The Rules and City Government Committee of Annapolis convened on September 8, 2025, to discuss significant changes to the city's short-term rental (STR) regulations. A key proposal under consideration is the introduction of a lottery system aimed at managing the density of STRs in neighborhoods where the current percentage exceeds 10%.

The proposed legislation seeks to cap the number of STRs at 10%, but it includes a grandfather clause that would allow existing properties above this threshold to maintain their licenses and renewals. This means that while the cap would prevent new STRs from exceeding current densities, it may take years, potentially decades, for the city to actually reach the 10% target.

The amendment suggests implementing a phased lottery system starting in November 2027. Under this system, priority would be given to local residents seeking renewals, followed by city and county residents applying for new permits, and lastly, properties owned by out-of-town investors. This tiered approach aims to prioritize local ownership and reduce the influence of external investors in the STR market.

Committee members expressed concerns regarding the feasibility and legality of the lottery system. Some argued that it could lead to administrative challenges and potential lawsuits, referencing similar legislation in New Orleans that is currently facing legal scrutiny. There were worries about the fairness of potentially displacing current STR operators who have made significant investments in their properties.

Despite the intention to manage STR density, committee members highlighted that the proposed changes might not effectively reduce the number of STRs in the short term. The discussion underscored the complexities of balancing local interests with the existing business models of STR operators.

As the committee continues to deliberate on this proposal, the implications for local residents and the STR market remain a focal point of concern. Further discussions and refinements to the proposal are expected as the city navigates the challenges of regulating short-term rentals.