‘An attack on local control’: Bill aims to curb KY cities’ oversight of Airbnb, VRBO
A bill filed in the Kentucky Senate this week would tamp down local governments’ abilities to regulate vacation rentals listed on popular websites such as Airbnb and VRBO.
Senate Bill 110 is the latest attempt by the Kentucky General Assembly to curtail local government control of short-term rentals. A bill to restrict local government’s oversight of vacation rentals was proposed in the 2024 session but did not get a hearing before a Senate committee.
Walt Gaffield, president of the Fayette County Neighborhood Council, said his group will fight the bill. The Fayette County Neighborhood Council successfully lobbied the city of Lexington for more restrictions on short-term rentals.
“The proposed legislation is an attack on local government control on behalf of special interests. It’s an insult to the city of Lexington, the mayor, the Urban County Council, Lexington neighborhoods, and Fayette County residents,” Gaffield said. “The General Assembly will be hearing from us and our supporters.”
The bill, filed by Sen. Stephen West, R-Paris, prohibits local governments from setting density restrictions. 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.
The move for density restrictions came after many Lexington neighborhoods were inundated with short-term rentals, including Kenwick and Picadome, after Lexington’s initial ordinance was enacted in January 2024.
Louisville has had similar problems with the over-saturation of short-term rentals in certain neighborhoods and has also enacted density restrictions.
S.B. 110 would also prohibit cities from requiring a conditional use permit for short-term rentals. Most unhosted short-term rentals in Lexington’s neighborhoods require a conditional use permit, which means they have a hearing before the Board of Adjustment at which neighbors can voice objections.
Unhosted short-term rentals are when the owner does not live on the property.
Officials with the Kentucky League of Cities, a nonprofit that lobbies on behalf of Kentucky cities, said its board, which is made up of city officials, has not had an opportunity to review the bill but will likely oppose it.
“While KLC’s Board of Directors has not had a chance to discuss an official position on the legislation, I anticipate that there will be unanimous consensus to oppose this bill that takes away the ability of local governments to make community-based decisions,” said JD Chaney, executive director and CEO of KLC.
Why Airbnb wants the changes
In October, a lobbyist for Airbnb testified before the legislature’s Interim Committee on Local Government urging passage of the bill.
Jason Underwood of Capital Strategies said Airbnb estimates its total economic impact in Kentucky at well over $606 million. Short-term rentals are necessary to keep one of Kentucky’s primary tourism engines — the Bourbon Trail — running, he said.
Many distilleries located on the trail are in rural areas and short-term rentals help fill markets where hotels aren’t located, Underwood argued. “It is critical to the tourism industry,” Underwood said during the October meeting.
Airbnb and short-term rental operators believe local governments can regulate short-term rentals through parking, noise and other requirements but should not over-regulate through zoning, including requiring a conditional use permit, the industry has long argued.
The decisions planning boards make on conditional use permits are often arbitrary, difficult or sometimes impossible to appeal and often require homeowners to hire a lawyer, Underwood said in October.
Multiple short-term rental operators have told the Lexington-Fayette Urban County Council at several public meetings over the past two years that they find the city’s short-term rental ordinances confusing and onerous for small business owners.
Many KY cities not paid hotel, motel taxes by Airbnb
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 other tourism groups 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 the October hearing that VRBO, a primary competitor of Airbnb, pays all of its local hotel taxes.
