Short-Term Rental (STR) Update 2018

Short-term rental (STR) regulations in Texas are a hot topic among city governments around the nation. An increasing number of Texas communities have ordinances in place to manage local STRs in terms of registration, location, property inspection, the collection of applicable hotel occupancy taxes, and other matters.

While some communities have ordinances with moderate regulations in place, other cities are facing legal challenges to their local ordinances.

Austin. The City of Austin continues to defend itself against a lawsuit filed by the Texas Public Policy Foundation (joined by the Texas Attorney General) challenging the constitutionality of its ordinance passed in 2016. In the ordinance, City leaders passed a moratorium on granting permits for new non-owner occupied STR units in residential areas. The moratorium has been in effect for over two years, and by 2022, all existing permitted non-owner occupied STR units in residential areas will be fully banned.  

Grapevine.  Litigation is now pending in the City of Grapevine after its city council took action to reinstate a historic ban of all short-term rentals.  The ban was set to take effect on October 22, with the mayor noting that short-term rental activity in Grapevine is “just not appropriate.” A court has now blocked Grapevine’s ordinance from taking effect until after the litigation is concluded.

In other cities such as Arlington, Corpus Christi, and San Antonio, proposals are being considered that aim to strike a proper balance between STR activity within each community while ensuring the integrity of residential neighborhoods remains protected.  

Many homeowners have argued in city council meetings, public forums, and even the prior two Texas legislative sessions that their property rights are infringed by unchecked STR activity occurring nearby.

Common concerns from neighbors have included stories of late night parties, trash and sanitation violations, a constant flow of guests, increased housing costs due to investors converting traditional residential properties to full-time STRs, and even issues of public safety.

Arlington continues to maintain that STR activity violates its existing land use provision. Meanwhile, San Antonio’s city council is considering the density of non-owner occupied STR units that will be permitted to operate in a given block-face in the city.  

THLA and the San Antonio Hotel & Lodging Association are working with the City of San Antonio as they consider their ordinance.

The 86th Session of the Texas Legislature begins on January 8, 2019.  The issue of how short-term rentals should be regulated is likely to again be debated by state lawmakers.