House committee considers bill to bar certain local regulations against short-term rentals

Senate measure limits restrictions local governments can place on owners

Rep. Brit McKenzie, R-Rogers, presents Senate Bill 197, which aims to bar local municipalities from passing ordinances targeting short-term rentals, during a meeting of the House Committee on City, County and Local Affairs at the state Capitol in Little Rock on Wednesday.
(Arkansas Democrat-Gazette/Stephen Swofford)
Rep. Brit McKenzie, R-Rogers, presents Senate Bill 197, which aims to bar local municipalities from passing ordinances targeting short-term rentals, during a meeting of the House Committee on City, County and Local Affairs at the state Capitol in Little Rock on Wednesday. (Arkansas Democrat-Gazette/Stephen Swofford)

A House panel on Wednesday heard extended testimony on a bill that aims to limit local government restrictions on short-term rentals but postponed a vote to allow sponsors to file an amendment.

The Committee on City, County, and Local Affairs delayed consideration of Senate Bill 197 by Rep. Brit McKenzie, R-Rogers, until after the Legislature recesses for spring break next week.

Rep. Lanny Fite, R-Benton, the panel chairman, said the bill would likely reappear in committee for a vote March 27.

More than 30 people signed up to speak against the bill and at least 13 signed up to speak for it. After meeting for roughly two hours in the morning, the panel reconvened in the afternoon for that much longer.

After the meeting, McKenzie provided a copy of the amendment he intends to add. Among other changes, the amendment would allow local governments to require short-term rental owners or managers to obtain a permit costing no more than $50 per rental before accepting guests.

Local governments under the amendment could require owners or managers to take a short-term rental offline for up to 30 days if they are adjudicated of violating the same local ordinance three or more times during a 180-day period. Officials also could suspend a rental for up to a year if the owner or manager violated a local ordinance and was found to have contributed to the serious physical injury or wrongful death of a person due to purposely reckless conduct.

The amendment would allow local governments to pass ordinances prohibiting the use of short-term rentals to house sex offenders, sell illegal drugs or alcohol or house an adult-oriented business.

Otherwise, the bill would prohibit cities or counties from enacting or enforcing measures that prohibit or limit "the use of a property as a short-term rental unit." The bill would bar ordinances that are more burdensome than requirements that currently apply to all residential properties within the jurisdiction.

Several homeowners and local government officials raised concerns that short-term rentals -- especially those listed on online marketplaces run by Airbnb and other large companies -- could devalue properties, cause disturbances for long-term residents and restrict housing availability. Opponents also said the bill would limit local control.

Property owners and real estate agents spoke in favor of the bill, saying it would protect the rights of landowners and prohibit local government overreach.

McKenzie presented his bill as a measure intended to preserve the property rights of all Arkansans guaranteed by the state Constitution. Pointing to criticism that the bill would limit local control, McKenzie said he believed state lawmakers must step in when constitutional rights are threatened.

He contended that nuisances such as loud music and parking control sometimes associated with people staying in short-term rentals also could be caused by long-term renters or residents. The way municipalities should address these concerns, he said, is through their police powers. McKenzie noted that long-term rentals may be located in residential areas and argued that short-term rental properties should not have to be located in commercial zones.

When considering housing shortages, McKenzie said local governments should focus on reducing regulation instead of limiting the rights of current property owners.

Robert Berry, mayor of Eureka Springs, said his city understands tourism and the value of overnight housing but had begun restricting short-term rentals.

"Eureka Springs has an abundance of short-term overnight lodging in residential neighborhoods and the citizens felt that we do not need any more," he said. "They felt that these were nothing more than mini hotels posing as residential units."

Damon Wallace, an Arkansas resident, spoke in favor of the bill, saying many owners of short-term rentals had invested tens of thousands of dollars to renovate old homes to generate income.

"There may be some here that feel local control is better, and I can say that is usually the case," Wallace said. "But there are times when local control becomes big government."

Brian Albright, Hot Springs city attorney, opposed the bill, saying municipalities have exclusive authority over land use and zoning in cities.

"There are no state laws zoning districts, there are no land use laws across the state of Arkansas," he said. "Not every community is the same. Within each community, not every neighborhood is the same."

Some opponents of the bill claimed many short-term rentals are owned by out-of-state residents or companies. Supporters objected to this characterization, saying many owners are Arkansans.

Jerry Snow, a Bella Vista city councilman, spoke for the bill, saying he felt it would be unfair to regulate short-term rentals while not putting restrictions on long-term rentals.

"What is the difference?" he said. "If you're going to regulate one, why not regulate them all?"

Shash Goyal, a hotelier, spoke against the bill and said it would create an unbalanced playing field for hotel owners. Among other objections, he pointed to a provision in the bill that he said would bar municipalities from imposing certain taxes on short-term rental owners.

"We as business owners, hotel owners, tourism industry investors are going through that regulation," he said.

The bill defines a "short-term rental" as an "individually or collectively owned single-family house or individually or collectively owned single-family house or dwelling unit." The definition also includes "a unit or group of units in a condominium, cooperative or timeshare, or owner-occupied residential home that is offered for a fee" for 30 days or less.

McKenzie said the bill does not extend to multifamily dwellings or boarding houses. The bill would not impact the ability of homeowner associations to enact policies on small-term rentals, he said.

Rep. Johnny Rye, R-Trumann, raised concerns that having large groups of people staying at short-term rentals could limit parking places for neighbors.

McKenzie said municipalities could address this concern by passing ordinances regulating street parking.

On Wednesday morning, the committee adopted an amendment to the bill containing some of the provisions included in the new amendment McKenzie said he intended to introduce. Before adjourning in the afternoon, the committee expunged its vote on the adopted amendment.