There are fewer homes available in San Antonio for rent through short-term rental platforms than in other large Texas cities – but just enough for neighbors and City Council members to notice.

After receiving complaints from residents about noise, traffic, trash, and other neighborhood disruptions associated with renters from such platforms, Councilman Mike Gallagher (D10) called on City staff to start investigating current zoning and tax rules, potential safety issues, and policy recourse.

His constituents were concerned that their “residential areas were now becoming commercial areas,” Gallagher said. Some simply didn’t like the idea of “strangers walking around” their neighborhoods and homes.

Short-term rental companies, such as Airbnb, are online marketplaces that allow users to lease or rent homes as short-term lodging options. Instead of staying at a hotel or hostel, people traveling to participating cities may stay in temporarily vacant homes. Short-term rental companies do not own any lodging, but merely act as a brokers in return for percentage fees. Hosts determine the rates for lodging.

With the Governance Committee’s approval on Wednesday, the City is now on a path to start regulating short-term rentals, a process several cities and states continue to struggle with worldwide, especially in major cities like New York, San Francisco, and Paris.

At least one more stakeholder meeting will be held at 10 a.m. on Monday, March 27 at the Department of Development Services, 1901 S. Alamo St. City staff then plans to present information to Technical Advisory Committee, Planning Commission, tentatively the Neighborhoods and Livability Committee, and then for consideration by full City Council, which is expected in May. All of these meetings are open to the public. Meeting information can be viewed online here.

Click here to download a draft ordinance composed by City staff.

Locals who host short-time rentals, such as Elizabeth Lyons Houston, think there needs to be more time and dialogue among community stakeholders before the draft ordinance goes through City bureaucracy. Houston attended the first stakeholder meeting on Monday, she told the Rivard Report, and “it didn’t go super well.”

She said the meeting ended on a good note, but that the City seemed unaware of several unintended consequences the proposed regulations could have on the community.

“[May], essentially a month from now, is not really enough time,” Houston said, who called many of the requirements outlined in the proposed ordinance “burdensome. … The point is not just to [make up rules] – do it smartly, so you don’t have to do it again.”

Much like the “industry disruptive” technology associated with ride-hailing mobile applications, Airbnb (the largest company) and other platforms like HomeAway and FlipKey are fine-tuning how they interact with local and state rules. San Antonio has the benefit of being behind the trend, meaning officials can look at case studies from across the U.S. for what combination of regulation – if any – could work locally. The City also has the added experience of its back-and-forth regulation of rideshare.

Councilman Mike Gallagher (D10) submitted a Council Consideration Request regarding short-term rentals. Credit: Scott Ball / San Antonio Report

Gallagher suggested in his Council Consideration Request that short-term rentals should be considered a “home occupation,” as homeowners collect revenue from these visitors – or “customers.”

Since these residences provide essentially the same services as hotels or bed and breakfasts, Gallagher said Wednesday, they should be beholden to the same permitting and charge the City’s Hotel Occupancy Tax (HOT). Other cities like New Orleans and Philadelphia have regulations that collect such taxes. A preliminary draft ordinance suggests that short-term rental property owners would have to register and be inspected for health and safety violations.

This is not an anti-business idea, Gallagher said, “I just want to make sure that it’s done properly.”

City Council members on the Governance Committee, which is chaired by Mayor Ivy Taylor, agreed that the City should begin seriously looking into rules that balance the protection of neighborhoods while embracing the emerging short-term rental industry.

Opponents to local regulations cite the platform’s review and profile feature, which allows hosts to review their occupants and vice versa, as a tool to weed out “bad” guests and hosts in the platforms’ respective communities. Users who accumulate too many negative reviews will likely not be approved for a rental.

“Our community relies on honest, transparent reviews,” Airbnb’s review policy states. Its Trust & Safety policies outlines hosts’ and guests’ potential concerns and addresses unease hosts’ neighbors may experience.

Councilman Ron Nirenberg (D8) suggested that a part of the solution could be enforcing existing rules of code and conduct related to noise, littering, and parking. He cautioned against being “too heavy-handed,” but was open to considering rental registration.

Nirenberg sees the conversation as “more about trying to identify the bad actors and getting them out of neighborhoods as opposed to discouraging Airbnbs – which I think are here to stay.”

A growing concern in San Antonio and nationally is that people will start buying or flipping properties just to rent them out on short-term platforms, possibly lowering property values. This sidesteps the spirit of the system: to rent out your home or apartment when you’re not using it, or to rent out extra space where you live – like a room, garage apartment, or detached bungalow. There are even campers and RVs listed for rent in San Antonio.

“Patience” and “thoughtfulness” will be important factors to San Antonio’s regulations, said Councilwoman Rebecca Viagran (D3).

The authentic experience that short-term rentals offer visitors to San Antonio is important, Viagran said, but it’s also important to make sure it’s “respectful for the neighborhoods too.”

Then there is the liability issue: If a visitor is hurt while staying in an apartment, is that the responsibility of the host (whoever rented out the space), Airbnb, or the owner of the apartment building? Airbnb offers Host Protection Insurance and other insurance companies are beginning to offer similar products for renters and homeowners.

These issues and others will be discussed throughout the coming months as the draft ordinance receives community and City officials’ input.

The key of this regulatory challenge, Councilman Joe Krier (D9) said, is to recognize property rights of people who want to make extra cash through short-term rentals and other people who don’t want to live next to what might be considered a disruptive business.

“It’s a delicate balance,” Krier said.

Senate Bill 451 in the Texas Legislature would restrict local municipalities from banning or regulating short-term rentals in the state.

“Under the bill, local governments could still prohibit short-term renters from housing sex offenders or selling alcohol or illegal drugs to guests,” according to The Texas Tribune.

This bill is one of several that various cities, including San Antonio, oppose because it takes away local control.

For the most part, Airbnb is ready and willing to work with local governments and state agencies, said Laura Spanjian, Airbnb public policy manager. She gave a presentation in San Antonio last year at an Urban Land Institute luncheon.

The San Francisco-based company, which is projecting earnings of $3 billion in 2020, started operating in a handful of cities in 2009. In 2015, it facilitated more than 40 million “guest arrivals,” and had more than 2 million listings in 34,000 cities in 190 countries.

Airbnb guests typically stay longer than hotel guests and are more likely to explore more of their destination city, Spanjian said. “It’s not just two days. It’s not just the River Walk and the Alamo.”

Compared to Austin’s 6,000 hosts, San Antonio has an estimated 900, Spanjian said. Airbnb guests in San Antonio come from more than 80 countries.

Click here to download Spanjian’s presentation (warning: large file size).

Houston, who has been an Airbnb host for about one year and uses the platform for her own travels, said over-regulating hosts will cause some to drop off the platform and weaken San Antonio’s economy.

“We need to attract innovative tech companies and Millennials – just like [rideshare] – Airbnb is an important aspect for newcomers and visitors,” she said.

About 64,000 people stayed in San Antonio Airbnb listings last year, according to information the company provided Houston, which generated a $42 million impact.

The “vocal minority” complaining about short-term rentals doesn’t realize that a larger percentage of the guests and hosts aren’t bothering anyone, Houston said, adding that she hopes more public meetings can occur before City Council considers regulations.