Vacation-rental regulations come down to local control versus state preemption

In almost every Florida community that serves as a vacation destination, the issue of vacation rental housing is one of the hottest facing local government officials. 

We see it vividly here in the Sarasota area, especially on Anna Maria Island and on St. Armands and Longboat keys. It seems to come up at most public meetings in those places with discussions of complaints or calls for restrictions, and sometimes owners of vacation rentals speak out in their own defense.

It goes way beyond the Sarasota area, too. I’ve talked to local officials in several other communities on the west and east coasts of Florida and also in South Carolina, Arizona and Washington. I have been an expert witness in two lawsuits over restrictions on vacation rentals, one in Seattle and one in Chicago. 

Suffice it to say, it’s a national issue playing out at the local level all over the country.

Why the controversy?

At one level, the issue is not that dramatic. It revolves around whether Airbnb and HomeAway and the like should pay the same taxes as hotels, have the same safety requirements or be required to have local licenses, etc. But many localities go way beyond that, instituting outright bans (such as Miami, Palm Springs and Charleston) or severe limitations (such as Los Angeles, Las Vegas and Miami Beach). 

In Sarasota, the issue of taxes was largely worked out with the companies a couple years ago. Local complaints and controversies tend to concern specific neighborhood issues, either nuisance issues, such as trash, noise and parking, or more fundamental issues, such as vacation rentals, violating the “neighborhood character” other homeowners expect or simply being commercial activities in a residential neighborhood.

The first group of issues — trash, noise, parking, etc. — is in one sense simpler to address. Creating these problems is already illegal and covered under local codes that apply to all properties. There are mechanisms to cite and fine homeowners who violate those rules. 

But simple does not mean easy. I’ve been told by some Sarasota officials and some from other communities that enforcing these rules is “too hard.” There are too many such complaints, and many vacation rental owners are not responsive. 

Not compelling justification

But restricting someone’s property right — which is what limiting or banning short-term rentals amounts to — because enforcing normal rules of conduct for property owners is “too hard” is not a compelling justification. Ease and convenience for local officials is not a good reason for them to take something valuable away from property owners.

And I can’t help but look at my own neighborhood, which is overwhelmingly vacation rentals. In spite of having a steady flow of short-term renters, including tons of college kids at spring break and summer, we almost never have problems of noise, trash or cars all over the place. 

On the few times there have been issues, a call to the property manager or rental service company almost always works. Police involvement is super rare. Yes, maybe if you add up rare problems from a lot of neighborhoods, it looks like a bigger problem on a regional scale, but I have to say it looks like   the existing rules largely work as intended.

In the Sarasota-Manatee region, the neighborhood character problem seems to dominate most discussions. People complain about having lots of visitors coming and going at certain houses in their neighborhood that are short-term rentals versus the relative stability of year-round or seasonal residents.

But again, it seems like a draconian response to take away the ability of someone to make money off of their property just because you don’t like seeing people coming and going. 

It is hard and vague to argue the harm a property owner imposed on his neighbor by violating the neighborhood character and hard to show that harm to be substantial. 

Is there a big difference between homeowners in your neighborhood with many relatives who visit frequently throughout the year and homeowners who rents their house out to vacationers for many weeks of the year?

Moreover, we have a ready-made mechanism for dealing with the neighborhood character issue: homeowner and condo associations. If you want to ensure your neighborhood character remains stable, it’s hard to beat a homeowner or condo association for that. Their rules are clear when you buy the property, and owners have to agree to change those rules. 

If you bought a property not in an HOA or COA, then you chose not to ensure your neighborhood character. To then ask the government to regulate decisions by your neighbors that you don’t like and that don’t particularly harm you is unreasonable. 

Arguably it is a consequence of your decision to buy in a less-regulated neighborhood, not the vacation rental owners’ fault for using a new technology.

State or local control?

On the subject of state preemption, the conflict between short-term rental owners and cries for local regulations keeps boiling up to the state level. 

Once again, bills proposed in the state Senate and House seek to preempt many local rules on short-term rentals and regulate them at the state level.  

The fundamental argument behind the bills is that too many local governments are overly restricting short-term rentals, violating the property rights of those homeowners without sufficient harm to justify it. Instead, state regulations would impose some rules on financial, health and safety issues but would largely allow property owners to decide. 

As I have written here before, local decision-making is better than state-level decision-making in most cases, and the state should rarely preempt local decisions. But this is a case where the track record is clear. 

Driven by the claim that enforcing existing rules is “too hard” and by calls for regulations from some vocal residents, too many local governments are dramatically restricting short-term rentals. The clear recourse for property owners to protect their rights from these restrictions is to go to the state. Hence the situation we are in and the state bills being proposed. 

It would be better to see our local leaders be reasonable and allow short-term rentals and enforce existing rules against real and measurable problems. If that happens statewide, we wouldn’t see the pressure for state preemption. 

Let the HOAs and COAs provide an option for those who want to be away from vacation renters. Maybe we will see more homeowners’ associations emerge for more properties in response to growing vacation rentals. That’s an appropriate market response. 

Dr. Adrian Moore is vice president of Reason Foundation and lives in Sarasota.