Most short-term rentals in Fort Worth operate illegally, not paying local hotel occupancy taxes, data shows

The Fort Worth City Council is considering regulating short-term rentals after a report found most were operating illegally and failing to pay local hotel occupancy taxes.

The city defines short-term rentals as residential properties used for overnight stays of one to 29 days at a time. Most are advertised through mobile apps, such as Airbnb or Vrbo.

In February 2018, the council passed an ordinance specifying where short-term rentals can operate. They are permitted in areas zoned for mixed use or commercial or industrial use. They are also permitted in certain shape-based neighborhoods that have a mix of residential and commercial uses. Short-term rentals are not permitted in residential areas, according to city officials.

“I expect we will find that most of the short-term rentals we have in Fort Worth are not legal,” Deputy City Manager Dana Burghdoff said during a presentation in late July.

During a working session on August 16, Burghdoff presented three key issues for the board to decide.

First, the staff recommends that short-term rentals be required to register with the city and pay local hotel occupancy taxes. The city is considering online systems to facilitate registration. Those operating in areas where short-term rentals are not permitted would not be able to register or pay the required taxes, according to the city’s proposal.

Next, the board will have to decide whether to impose operating standards on short-term rentals. Some of those recommended by the staff include a mandatory parking plan, a limit on the number of guests, a ban on parties and events, 24/7 contact on file, and security measures, such as smoke detectors and of carbon monoxide.

The third main question is whether to change the city’s zoning ordinances that determine where short-term rentals are allowed to operate. Staff offered four options, including one that continues to ban short-term rentals in all residential areas.

“It’s a really tough subject,” Mayor Mattie Parker said during the business session. “We have to get it right, and I don’t think the speed is in our favour.”

Council members will continue to talk with constituents, research and get their questions answered. No decision timetable has been set.

Consultant Comments

The city hired Deckard Technologies as a consultant earlier this year to provide baseline data on short-term rentals operating in Fort Worth.

In its July report, the consultant confirmed the addresses of 2,453 of the 2,738 short-term rental ads found online. These listings have been confirmed to be linked to 814 properties that have operated as a short-term rental over the past 12 months. The difference in numbers indicates that some properties had multiple listings online, Burghdoff said.

The consultant found 633 of these properties operating on short-term rentals in July. Of these, 68 were in authorized areas of Fort Worth. The other 565 were operating illegally in areas where they are not permitted, according to the report.

About a third of listings had five or fewer stays between August 2021 and July 2022, according to the report. About 13% of them had 40 or more stays during that 12-month period, the report said.

According to Deckard Technologies, the majority of short-term rentals in Fort Worth are listed on the Airbnb platform.

“Short-term rentals offer Fort Worth residents a way to supplement their income and support local businesses by welcoming guests into their homes, and we want to work with the city on rules that preserve those economic benefits and allow hosts to pay their fair share of taxes,” Luis Briones, public policy manager for Airbnb in Texas, said in an email.

Mix of reviews

Opinions on short-term rentals are mixed. At a public hearing in late July, the city heard from short-term rental operators who say they are responsible and deserve the ability to use their property as they wish. Others testified to problems including noise, litter and lack of parking, short-term rentals located nearby.

This summer, city officials logged 3,664 responses to its online feedback form on possible changes to short-term rentals, received 646 idea submissions and logged 29,680 ratings of those proposed ideas, according to Burghdoff.

One of the city’s goals is to preserve the residential quality of neighborhoods and protect them from the encroachment of commercial accommodation, Burghdoff said. Municipal authorities also want to ensure the health and safety of residents and guests. Collecting resort taxes from hotels is also part of the city’s goals, she said.

The 9% hotel occupancy tax that Fort Worth collects on short-term rentals goes to the city’s cultural and tourism fund. Tax money can only be used for spending related to culture or tourism and not for enforcing any regulations, according to Burghdoff.

Fort Worth said it received $28,000 in revenue from short-term rental operators in the 2020-21 fiscal year. According to the consultant’s report, the city had the potential to raise more than $1.2 million of the estimated $13.3 million in revenue short-term rental operators collected between August 2021 and July 2022.

Treatment of offenses

The city is investigating violations of its short-term rental ordinance based on a complaint. With respect to short-term rentals, code enforcement officers must confirm that a property is being used as a short-term rental before a violation can be issued. By city standards, an online listing alone cannot be used as the basis for a violation.

In the 2020-2021 fiscal year, the city reviewed 71 complaints about short-term rentals. Those complaints required 278 staff inspections to confirm whether a short-term rental had taken place, according to Burghdoff.

City staff have opened 147 cases so far in the 2021-22 fiscal year involving possible short-term rental zoning violations. Those cases required 710 inspections by staff trying to confirm a violation, according to city data.

Among the city’s proposals is one that requires operators to register with the city to advertise a short-term rental with an online platform.

“This will make enforcement a lot easier,” said Shannon Elder, assistant director of the city’s code compliance department.

During a question-and-answer session in July, several residents spoke about landlords’ right to use their property for short-term rentals.

“Fort Worth homeowners are subject to zoning,” Burghdoff said. “They are not permitted to have the short-term rental business if their zoning does not permit such use.”

Fort Worth City Council members are expected to meet again in the coming weeks to discuss short-term rentals and give the public a proposed timeline for any changes.

See this story in the August electronic edition of the Community Impact journal.

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