Norman City Council to propose short-term rental license ordinance in 2020
Originally published by Norman Transcript Dec. 22, 2019.
After nearly two years of researching and drafting regulations, the Norman City Council will officially propose and vote on a short-term rental ordinance in early 2020, according to assistant city attorney Jeanne Snider.
The ordinance will establish a licensing process for currently operational short-term rentals, such as Airbnb, HomeAway and more, as well as future short-term rentals, to be licensed with the City through an application process, Snider said.
Norman’s council members began discussing the ordinance in February 2018, when Airbnb contacted the City to propose that the company collect a hotel-motel tax on behalf of the Airbnb hosts operating in Norman, said Kate Bierman, Ward 1 council member.
“We realized that we could not take them up on that offer to collect the hotel-motel tax because we did not have an ordinance that allowed them to legally operate within city limits,” Bierman said.
At the time, it was city law that businesses could not operate in residential districts, Bierman said, which caused the council to begin the process of drafting an ordinance to allow short-term rentals to operate as businesses in residential neighborhoods in Norman. Since February 2018, the council has met in a conference meeting once a month with Snider to research and draft an ordinance.
Snider said the ordinance is “finally close” to being proposed and voted upon by the council. Snider said she was asked to finalize the draft ordinance and make adjustments to the zoning district ordinance, submit the draft to the council for a final review, at which point it will be placed on a council meeting agenda for approval or denial. She said she hopes to have the finalized draft ordinance completed by late January 2020.
“Nationally no city was prepared for this,” Snider said. “The share economy has changed things, and so all cities have been looking for ways to pass an ordinance that best fits their city.”
A share economy is an economic model defined as a peer-to-peer based activity of acquiring, providing or sharing access to goods and services that is often facilitated by a community-based on-line platform, according to Investopedia.
Short-term rentals, like Airbnb, have been a controversial topic of conversation since their rise to popularity in 2008, and Norman is not alone in its attempts to draft an ordinance that benefits its community. Oklahoma City drafted its ordinance in January, followed by Stillwater in early July, according to its short-term rental ordinance, and Tulsa, a few weeks later.
Currently there are 200 short-term rentals operating in Norman illegally, of which 79% are single-family homes where the owner does not live in the residence, Snider said. Yet, despite the lack of an established ordinance, there has only been one reported complaint, she said.
“We’re finally close and it looks like we’re mainly going to do licensing and go from there,” Snider said. “I don’t anticipate any trouble…it’s just getting it done because citizens have had legitimate concerns, but I’ve always understood [their concerns], so I’m just ready to get it go in.’”
Bierman said the biggest issues the council discussed were how many short-term rental licenses would be allowed per person or entity, the potential disruption of neighborhood character and aesthetic, as well as collecting the hotel-motel tax from all lodgers, whether at an actual hotel or a short-term rental.
For some members of the council, the increased use of Airbnb over hotels, particularly for game day weekends, is an issue.
“We’re losing money,” said Bill Scanlon, Ward 6 council member.
For Scanlon, the issue with short-term rentals is that it puts the city at a financial loss due to the decrease of visitors staying in hotels, preferring to stay in a short-term rental, which affects the city’s hotel-motel tax revenue.
Council members Lee Hall, Ward 4, and Stephen Holman, Ward 7, agreed the tax revenue issue should be a priority in the ordinance. Additionally, Holman said he didn’t understand why the public would prefer to stay in a short-term rental over a hotel.
“I’ve never used one,” Holman said. “Seems weird. Plus, hotel showers are nice.”
Bierman said some council members were concerned about allowing an individual or entity to purchase entire areas in a residential neighborhood to rent solely as short-term rentals, and thus short-term rentals should have higher regulations than other businesses. However, Bierman felt strongly that short-term rentals should be considered businesses, and thus, should be regulated as much as any other business.
“We don’t put that limit on any other type of business. You can own as many liquor stores as you like, you can own as many rental properties as you like, you can own as many hotels as you like — so why would we limit the number of Airbnb’s that you can hold licenses for?”
Bierman said. “Really, the crux of the issue is, is an Airbnb more comparable to a rental property or more comparable to a business? And that’s really the gray area that we were trying to navigate.”
Bierman said at the conference meeting on Nov. 26 the council agreed that an individual or entity will be allowed to apply for four short-term rental licenses, with an individual property application fee of $150 and a $50 inspection fee. If an individual or entity wants more than four short-term rental properties, they will be required to apply for a special use permit, which the council will review and either approve or deny.
Bierman said the council reserves the right to deny any applicant based on failure to provide the proper documentation, a failed inspection, complaints from the applicant’s neighborhood, and more.
“This is not a unique situation that Norman finds itself in, but my hope is that we are not being overly restrictive on an industry that has clearly found a nice and there’s clearly a market for,” she said.
Colin Krapff, a Norman resident and independent contractor for the oil and gas industry, and his wife Nina, have hosted an Airbnb in a small studio near Crawford and Daws streets in downtown Norman since September 2018.
At the time, Krapff and his family lived in the main home on the property with a separate, studio apartment in the backyard, which they rented out as a full-time rental property. In 2018, when Krapff was forced to evict the tenant and fix it up with all new appliances, he decided to market it as a weekend get-away for OU football fans and other tourists.
Krapff said his rental rate varies depending on the weekend or event, but average $65 per night plus a $25 cleaning fee.
“[I thought], ‘Hey, let’s try this short-term rental thing since we’re just on the cusp of football season.’ And that was going to be my test period, basically the last four months of the year to see how it did and then re-evaluate if I should turn it back to a long-term rental or continue with Airbnb,” Krapff said. “And it did exceptionally well.”
Krapff said his studio is booked 17-20 nights a month, with increased bookings for football game days, graduations and other university events. Additionally, Kapff said game day weekends get booked up months in advance.
“I think the best part for me is it gives me a chance to show people what the City of Norman’s all about,” he said. “Because of that location it really pushes people to try out those local places as opposed to hotel chains like Embassy Suites, Holiday Inn — they’re over there by all the chain restaurants — which, is still putting money in the community, but compared to supporting local business, I mean — you really can’t beat our neighborhood.”
Krapff said he would be supportive of a city-wide ordinance and would have no issues paying an annual license fee, if the city were to require that.
“I think it makes sense if we’re helping bring people into the community and keeping more money local, and even helping the city out in that regard to let us do that,” Krapff said. “I think it’s a win-win on both sides.”
This story was written as part of a senior reporting class at the OU Gaylord College of Journalism and Mass Communication.