Richmond Continues to Assess Short-Term Rentals

Date: October 9, 2019
Through public hearings continuing into fall and winter 2019, the Richmond community continues to debate the benefits and shortcomings presented by the city’s proposed Short-Term Rental regulations (STRs, in short). May marked the close of the survey period in which Richmonders could share their thoughts on proposed regulations, and the public hearing period since has revealed the community’s concern and frustration regarding those significant questions left unanswered by the proposal.
By way of background, Richmond homes have for several years played host to online rental platforms like Airbnb, FlipKey, and HomeAway. These STRs are currently illegal under the Richmond City Zoning Ordinance without a Special Use Permit, though enforcement is conducted solely on a complaint basis. Richmond’s interest in addressing how to regulate STRs originated from the 2015 UCI Road World Championships, when hundreds of Richmond-area properties were offered up as rentals to race-day visitors. Since then, the General Assembly passed a bill preserving the ability for localities to implement local regulations and create registries for STRs, and developed draft regulations following a review of other localities’ approaches. Richmond has not yet implemented any regulations governing STRs, though STRs continue to be available illegally in hundreds of area homes.
The opportunity presented by the proposed regulation removes the need to obtain a Special Use Permit for home-based operators only, instead requiring these operators to register to obtain a Certificate of Zoning Compliance (CZC) for Short-Term Rental on a biennial basis, for $300. STRs would be permitted uses in any zoning district permitting residential uses, and would be available to both tenants and property owners alike, provided the STRs are the operators’ primary residences (domiciled at least 185 days per year). The hang-up for would-be commercial STR operators is the standing requirement to obtain a special use permit – an elusive prerequisite to operating in the otherwise burgeoning STR sphere.
Besides the obstacle of the special-use permit, complaints voiced in the community surround uncertainty relating to effects on parking, noise and use complaints and enforcement, tax implications, and quality concerns.
The run-down on each item in turn: 1) The city has not yet provided clear answers as to how increased parking congestion would be handled with the projected rise of incoming visitors once STRs are legalized (if ever they are). 2) The proposal places limits on guest capacity, but the threat posed by a repeat of that locally infamous and now-condemned Church Hill Airbnb listing, a home in Richmond whose floor collapsed in January 2019 under the weight of too many visiting party-goers, presents a strong cautionary tale. Complaint-based enforcement and general references to third-party registry monitors provide little potential redress for concerned neighbors. 3) Opportunity typically comes with tax implications. The value to the city is unclear in this case, though, as the actual contingent to which the 8% transient occupancy tax for multi-family and larger single-family operators would apply constitutes a minute percentage of potential STR operators. Primary-residence operators (the vast majority of potential legal operators) would not be subject to additional business licensure requirements or taxation under the proposed regulations. 4) Finally, the practical effects of the domicile requirement along with the difficulty in obtaining special use permits means that renters can expect to lose the services of those STRs operated by professional, experienced commercial business owners, who otherwise make many a visitor feel safer and more secure in renting temporary spaces. The risks of operating illegally will push any commercial owner with well-run, trustworthy options away from the market rather than towards it.
More to come as Richmond continues to mull over the STR option.