Debate Over Local Control and State Preemption Heats Up on Short-Term Rentals
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Commentary

Debate Over Local Control and State Preemption Heats Up on Short-Term Rentals

With local governments restricting short-term rentals due to complaints from some of their residents, some homeowners are looking to the state to protect their property rights.

In almost every Florida community that serves as a vacation destination, the topic of vacation rental housing is one of the hottest issues facing local government officials.

We see it vividly here in the Sarasota area, especially on Anna Maria Island and on St. Armands and Longboat keys. It seems to come up at most public meetings in those places with discussions of complaints or calls for restrictions, and sometimes owners of vacation rentals speak out in their own defense.

It goes way beyond the Sarasota area, too. I’ve talked to local officials in several other communities on the west and east coasts of Florida and also in South Carolina, Arizona, and Washington. I have served as an expert witness in two lawsuits over restrictions on vacation rentals, one in Seattle and one in Chicago.

Suffice it to say, it’s a national issue playing out at the local level all over the country.

At one level, the issue is not that dramatic. It revolves around whether Airbnb, HomeAway and the like should pay the same taxes as hotels and have the same safety requirements or be required to have local licenses. But many localities go way beyond that, instituting outright bans on short-term rentals (such as Miami, Palm Springs, and Charleston) or severe limitations (such as Los Angeles, Las Vegas, and Miami Beach).

In Sarasota, the issue of taxes was largely worked out with the companies a couple of years ago. Local complaints and controversies tend to concern specific neighborhood issues, either nuisance issues, such as trash, noise and parking, or more fundamental issues, such as vacation rentals violating the “neighborhood character” that other homeowners expect or simply being commercial activities in a residential neighborhood.

The first group of issues — trash, noise, parking, etc. — is, in one sense, simpler to address. Creating these problems is already illegal and covered under local codes that apply to all properties. There are mechanisms to cite and fine homeowners who violate those rules.

But simple does not mean easy. I’ve been told by some Sarasota officials and some from other communities that enforcing these rules is “too hard.” There are too many such complaints, and many vacation rental owners are not responsive.

But restricting someone’s property rights — which is what limiting or banning short-term rentals amounts to — because enforcing normal rules of conduct for property owners is “too hard” is not a compelling justification. Ease and convenience for local officials is not a good reason for them to take something valuable away from property owners.

And, anecdotally, I can’t help but look at my own neighborhood, which is overwhelmingly vacation rentals. In spite of having a steady flow of short-term renters, including tons of college kids at spring break and summer, we almost never have problems of noise, trash or cars all over the place. On the few times there have been issues, a call to the property manager or rental service company almost always works. Police involvement is super rare. Yes, maybe if you add up rare problems from a lot of neighborhoods, it looks like a bigger problem on a regional scale, but I have to say it looks like the existing rules largely work as intended.

In the Sarasota-Manatee region, the neighborhood character problem seems to dominate most discussions. People complain about having lots of visitors coming and going at certain houses in their neighborhood that are short-term rentals versus the relative stability of year-round or seasonal residents.

But again, it seems like a draconian response to take away the ability of homeowners to make money off of their properties just because you don’t like seeing people coming and going. In a case like that, it is hard and vague to argue the harm a property owner imposed on his neighbor by violating the neighborhood character and hard to show that harm to be substantial.

Is there a big difference between homeowners in your neighborhood with many relatives who visit frequently throughout the year and homeowners who rent their house out to vacationers for many weeks of the year?

Moreover, we have a ready-made mechanism for dealing with the neighborhood character issue: homeowner and condo associations. If you want to ensure your neighborhood character remains stable, it’s hard to beat a homeowner or condo association for that. Their rules are clear when you buy the property, and owners have to agree to change those rules.

If you bought a property that is not in an HOA or COA, then it could be argued you chose to prioritize other things and not to ensure your neighborhood’s character. To then ask the government to regulate decisions made by your neighbors because you don’t like those decisions — and are decisions that don’t particularly harm you — is unreasonable. Arguably it is a consequence of your decision to buy in a less-regulated, non-HOA neighborhood, not the vacation rental owners’ fault for using a new technology that is offering them options for their property.

On the subject of state preemption, the conflict between short-term rental owners and cries for local regulations keeps boiling up to the state level. Once again in Florida, bills proposed in the State Senate and House seek to preempt many local rules on short-term rentals and regulate them at the state level.

The fundamental argument behind the bills is that too many local governments are overly restricting short-term rentals, violating the property rights of those homeowners without sufficient harm to justify it. Instead, state regulations would impose some rules on financial, health and safety issues but would largely allow property owners to decide.

Local decision-making is better than state-level decision-making in most cases, and the state should rarely preempt local decisions. But this is a case where the track record is clear. Driven by the claim that enforcing existing rules is “too hard” and by calls for regulations from some vocal residents, too many local governments are dramatically restricting short-term rentals. The clear recourse for property owners to protect their rights from these restrictions is to go to the state. Hence the situation we are in and the state bills being proposed.

It would be better to see our local leaders be reasonable by allowing short-term rentals and enforcing existing rules against real and measurable problems. If that happened statewide, we wouldn’t see the pressure for state preemption.

Let the HOAs and COAs provide an option for those who want to be away from vacation renters. Maybe we will see more homeowners’ associations emerge for more properties in response to growing vacation rentals. That would be an appropriate market response.

A version of this column originally appeared on YourObserver.com.

Adrian Moore

Adrian Moore, Ph.D., is vice president of policy at Reason Foundation, a non-profit think tank advancing free minds and free markets.