SUNDAY EDITION | Only five homeowners have been fined under Louisville's Airbnb rules

LOUISVILLE, Ky. (WDRB) – In the more-than two years that Louisville Metro has regulated the short-term renting of homes and apartments on platforms like Airbnb, only five property owners have been fined for breaking the rules, according to public records.

As elected officials are weighing changes to the city’s Airbnb rules, the lack of practical consequences for violators is a key issue that must be tackled, say both supporters and opponents of Louisville’s growing short-term rental market.

“There is no enforcement whatsoever,” said Andi Hannan, a board member of Original Highlands Neighborhood Association, which has asked the city for a temporary moratorium on permits for short-term rental houses not occupied by homeowners.

The number of Louisville homes and apartments listed for rent on Airbnb, VRBO, HomeAway and other platforms has continued to grow. And for the most part, those offering the rentals have ignored rules the Louisville Metro Council implemented in 2016 requiring registration for all and a special permit for many.

Only 416 properties were registered for short-term rentals with the city as of Oct. 10, according to Metro government.

There were an average of 1,769 monthly active short-term rental listings in the Louisville market – which closely approximates Jefferson County – in the year ended Sept. 31, up about 50 percent from the previous year, according to Airdna, an analytics company.

In fact, the short-term rental market in Louisville is "beginning to show signs of saturation," said Airdna’s Abigail Long, because per-night prices are stagnant while the number of available homes continues to climb.

The rentals are largely concentrated in the Highlands, Clifton and Crescent Hill, and Old Louisville – older neighborhoods that have few hotels but are close to bars, restaurants and other entertainment venues.

In August, Louisville Mayor Greg Fischer’s administration floated a number of changes to the city’s short-term rental regulations.

The next step is for the planning commission, a mayoral-appointed board, to discuss and refine the changes at a public hearing in November or December. Then, the Metro Council could adopt the changes early next year.

The changes are aimed at “upstreaming” enforcement so that violators are identified and penalized more quickly, lessening the burden on neighbors to pester city officials about problematic properties, said Metro Councilman Brandon Coan, whose Highlands district is a hotbed for Airbnb rentals.

Coan noted that the state and Louisville Metro recently got Airbnb to collect and remit hotel taxes on behalf of their hosts, meaning local government entities such as Louisville’s tourism bureau are still getting their cut of taxes even if hosts don’t bother to register or pay on their own.   

“I’m glad we’ve got revenue taken care of,” Coan said. “Now, let’s take care of enforcement because that’s what’s really affecting people in our neighborhoods.”

Among other tweaks, the city proposes to stop issuing no-penalty warning notices and instead imposing a $50 fine for a property’s first offense. Another proposal would make it a violation simply to advertise an unregistered short-term rental – though penalties wouldn’t kick in until a repeat offense. 

Some say the changes don’t fix the core problem.

“Over 80 percent of the homes listed on Airbnb are operating illegally … I don’t think changing the laws to make them more stringent will make those people suddenly begin operating within the law,” said Deirde Seim, a Cherokee Triangle resident who occasionally rents her own home on Cherokee Road and operates a short-term rental business, Louisville Lux Home Rentals. “We have to have enforcement that works.”

Louisville is hardly the only city struggling to craft rules of the road for Airbnb.

In San Francisco, the tech company’s headquarters, it took a court fight and settlement before Airbnb agreed to remove unregistered rentals from the platform earlier this year, according to the San Francisco Chronicle.

In Boston, regulations set to take effect Jan. 1 would bar many properties from being rented for more than 30 nights a year, according the Boston Globe.  In nearby Cambridge, Mass., few property owners are complying with registration requirements implemented in April, the paper reported.

A ‘real erosion of neighborhood’

Meanwhile, the debate over the Louisville regulations highlights a growing rift between those who embrace “home sharing” and the extra income it generates, and others who feel the practice has gotten out of hand, turning homes into hotels and denigrating community.

“We are seeing a real erosion of neighborhood because of these things,” said Hannan, of the Original Highlands, who said her area is plagued with absentee owners who don’t live in their rentals and are oblivious to the problems they create.

Metro Councilman Bill Hollander, whose district includes Clifton and Crescent Hill, got an earful at a community meeting last week from about two dozen constituents who complained about noise, parties, parking and other nuisances caused by tourists and bachelor parties in their neighborhood.

Residents said they feel powerless to address problems that come up at 2 a.m. on weekends, when there is no one to call except the police – who may not show up timely if there are higher-priority calls.

And police don't issue short-term rental citations. Only zoning enforcement officers do, and they work a normal, Monday-Friday schedule. Will Ford, a spokesman for Develop Louisville, said: "In certain situations, management can provide overtime to officers to work nights or on weekends."

Code officers need not personally witness a violation of the city's short-term rental rules to issue a citation, but they need "evidence" that a violation occurred, and "the observation of a neighbor is generally not used as evidence," Ford said in response to emailed questions.

Hollander told the group of constituents that, while he knows many Louisville residents rely on income that Airbnb provides, he is increasing coming around to the idea of limiting short-term rentals to owner-occupied homes.

