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Return of the great STVR debate?

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HERE’S A startling statistic about short-term vacation rentals (STVRs) in the state of Georgia:

Despite Savannah being credited as the municipality doing the most extensive and nuanced work to regulate STVRs, through a great deal of dialogue with its citizens; of the House Study Committee on STVRs, tasked with devising recommendations for regulating STVRs at the state level, only 28.6% of committee members attended the public forum on the subject at Savannah’s City Hall this past Saturday.

The two members in attendance were Matt Dollar (R), Chairman of the committee in question and State Representative for District 45 (East Cobb County and Sandy Springs), and our own Ron Stephens (R), State Representative for District 164 (Outer Metro Savannah and Fort Stewart).

Absent committee members:

Rep. Karla Drenner (D) District 85 (DeKalb County)

Rep. Mark Newton (R) District 123 (Suburban Augusta)

Rep. Dale Rutledge (R) District 109 (Henry County)

Rep. Spencer Frye (D) District 118 (Athens)

Rep. Butch Parrish (R) District 158 (chunk of rural Georgia between Statesboro and Dublin)

There were many jokes (including my own) made about it being Game Day, and travel to Athens to watch the Dawgs precluding a trip to Savannah on the same day. But c’mon, this is a poor showing if you’re charged with devising legislation that will affect the whole state, perhaps in profound ways.

But, to give the absent committee members the benefit of the doubt, maybe their absence was an indicator that they don’t plan on doing anything that would endanger Savannah’s existing STVR regulations.

I hope that this is the case.

Neighborhood group representatives (including myself, for Thomas Square), and Bill Durrence, the City Council member whose district contains all of Savannah’s legal STVRs, all seemed to agree on trying to impart one common message to the state representatives:

We got this. Don’t take away our ability to regulate this locally.

As reported by Eric Curl of Savannah Morning News earlier this month, it is expected that all 44 wards where a 20% cap was placed on STVR units will have reached this threshold by the end of the year. This will give much-needed stability to the housing mix in these areas.

However, there is the specter of House Bill 579, introduced by Rep. Matt Dollar himself. It would provide that “local government cannot ban or regulate short-term and vacation rentals.” I’m told that this bill is “dead” but I cannot confirm that, and nothing prevents it from being resurrected.

While I support short-term rentals, I am not of the mind that they shouldn’t be regulated, and that the regulation should be local. I think that passing any state law like HB 579 would be horrible.

Also, my support for short-term rentals is conditional, and it declines sharply and in direct proportion to how many STVRs one might own, and how far that owner lives from downtown Savannah.

Atlanta native and champion of the working-class consumer, Clark Howard, recently (10/16/2018) had this to say of Airbnb and its competitors:

“Airbnb has been an enormous financial boost to so many. You’re renting a room in somebody’s home, or over their garage, or whatever, and it supplements their income, and gives you either more space, or a lower price, or a more authentic experience where you’re visiting, by being able to stay in somebody’s private home, rather than a hotel.”

While I agree with Clark – my support for Airbnb is been based on how much it can help out the average person, and especially the creative class – this is not an accurate depiction of who is now making money in the short-term rental market. At least not in downtown Savannah.

The same SMN article provided some updated STVR numbers from the City:

Of 1,431 certified STVRs, only 36 are owner-occupied (these also do not count towards the cap). 46% of all STVRs have owners outside the City of Savannah. Of that number, a further 40% have owners outside the state of Georgia. My math says that’s about 263 units.

The farther away the owner lives, the more likely they have little or no involvement with the operation of their STVR. It is a managed property. That still puts money into the local economy, but not as much as if the owner lived here and was embedded in Savannah life, day to day.

The calls to loosen STVR regulations and caps come from absentee owners and groups representing them.

A representative of Expedia Group, which owns HomeAway and VRBO, spoke at the Savannah forum. He said that the industry would like a “level playing field”. My brain translates that into, “the investor class wants one-size-fits-all regulation across the state.”

Standardization benefits turning the STVR market into nothing but another investment vehicle for those with extra cash looking for high returns. It favors commoditization.

On that note, I’ll mention that a Texas group owns 77 STVRs on Broughton Street.

Seventy-seven. Texas.

Airbnb, at its best, is the exact opposite of a commodity. It gives the visitor a truly unique experience, one that is different with every local host. And it puts money into the pocket of that local host.

Idiosyncratic regulation, neighborhood by neighborhood, as opposed to statewide standardization, benefits local hosts and local knowledge. It makes potential absentee investors nervous, and perhaps search for greener pastures elsewhere.

I am completely OK with that. Go buy safe, predictable mutual funds instead.

This is not to say that I want to take STVRs away from investor-class owners that already have them. They got into the market fair and square, under the current regulations. However, I do not see the need to create more opportunities for them. Any growth in the market should be steered towards locals, as much as is possible.

So, is it possible for the state to do something that would enhance, rather than detract from, local nuanced regulation of STVRs? Yes, says Melinda Allen of the Downtown Neighborhood Association (DNA):

“Definitely on proper tax collection, sharing of data by the industry, and some sort of STVR-negotiated safety standards, and the ability for the City to inspect the businesses,” she says.

“Owner-occupied would be exempt from the inspections, as the primary purpose of the parcel is still residential.”

This is where things always get a little muddy, seeing that if it is owner-occupied, it is probably not actually an STVR, but an inn, or some variation on that use. Or, the STVR is an accessory dwelling on the same parcel as the primary residence.

Would homeowners be OK with their accessory units being inspected by the City, if they wished to use them as STVRs? My guess would be yes, considering the additional income that can be gained.

But if the state really wants to help the little guy, the homestead-homeowner (rather than the investor), and at the same time protect property rights, I have my own suggestion: Take up the issue of homestays.

These are distinct from STVRs. Remember, an STVR is a complete dwelling unit. A homestay is the renting out of a spare bedroom on a short-term basis.

This is not covered in STVR regulations, and is currently forbidden throughout most of Savannah, even in the home that you own and occupy yourself.

The state could change this. It could say that local jurisdictions have no right to forbid homeowners from renting out a single spare bedroom in the house that they own and occupy (as opposed to multiple bedrooms, and approaching “inn” territory).

This would really help out the average homeowner, and not create further inroads for investment properties.

Also, it could help to cool the STVR market, if STVRs have to compete with a larger pool of homestay options.

Think about it, Representative Matt Dollar.

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