Planning Commission recommends short-term rental code amendments; calls for stronger enforcement and platform accountability

The Austin Planning Commission recommended approval of a set of code amendments that update how the city licenses and enforces short-term rentals (STRs), after an extended public hearing with dozens of speakers representing neighbors, licensed hosts, neighborhood groups and industry stakeholders.

The draft ordinance presented by staff would move much of STR regulation from the land-development code into the business code, treat STRs as an accessory use to residential uses, require licensing and life-safety checks, tighten local-contact requirements, and create platform-accountability measures (including requiring a license field on advertisements and a procedure for city delist notices). The proposal also asks platforms to collect and remit hotel-occupancy taxes and to provide quarterly documentation to hosts. Staff said the proposal reflects recent court decisions that limit the city's ability to adopt blanket prohibitions on non-owner-occupied rentals and that the proposed rules are intended to align with those decisions while improving compliance and tax collection.

Speakers at the hearing described wide differences in neighborhood experience. Multiple East Austin residents told the commission of repeated nuisance incidents and violence at properties they said were operating as unlicensed STRs and urged stronger controls, faster enforcement and no grandfathering of currently unlicensed hosts. Representatives of neighborhood organizations and housing advocates said STR proliferation reduces long-term housing supply and increases rents. Some speakers urged a pause on new permits, limits on future STRs, or higher enforcement resources before changes are adopted.

Licensed host representatives and other speakers argued for clear, predictable rules and cautioned against measures that could unintentionally punish small owner-occupied hosts. They urged caution on a two-hour local-contact rule and asked for narrowly defined emergency conditions, argued the city should accept platform-provided insurance as meeting liability requirements, and supported platform remittance of hotel-occupancy tax but asked for protections for small hosts.

Staff summarized the legal context: a 2019 appellate decision struck down the city's phase-out of certain non-owner-occupied STRs and limited the city's ability to impose blanket owner-occupancy conditions; a later federal decision struck down homestead-based eligibility tests in other jurisdictions. Staff said the ordinance approach aims to recover hot revenue, improve compliance, and avoid measures that courts have found invalid.

Key provisions in the staff draft and commission action included: - Licensing and eligibility: On single-family sites (three or fewer dwellings), an "individual" (natural person, trust with all natural-person beneficiaries, or corporation with natural-person members) would be eligible to obtain a license; LLC-owned investment portfolios would be limited in that context. The draft also proposes a 1,000-foot spacing requirement between multiple short-term rentals owned/operated by the same individual in single-family contexts. Multifamily sites (four or more units) would be capped at a percentage of units that may operate as STRs; commissioners adopted a tiered amendment that adjusts the allowed share by size of complex (smaller complexes may have a higher percentage; larger complexes lower percentages). - Host and property requirements: Licensed hosts would be required to post evacuation and life-safety information, maintain $1,000,000 liability insurance (platform-provided coverage accepted), and identify a local contact who must respond within two hours; commissioners approved an amendment allowing named alternate local contacts with no additional notification fee. - Platform rules and enforcement tools: Platforms would be required to provide a field for license numbers on advertisements, collect and remit hotel-occupancy tax, and be required to delist advertisements on city request; commissioners added measures that would direct staff to explore delisting penalties for noncompliant platforms and to seek data-sharing or address-disclosure mechanisms to aid enforcement, subject to legal review. - Compliance and mitigation: Staff proposed new mitigation measures (for recurring trash, noise or other issues) including mandatory receptacle upgrades and the use of noise-monitoring devices; staff and commissioners discussed revocation authority for nuisance properties. Commissioners adopted a public-safety amendment so that where a unit experiences multiple nuisance incidents involving violent criminal activity, the unit's STR license would be barred until a change in ownership (substance subject to legal review).

On staffing and enforcement the commission repeatedly heard that City staff capacity is limited. Staff said third-party vendor contracts (for data scraping and address-matching) are being pursued to speed identification of unlicensed listings. Several commissioners adopted and supported motions directing staff to study feasibility of a dedicated enforcement fee or other funding mechanisms and to produce a 12-month report on how the ordinance performs and whether additional staffing is required.

The commission voted to recommend approval of the STR package as amended. The final tally on the commission recommendation was 9 in favor, 0 opposed, 1 abstention (Commissioner Cox), with multiple amendments adopted during the committee-style amendment process. The Planning Commission's recommendation and the ordinance's details will advance to City Council, and staff said third-party licensing and enforcement contracts are being pursued to accompany any new rules.

What changed in commission deliberations: Commissioners approved several direction motions and amendments adding reporting and enforcement follow-up, a tiered cap on multifamily STR concentrations, alternate-local-contact rules, a 12-month reporting requirement, and the public-safety/violent-crime provision described above. Commissioners also asked staff to study feasibility of a dedicated STR enforcement fee and to explore data-sharing and hot-tax recovery options with the city controller and state comptroller.

Next steps: The Planning Commission's recommendation advances for City Council consideration. Staff said the earliest council hearing date for action would be February 27 (per staff presentation), and that separate third-party contracts for licensing and data scraping will be sought as part of implementation planning.