Austin City Council Updates Short-Term Rental Regulations
Teh Austin City Council recently approved revisions to its short-term rental (STR) ordinance,aiming to improve compliance,strengthen enforcement,and increase hotel occupancy tax revenue. The changes follow over a decade of study, discussion, and legal challenges.
Under the new rules, tenants will be eligible to apply for licenses to operate STRs if their leases allow, assuming responsibility for utility payments. License holders will need written authorization from property owners before submitting their applications. Enforcement of licensing violations will fall to tenants, while property code issues, like unpermitted construction, remain the responsibility of property owners.
Councilmember Ryan Alter proposed an amendment directing city staff to simplify the application process. Staff will explore options like provisional licenses and review current fee levels to reduce barriers to entry. Recommendations regarding fee adjustments and licensing procedures are expected in the coming months.
A more contentious proposal, put forward by Councilmember Josรฉ Velรกsquez, to impose geographic density caps on STRs was defeated by an 8-3 vote. Councilmembers Velรกsquez, Alter, and Mayor Pro Tem Vanessa Fuentes supported the caps, arguing they were necessary to protect housing supply and neighborhood stability, particularly in gentrifying areas, and to address safety concerns related to investor-owned rentals.
Opponents of the density caps pointed to the legal vulnerabilities and enforcement difficulties of similar measures adopted a decade prior, suggesting they could drive operators into noncompliance. City legal staff cautioned that geographic limits could face challenges under equal protection or state constitutional claims, and enforcement staff highlighted past issues with widespread violations resulting from previous caps.
Two amendments were withdrawn before being considered. Councilmember Alter retracted a proposal linked to Velรกsquez’s density-cap measure, and Councilmember Chito Vela withdrew an item that would have requested state permission to use hotel occupancy tax revenue for STR enforcement.
Councilmembers expressed optimism that the revised ordinance will be legally defensible and effective. Vela stated the council is “finally getting to a point where we have a workable, enforceable STR ordinance that will be able to stand up to legal challenge and also generate the Hotel Occupancy Tax that we’ve been trying to get into the city coffers.”