Offering an easy, and free, avenue for registration could be one way Kyle plans to regulate short-term rental (STR) use in the city.
Even as the city’s Planning and Zoning Commission continues to iron out the details, most sided with residents in embracing the need for STRs, which in turn could equate to a marketing opportunity.
The latest chapter in the saga came Aug. 16 when Kyle’s P&Z worked to finalize its recommendation on STRs to the city council. P&Z did so without Commissioner Pete Oppel, who resigned his post earlier in the month. P&Z plans to complete its STR recommendation during a special called meeting Aug. 30.
According to P&Z’s proposed recommendation, STRs currently operating in the city would be required to register at no cost. Commissioners also opted to limit the amount of regulation with registration, in order to allow the city to “encourage and embrace” all hospitality options. Commissioners also believed current state litigation, as well as the possibility of future litigation, could limit the amount of regulation cities can have toward STRs.
Favorability among the citizenry also played a role in commissioners’ recommendation. A city survey conducted in 2018 showed 85 percent of respondents favored STRs in the city. Most said they welcomed the chance for a new market with STRs, with others believing it was within a property owner’s right to operate one.
Under the Texas Tax Code, an STR is the rental of all or part of a property to someone who is not the permanent resident. Sites such as AirBnB and VBRO offer STRs.
Data collected by city officials showed 63 active STRs in Kyle as of June 2018, with 161 cumulative rentals that were available. In 2011, there was only one STRs operating in the city and in its extra territorial jurisdiction.
Kyle STRs have an occupancy rate of 30 percent, with 52 percent of all STRs offering the entire home for rent.
Rick Koch, Kyle P&Z chairperson, said Aug. 16 the commissioners wanted an easy process for permitting, to incentivize people to register with the city.
“All we want is contact information for the property owner for the public health and safety,” Koch said. “We want people to comply with permitting.”
Commissioners also recommended the city avoid attempting to collect hotel occupancy tax (HOT) from STR operators, citing the amount collected wouldn’t cover administrative costs. In addition, city officials found cities take in HOT from less than 20 percent of STRs using online platforms.
“We believe it’s a net gain for the city to surrender HOT that may be collected from STRs in return for the economic stimulus STRs could provide,” according to the P&Z’s recommendation.
HOT is a six percent state tax on hotel and motel rooms that are rented for $15 or more per day. Individual cities can also collect a percentage of HOT for rooms costing $2 or more each day.
Kyle and Buda each have a total HOT rate of 13 percent.
But commissioners were not on the same page when it came to enforcing possible rules.
P&Z’s recommendation proposed a fine of $200 per month until the STR is in compliance, along with charging five percent of all revenues generated by the STR from the year before the fine was imposed.
Koch said the idea behind the fines was to have a high penalty due to an “easy” registration process. He also cited the city would not be charging people who comply with the proposed process.
“If you don’t comply, there should be some penalty involved,” Koch said.
Jo Fenety, P&Z commissioner, opposed the language, believing the proposed fine was too stringent, and that commissioners had not previously discussed it. City officials said language of the fine came from Oppel’s recommendation.
Fenety said homeowners might not be able to prove what their revenue is, as they had not previously registered or paid taxes. She also said it would be up to city council to decide what the fines could be.
Eventually, commissioners approved language that called for a fine “not to exceed” $200. The city would send homeowners a letter communicating the need to register before they enforce the possible rule.
The Kyle City Council could take action on P&Z’s recommendation in early September.