The city of Lexington, Virginia recently updated their zoning ordinance to include restrictions on short-term rentals (STRs), including Airbnbs. Colloquially called Airbnb laws, these regulations are common in large cities, but smaller cities take a larger risk of harming their economy by restricting one of the many cottage industries providing income to residents. By capping total rental nights to 104 per year and threatening business license revocation on the basis of neighbor complaints, Lexington fails to recognize the potential negative impact this action will have on the city’s small economy.
Homes Are a Resource for Generating Income
Increased regulation directly harms residents who use STRs as a source of income.
At the time of the 2010 census, the population of Lexington measured at over 7,000 people. The largest employer in Lexington is Washington and Lee University, serving about 1,800 undergraduates, just ahead of the other higher education institution in town, Virginia Military Institute. Most jobs, however, fall into the small business category, with 60 percent of businesses employing between zero and four people. STRs would be included in this count as they require a business license to operate, even before this most recent zoning ordinance update.
In an economy that relies heavily on small businesses to provide jobs, increased regulation directly harms residents who use STRs as a source – or the only source – of income. In some cases, residents don’t have many other attractive options. A retired person might be unable to handle the physical demands of retail or restaurant work, or a stay at home mother or father might need to supplement their family’s income while also caring for their children. Regardless of why residents choose to operate STRs, the zoning ordinance capping total rental nights to 104 per year is harmful.
In addition to contending with the new zoning ordinance rules, under the “three strikes” provision in the ordinance changes, resident who operate STRs will now be answering to their own neighbors. The change endangers the operation of an STR if three or more complaints are filed in a one-year period for nuisances such as noise, trash, or parking.
STR platforms have a similar recourse, but instead of giving power to potentially vindictive neighbors over host or guest infractions, STR platforms provide a way for hosts and guests to be held accountable for their actions. When even those measures fail, guest and host behavior is subject to law enforcement intervention based on previously-established local laws, like public nuisance laws. Putting a host’s income on the line for a neighbor’s complaint when any other resident would only face a fine (or maybe a mediation session) adds further harm to entrepreneurial residents.
Retirees, young families, and individuals unable to find work can take advantage of their long-term leases or home ownership to support themselves and the economy through STRs. Lexington is not exempt from the need to support a diverse economy that in turn supports citizens. The new zoning ordinances may fall into line with larger cities’ regulations on STRs, but that gives the false idea that they are creating positive effects in large cities.
Easing Restrictions Would Also Help People in Large Cities
The city of San Francisco, for example, faces rising homelessness and lower home affordability – issues that loom larger than the negative effects of short-term rentals. What city regulators don’t realize, though, is that easing restrictions on STRs can actually help. Residents who are house rich, but cash poor may choose STRs as additional income. Potential visitors looking to explore San Francisco on a budget find even less affordable lodging options barring them from experiencing the cultural richness of the Bay Area. However, it’s difficult to focus on these negative effects when you struggle as a city to house even the children born in city limits.
Now, many residents are left unable to host guests and make some much-needed side money.
Austin, Texas is adding to their own list of issues by moving to ban all full-time STR homes by 2022. This change is a response to the downsides to increased tourism, commercial activity, and a higher population. Demand for lodging has gone up as more businesses relocate to the city and new residents arrive, driving up home costs. While the city waits for new housing construction to catch up with an increased population, they are resorting to reactionary measures that cause further harm. Noise complaints and cries of tears in the fabric of neighborhoods have helped to restrict an income source for residents facing skyrocketing property taxes. Now, many residents are left unable to host guests and make some much-needed side money.
Like San Francisco and Austin, the city of Lexington is misguided in their implementation of STR regulations because they fail to see the ways that STRs can foster welcoming neighborhoods and help residents keep up with the increase of housing prices and property taxes. Through STR platform procedures, neighborly discussions, and even current laws, there are already many ways to combat any negative externalities of STRs. In their search for a way to prevent perceived negative effects for neighbors of STRs, city regulators are, in fact, creating a negative effect themselves: a static, unbending neighborhood in which neighbor turns on neighbor for stepping outside the status quo.