What are Short Term Rentals?

Austin’s Planning Commission weighs in on Short Term Rentals

The Sharing Economy – STRs in Austin

Short-term rentals are generally affiliated with the concept of the “sharing economy,” which began to appear in the mid-2000s, as new business structures emerged inspired by social technologies and an increased sense of urgency around global population growth and resource depletion. A driving force behind the sharing economy was the host of enabling technologies that reached the mainstream, making it easy for networks of people and organizations to transact directly. One of the sharing economy’s main benefits is increased independence, flexibility, and self-reliance by decentralization, allowing people to take idle capital and turn it into revenue streams.[1]

The sharing economy is not without its flaws, however. Many see it as a misnomer with a more accurate title being the “access economy.” The technology companies built on this idea have capitalized on the industry, turning the concept of peer to peer transactions into huge profits.[2] The sharing economy is supposed to offer a new kind of capitalism, one where regular folks, enabled by efficient online platforms, can turn their fallow assets into cash machines. But the reality is that these markets also tend to attract a class of well-heeled professional operators, who outperform the amateurs.[3]

In 2009, HomeAway moved its Corporate headquarters to Austin.[1] Over the next two years, the City of Austin initiated a review addressing short-term rentals. Lobbying efforts initiated by Austin Rental Alliance (“ARA” – associated directly with HomeAway) and the Austin Board of Realtors (“ABoR”) advocated for lax restrictions. In May of 2012, the Planning Commission approved a set of STR regulations, borne from the two years of stakeholder negotiations, that included the limited use of STR-2s. In early June, just two weeks later, the City Council rejected the Planning Commission’s recommendations and passed on first reading an alternative STR ordinance supported by the ABoR.[2] In the words of the President of the ARA, Joel Rasmussen, “ARA members worked thousands of hours along side HomeAway and the Austin Board of Realtors to produce the very, very light regulations that are now in place.”[3] Initially lauded by the U.S. Conference of Mayors, and others as a national model,[4] it has since become a cautionary tale. Cities that have mirrored Austin’s policies, like Nashville, are facing similar backlash from affected citizens

[1] Homeaway, The History of HomeAway, www.homeaway.com, – http://www.homeaway.com/info/homeaway/ha-vrbo-anniversaries/homeaway-timeline (last visited Aug. 9, 2015).

[2] Austin Board of Realtors, Short Term Rentals Code Amendment Timeline. www.abor.com https://www.abor.com/gov_affairs/STR_Timeline.cfm (last visited Aug. 9, 2015)

[3] Community from HomeAway, City Posts Requirements for STR Licensing, post by joelr (Sept. 28, 2012, 7:02pm) https://community.homeaway.com/thread/6327 (last visited Aug. 9, 2015).

[4] James Barragan, Enforcement of Short-Term rental ordinance urged, Austin American Statesman (July 2, 2015).

[1] Sharing economy, www.Wikipedia.org, https://en.wikipedia.org/wiki/Sharing_economy (last visited Aug. 9, 2015).

[2] For example, Airbnb has a valuation of $25B. See Sarah Ashley O’Brien, ‘Crazy Money’ – Airbnb valued at over $25 billion, CNN Monday (June 27, 2015); and Uber has a valuation of $50B. See Chris Myers, Decoding Uber’s proposed $50B valuation (and what it means for you)’ Forbes (May 13, 2015).

[3] William Alden, Business Tycoons of Airbnb, New York Times. (Nov. 25, 2014).

1210 A Garden St., Interior, Contd. (photos from STR ad):