Nearly a year has passed since the 5th Circuit Court of Appeals ruled that it’s unconstitutional for city ordinances to require short-term rental homes to be a primary residence because it discriminates against out-of-state real estate owners.
Since the Hignell-Stark v. City of New Orleans decision, the city of Fort Worth has been sued by short-term rental owners who claimed that the city’s regulations essentially ban short-term rental uses in residential districts, as Denton staff pointed out Tuesday in an agenda information sheet.
In light of these two instances, city staff recommended that the City Council remove the primary residence requirement from Denton’s short-term rental ordinance. The Planning and Zoning Commission also agreed unanimously to recommend that council members change the code.
On Tuesday night, City Council members voted unanimously to remove the requirement.
In March, city staff had recommended considering changing the rules for short-term rentals after the 5th Circuit’s August 2022 decision.
At the time, then-council member Jesse Davis said he agreed in principle with those changes but pointed out that some of the regulations, such as the primary residence requirement, were designed “to prevent this proliferation [of short-term rentals] into single-family neighborhoods.”
“People who don’t want them say they are not safe and [that it is] not good for the city to have mini-hotels in the middle of neighborhoods,” Davis said.
But the 5th Circuit did offer several other examples of what cities could do to prevent the proliferation of short-term rentals in single-family neighborhoods. Those examples include, according to the Aug. 22 ruling:
Enforcement
- Step up enforcement efforts and increase the chance that owners face punishment for disorderly guests, which in turn strengthens their incentive to monitor their rentals.
- Increase the magnitude of penalties imposed on owners for guests who violate quality-of-life regulations. “That would similarly give owners stronger incentives to prevent nuisances and help to fund increased enforcement,” according to the court.
- Strip repeat offenses of their short-term licenses, “thus eliminating the short-term rentals most likely to negatively impact their neighbors.”
Financial
- Increase taxes on short-term rentals. The court claimed it would discourage younger, rowdier guests from renting them. It will also provide additional funds that could be used to mitigate nuisances.
- Increase the prices of short-term rental licenses for owners and/or cap the number of licenses available for any given neighborhood.
- Cap the share of housing units that can be used as short-term rentals.
Watchdog
- Give short-term rental owners the alternative of having an operator stay on the property during the night, “thus acting as the ‘adult supervision’ that the city ostensibly hopes live-in owners will provide.”