That would be a more significant change than what’s currently proposed, as Louisville has been doling out permits for people to operate rentals that aren’t their primary residence.

But Nashville made a similar move in January when the city passed an ordinance seeking to phase out non-owner-occupied short-term rentals from residential-zoned neighborhoods in less than three years, according to the Tennessean.

Tensions on Eastover Court

With old, stately homes set back from large yards, Louisville’s Eastover Court is just one of the battlegrounds between rental hosts and their neighbors.

Gina Stipo, a chef who owns the Frankfort Avenue restaurant At the Italian Table, paid $450,000 for a home on the street in July, only to find out later that it sits between two homes frequently rented on Airbnb, she said.

One weekend in August, she said, two big groups of 20-something renters criss-crossed her front yard as they moved between pools at the Airbnb homes.

“They had a group of guys in one house and a group girls in the other house and they just got together and had a huge pool party and kept the neighbors up until 3 in the morning,” said Stipo, who hadn’t yet moved into the home at the time. “When you’re basically running a hotel in a residential area, it disrupts the whole neighborhood.”

Judd Devlin, who lives a few doors down Eastover Court, backed up Stipo's story about the converging pool parties, saying it kept his 89-year-old neighbor awake and prompted him to file a complaint with Airbnb.

"Airbnb has been a disaster for this street," he said, adding that the couple living next door to Stipo "market(s) their house as a party pad and in the summer months are rented out most every weekend often to bachelor, bachelorette and birthday parties."

The couple to which Devlin refers is Mollie and Anthony Noe, who live next door to Stipo.

Mollie Noe acknowledged there was “some type of disturbance” with the people who rented their home during the August weekend Stipo described.

But in general, Noe said her family has had few problems since they started regularly renting their home – perhaps one weekend a month on average – about two years ago, she said.

Theirs was among the first 30 properties to be registered with the city,  records show, and Noe said they comply with all rules surrounding short-term rentals. City inspectors have never opened an enforcement case against them, records show.

Meanwhile, the extra Airbnb income has helped them afford $75,000 in new windows and a $15,000 upgrade to their pool, Noe said.

“Airbnb has been fantastic for us to better our home for our neighborhood,” she said. “If you look on our street, we are hundred-year-old homes and most of them have not been touched.”

But there are rising tensions in the neighborhood, Noe said, with some longtime Eastover residents simply opposed to short-term rentals.

“We are borderline being harassed, and it’s unfortunate,” she said.

Now, the owner of the home on the other side of Stipo's, who doesn't live in it, is applying for a city permit to run a non-owner-occupied Airbnb that would accommodate "no more than 10 guests" per night.

Many rules, few consequences

It’s little wonder that few short-term rental hosts bother to comply with Louisville’s registration and permitting requirements: There are no consequences, at least at first.

Of the more-than 300 enforcement cases the city has opened, only five properties have been subject to a second citation and a fine, records show.

And enforcement is entirely complaint-driven, meaning only those properties reported to the city as problems are targeted.

“You get to operate illegally until you’re caught, and then they let you come into the system and get a license or a permit, and that’s led to a majority of people not bothering,” said Seim, the Cherokee Triangle resident and rental host. “Someone operates illegally for 6 months, 7 months, 8 months, a year -- until the neighbors complain enough that they finally get cited … Then they go in and say, ‘Now we are going to obey the law.’”

Coan said he understands some neighbors’ fears that the proposed $50 fine for a first offense could simply be written off as a “cost of doing business” for a host with a lot of short-term rental income. But the penalties are meant to “accumulate and accrue,” he said, with escalating fines that can be duplicated for each day the property is in violation.

As for the proposed change to make it illegal to simply advertise an unregistered rental on a site like Airbnb, Seim questioned how it would be enforced, since Airbnb does not publicly reveal the address of a home – only its approximate location. A savvy host would avoid posting pictures of the exterior, she said.

The city recently asked the public for feedback on the proposed changes and received about 130 comments.

One the best ideas, Coan said, was to require hosts to post a picture of their property’s registration on their rental advertisement.

He said other changes not currently proposed, like parking requirements for dense neighborhoods such as the Highlands, could help.

Coan said he is open to adding enforcement staff – perhaps a code officer dedicated to short-term rentals – “if the dollars are there” when the city crafts its budget next spring.

But, “You really can’t ever have enough people working on the enforcement side of anything,” he said.

One change that is not realistic, Coan said, is banning short-term rentals altogether.

“There are some people who say this is an awful thing and needs to go away completely. I don’t agree with that,” he said. “You can’t put things like this or ride-sharing back in the toothpaste tube … You have to try to adapt.”

Reach reporter Chris Otts at 502-585-0822, cotts@wdrb.com, on Twitter or on Facebook. Copyright 2018 WDRB News. All rights reserved.

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Chris Otts reports for WDRB.com about business and economic topics, higher education and local / state government. He joined WDRB News in 2013 after seven years with The Courier-Journal. Got a tip? Chris is at 502-585-0822 and cotts@wdrb.com.