SUNDAY EDITION | Louisville takes lenient approach to enforcing new Airbnb rules
Renting your place out for the Kentucky Derby? Louisville officials are taking a lenient approach to enforcing the city's new rules for Airbnb and other short-term rentals. Here's what you need to know.
LOUISVILLE, Ky. (WDRB) – Almost three years ago, Jonathan Bevan jumped at the chance to buy the duplex carriage house behind his family’s Old Louisville home.
He then undertook a painstaking, year-long renovation – knocking out part of a brick wall, restoring hard-wood floors and building a kitchen table and counter top from reclaimed wood.
The result: a three-bedroom apartment that Bevan now rents for $149 to $169 a night on the home sharing platform Airbnb.com.
In a little over a year, Bevan estimates about 100 people have stayed in the apartment, including tourists from as far as Australia, actors in town for shows and – of course – Kentucky Derby goers. Bevan’s apartment is already booked at $1,000 a night for this year’s Derby weekend, May 5-7.
“We’ve had all types of people – families, young couples, groups coming for bourbon tours,” said Bevan, a 49-year-old property investor.
Bevan is also one of the few property owners to have successfully navigated Louisville Metro’s new regulations surrounding “short-term rentals” on Airbnb, VRBO.com and other online platforms.
The rules, which Metro Council adopted last year, have been in effect since Aug. 1. At a minimum, anyone in Jefferson County using a platform like Airbnb is supposed to register with Metro government, pay a $25 annual fee and pay the city standard hotel taxes.
As of Feb. 8, the city had 87 active registrations for short-term rentals.
That’s only a fraction of the roughly 1,300 hosts offering rooms, apartments and homes for rent in Louisville on Airbnb alone, according to the company.
And for some owners, like Bevan, the new rules require much more than simply registering and paying the $25 fee. They have to spend nearly $400 to obtain a separate permit – a process that takes months.
What owners need to do depends primarily on whether the home is their primary residence and its zoning classification.
Derby, when hotels across the city are booked, is by far the biggest income opportunity for Louisville homeowners renting on Airbnb, and this year’s Derby weekend will be the first since Louisville’s rules went into effect.
So far, city officials have taken a lenient approach to enforcing the new rules. A few dozen property owners have been given warnings – two in some cases– but Metro government has yet to issue a formal violation notice or levy any fines.
“Because these regulations are new, we have been trying to give property owners more opportunities to bring their properties into compliance rather than penalizing them when maybe they weren’t aware of the regulation,” said Deborah Bilitski, director of Develop Louisville, the city department charged with enforcing the rules.
Bilitski said the city will eventually “move into a more standard type of enforcement” – but she declined to say when.
In any event, city officials won’t be monitoring sites like Airbnb to find offenders.
Just like high grass and other code problems, the city will only investigate short-term rentals if a complaint is filed through Metro Call 311, she said.
Develop Louisville has received 74 complaints about short-term rentals so far, Bilitski said.
Airbnb popular in city’s urban neighborhoods
The growing popularity of Airbnb – which more than doubled in Kentucky last year, with 80,000 hosts – prompted Louisville to join cities like Nashville, Austin and San Francisco in adopting rules for residents using the platform.
“The (Metro) Council tried to find a happy medium where we protected the citizen’s rights, and their property owner rights, but still tried to be progressive and allow for short-term rentals to take place in our community,” said Metro Council member David James.
Using city records, WDRB analyzed 158 properties whose owners have attempted to register a short-term rental or applied for a permit, as some are required to do.
Almost half of the rentals are in the Highlands zip codes of 40204 and 40205 – an area with plenty of bars, restaurants and nightlife, but no hotels.
Other popular neighborhoods for rentals are Clifton/Crescent Hill, Germantown, Schnitzelburg and Old Louisville.
INTERACTIVE MAP Properties that have applied for short-term rental registration or permit
'You’re in a neighborhood…not so much as a tourist'
For Bevan, renting his Old Louisville carriage house on Airbnb allows him to earn more than a regular, monthly renter would pay and to show off his historic neighborhood to people from around the world – all while maintaining the flexibility to keep the apartment available for visiting family.
His tenants, meanwhile, get to experience life in an area where people live instead of where hotels happen to be.
“What I like about it is, you’re in a neighborhood and you feel not so much as a tourist ... you almost feel like you’re living at home,” he said.
Bevan added that his tenants patronize bars and restaurants in the area, boosting the local economy.
“They’re spending money in this neighborhood; it drives me nuts when people don’t want (Airbnb rentals),” he said.
In over a year of renting his carriage house, Bevan said his biggest problem was when one of his tenants accidentally parked in a neighbor’s driveway for an hour or so.
But in Old Louisville, the rules around short-term rentals are particularly strict.
That’s because the area’s “traditional,” preservation-minded zoning means all hosts like Bevan need to get a “conditional use permit” from the city before even being allowed to register and pay the $25 annual fee for a short-term rental.
“We did not want to end up with entire portions of the neighborhood that were investment properties for the sole purpose of short-term rentals, because that can destroy a neighborhood,” said James, who represents Old Louisville on the Metro Council.
Outside of Old Louisville, the special permit is also needed for most anyone renting a home or apartment that is not his or her principal residence.
The permit rules do not apply, however, to the suburban cities that handle their own zoning: Anchorage, Douglass Hills, Graymoor-Devondale, Hurstbourne, Indian Hills, Jeffersontown, Lyndon, Middletown, Prospect, Shively, St. Matthews and St. Regis Park.
But even those suburban city residents have to register their short-term rental with Metro and pay the $25 annual fee.
A permit, meanwhile, takes months to obtain. It requires the property owner to host a “neighborhood meeting” to explain the plan to anyone who shows up, to file two applications and to pay $370.50 in fees.
And – while city officials are available to help – it’s up to the property owner to figure out which neighbors are required to be alerted to the neighborhood meeting and to mail them notices.
For Bevan, this meant using city tax records to manually look up the addresses of two-dozen property owners, to whom he needed to mail a letter about the meeting. He made an Excel spreadsheet to keep track.
Only one person showed up to the meeting, Bevan said, and she had no problem with his Airbnb duplex. She was merely curious about what it took to get a permit.
On Feb. 6, Metro’s Board of Zoning Adjustment voted to grant Bevan the permit. The zoning board has given out 10 permits so far, while 36 have begun the process.
‘I like to do it by the book’
The new rules carry penalties starting at $100 a day for properties that aren’t registered. And for those properties that require the additional permit, the city could take owners to court for flaunting the rules.
But property owners will always be notified and offered a chance to begin complying with the rules before incurring any penalties, according to the city’s short-term rental ordinance and its long-standing zoning rules.
Even so, people operating a short-term rental shouldn’t wait for the city to notify them that it might be a problem, Bilitski said.
“It’s always better to be actively pursuing compliance rather than defending from a violation,” she said. “We are here to help property owners who aren’t sure if their property is in compliance or not.”
Bevan, for his part, said he believes the city should regulate Airbnb hosts, but the lengthy permit process might be “a little too far.”
He never considered disregarding the rules.
“I like to do it by the book,” he said.
Louisville Metro Planning & Design: 502-574-6230
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