Lexington moves forward on regulating short-term rentals. Here’s what the rules say
After nearly four years of debate, a Lexington council committee passed a proposal Tuesday that would regulate short-term rentals, such as Airbnb and VRBO, in Fayette County.
The Lexington-Fayette Urban County Council’s General Government and Planning Committee voted unanimously to pass a resolution that would start changes in city ordinances and another motion to update zoning regulations for short-term rentals.
During a council work session later Tuesday, the council voted to move the zone text amendment to its meeting agenda. A final vote could come later this month.
It’s just the first step in regulating short-term rentals.
If the full council approves the resolution on zoning text amendments, it will go to the Planning Commission for review. The Planning Commission would then vote on the changes to the zoning text amendments and send it back to the council for further review.
At that time, the council would also vote on the ordinance that helps regulate short-term rentals, city officials said.
A final vote on the zoning text amendments and changes to city ordinances to establish short-term rental regulations will likely not happen until summer, city officials said Tuesday.
Councilwoman Liz Sheehan said a work group consisting of neighborhood representatives and short-term rental operators helped craft the regulations. Sheehan and Councilman James Brown co-chaired the work group.
“The draft proposal” is a way to seek “balance” between neighborhoods and operators, Sheehan said. “I am confident we have produced a balanced, common-sense approach.”
Lexington first started debating regulation of short-term rentals in 2019, but the coronavirus pandemic and other issues put the debate on hold for several years.
The city returned to the issue in November. It held a two-hour public hearing where several short-term rental operators asked the city not to pass regulations that were too onerous or too costly.
Most cities have some type of regulations for short-term rentals. Georgetown passed regulations on short-term rentals in 2022. Louisville, which passed its first short-term rental ordinance in 2015, and Nashville, Tenn., have had regulations for years.
It’s not known how many short-term rentals are in Fayette County. Some have estimated it’s more than 1,000 units.
What the new regulations say
The proposed changes to city ordinances would require all short-term rental operators pay a $200 license fee and report annually on the number of stays. For those with multiple short-term rentals, operators will have to pay $200 on the first rental and $100 each for the remaining rentals. Short-term rentals would get a local registration number that must be advertised on all short-term rental websites. The annual fees will help the city pay for software that will assist in managing short-term rentals.
All short-term rentals would have a maximum occupancy of 12. Private events, including weddings, cannot be hosted at a short-term rental, if the total number of attendees exceeds 12 people.
The city has an agreement with Airbnb and Expedia, which includes VRBO, to remit local hotel taxes to Fayette County.
Those taxes go to Visit Lex, the city’s tourism group, and also helps pay off debt from the $350 million expansion of Central Bank Center. Lexington collected $970,000 from short-term rental platforms in 2021, more than twice the $400,000 it got in 2020. Short-term rental operators that host on platforms other than Airbnb, VRBO and Expedia would have to remit those hotel taxes to the city.
Those groups give the city lump payments and do not tell the city how many operators are in Fayette County, said Wes Holbrook, director of revenue for the city.
The proposed changes would also make clear where short-term rentals are allowed and what types of short-term rentals will need city sign offs. If the short-term rental is part of an owner-occupied home, it will be allowed without a conditional use permit.
Conditional use permits, which are granted by the city’s Board of Adjustment, will also not be required in certain business zones that allow for homes and other residential properties and hotels.
Those that fail to follow the city’s short-term rental rules will face a $125 fine for a first offense and a $1,000 fine for a fourth offense.
The city added a clause that allows operators six months after the ordinances and zone text amendments are passed to become licensed. Current operators that are in zones that would require conditional use permits would be grandfathered and would not need to apply for a conditional use, city officials said.
There is also some language that allows the Board of Adjustment to consider how many other short-term rentals are in the area before granting a conditional use permit for a short-term rental.
There are no requirements for parking. The city has done away with all parking requirements for new developments.
Under the current proposal, no short-term rentals are allowed in the agriculture zone. However, the Planning Commission can consider adding regulations for the agricultural zone during its considerations. That can be done with help from the Rural Land Management Board, which oversees rural policy in Fayette County.
Why some say regulations are necessary
Because short-term rentals aren’t currently in the city’s ordinances or zoning regulations, all current short-term rental operators are operating illegally, city officials have said of one of the reasons why the regulations are necessary.
Traditional brick-and-mortar hotels have long argued short-term rental operators who don’t pay those hotel taxes have a competitive advantage.
Others have previously voiced concerns that too many short-term rentals in downtown neighborhoods will erode neighborhood characters.
Some housing advocates are worried that too many landlords are converting long-term rentals to short-term rentals at a time when rents are skyrocketing.
Councilman Chuck Ellinger, a short-term rental owner, recused himself from the vote and all discussions.
