Bill restricting Lexington’s rules on short-term rentals passes Kentucky House
A bill that would prohibit Lexington and other cities from putting density regulations on short-term rentals made popular by websites such as Airbnb and Vrbo was passed by the House Friday.
Senate Bill 61, originally a bill loosening some regulations on inspections of home swimming pools, was amended by House Speaker David Osborne, R-Prospect, late Wednesday to restricts cities’ abilities to regulate short-term rentals.
The House voted 59-28 largely along party lines to approve the amended SB 61. It now goes to the Senate for its approval of the House’s changes.
Other bills had been filed that limit local governments’ ability to regulate short-term rentals but those bills were not heard in a legislative committee during the 30-day session. Friday is the last day for legislation to pass prior to the veto period.
The new SB 61 would prohibit a city from including density restrictions including:
- Be spaced any distance apart
- Or exceed a percentage of dwelling units in a certain area
The bill would also require local governments to approve an application within 30 days.
Osborne said local governments can not solely deny a request based on a density restriction. It can deny a request for a short-term rental if there is a demonstrated public safety, health and welfare issue.
Osborne said during debate Friday that the additions to SB 61 “strikes a very delicate balance between the ability to regulate and preservation of property rights.”
Other bills filed this legislative session would have been more restrictive, Osborne said.
Lexington, Louisville and Covington have enacted density restrictions on the number of short-term rentals such as Airbnb and Vrbo in neighborhoods after many residents saw their neighborhoods over-run by short-term rentals.
All three are largely represented by Democrats in the House and Senate, who are in the minority and did not have enough votes to stop the measure.
Rep. Anne Donworth, D-Lexington, said the restrictions Lexington has placed on the number of short-term rentals has protected neighborhoods and property rights of those who live next to a short-term rental.
Neighborhoods pushed for the density restrictions, Donworth said. If SB 61 is passed by the Senate, “this is going to be devastating for several of the neighborhoods that I represent,” she said.
Lexington recently changed its ordinance to allow the Board of Adjustment, which grants conditional use permits for unhosted short-term rentals, to deny a permit if the short-term rental is within 600 feet of another rental or if more than 2% of homes in 1,000 feet are short-term rentals.
If SB 61 passes into law, those restrictions would be immediately voided, according to the amendment.
Susan Straub, a spokeswoman for Lexington, said the city did not have a comment.
Walt Gaffield, president of the Fayette County Neighborhood Council, said the amendment was an attempt to circumvent public scrutiny.
“An amendment to a swimming pool bill to establish a state mandate over short-term rental regulation with no committee hearings is government in the dark and is unacceptable,” Gaffield said. “The amendment would eliminate all meaningful changes to the original short term rental ordinance and would suggest that the state legislature does not support local governments.”
Covington Mayor Ron Washington said local decisions are best made by locally-elected leaders. Covington spent four years tweaking and changing its short-term rental ordinance that it felt protected property rights and neighborhoods, he said.
“Our intent — and we believe we succeeded — was to retain property owners’ ability to create businesses and make money while also preserving the residential character of our neighborhoods, safeguarding the availability of housing here, and protecting our residents from the negative effects of bad actors who are using these rentals for parties,” Washington said.
Louisville also has density restrictions on the number of Airbnb and Vrbos allowed in a neighborhood.
Similar bills curtailing local governments’ ability to regulate short-term rentals were proposed in 2024 but did not pass.
Airbnb still hasn’t paid many cities, tourism boards local hotel taxes
Meanwhile, one of the largest short-term rental platforms owes many cities, counties and tourism boards taxes.
Airbnb is in a legal battle with many Kentucky cities and local tourism boards over remittance of local hotel taxes to local governments and tourism boards, which are the main beneficiaries of local hotel taxes.
The Kentucky League of Cities and the Kentucky Travel Industry Association sued Airbnb over its failure to remit those taxes in December 2023.
That lawsuit is still pending.
Airbnb has agreements with some cities including Lexington, Louisville and Bowling Green. Airbnb is paying local taxes to those cities. Airbnb has argued remitting those taxes to so many cities and counties is too onerous.
However, some state legislators pointed out during an October Kentucky legislative hearing that Vrbo, a primary competitor of Airbnb, pays all of its local hotel taxes.
