software to track and fine illegal STR operators and hire program staff. Lexington has not appropriated funding for software or for staff to set up and run it. Nashville, Louisville, and Covington all had very significant compliance problems with STR owners not registering and permitting their STR properties. Lexington requires no public engagement, may or may not require application fees, and has no software or staff to police the action or lack of action on the part of STR owners.
3. Louisville has a 600-foot rule for STR density. The Louisville Metro Council President says that the purpose of the 600-foot rule is to ensure there weren’t more than a couple of hotel-like short-term rentals on a city block. Specifically, there can be no more than 2 STRs with a conditional use permit within 600 feet of each other. The Board of Zoning Adjustment in Louisville is prevented legally from granting exceptions or variances where two or more short-term rentals with special permits are already located within 600 feet of each other in a residential area. Lexington’s ordinance is far looser. Our Board of Adjustment may (i.e., has permission, presumably from the Council) to look at nearby STRs—remember, however that staff lacks definitive information of where such STRs are; the Board of Adjustment “may” look at occupancy rates of nearby STRs—remember, however, that staff lacks this information and were it available, nowhere is it stated how the Board should use such information. The Board “may” look at the compliance record of the applicant—remember, however, that there are no compliance records; the Board “may” look at the compliance record of other nearby STRs—remember, however, that there are no compliance records, and that the ordinance specifically looks at citations rather than complaints. CivicLex reports that of the last 6,000 nuisance complaints in Lexington, the LFUCG Police Department issued only 33 citations. The Board in Lexington is not prohibited from approving variances or exceptions to the rules for STRs.
Lexington is different from Louisville in some ways. Lexington waited far too long to regulate STRs, and consequently, new STRs should be prohibited whenever the combination of grandfathered STRs and newly permitted STRs is two or more within 600 feet of each other. The Lexington ordinance does not prohibit the Board of Adjustment from allowing variances from density requirements.
4. Louisville allows a maximum STR occupancy of 2 persons per bedroom + 2 persons in residential areas, while Lexington allows 2 per bedroom + 4.
5. FCNC does not know what Louisville did with existing STRs when it passed its initial STR Ordinance in 2015. Lexington, however, largely declared its 1,250 existing STRs to have been legal before the passage of its ordinance, to be nonconforming uses under the new ordinance, and then to be conforming uses with conditional use permits without having a hearing with the Board of Adjustment. That hasn’t been challenged to this point. Nonconforming uses may not expand their nonconforming use, while conforming uses with a conditional use permit may expand.
Louisville’s STR ordinance is not perfect, and neighborhoods remain upset with STR regulations. However, Lexington’s ordinance is worse in the opinion of FCNC. Only the Urban County Council can create or change an ordinance in Lexington.
Walt Gaffield, President
Fayette County Neighborhood Council, Inc