Renters are losing out to Airbnb, and Utah won’t let cities help them, Robert Gehrke says

In a brutal rental market, it doesn’t make sense to deny local governments the ability to regulate offerings on sites like Airbnb and Vrbo.

A buddy recently left Salt Lake City for a job in Denver, and in the process he left behind a sought-after commodity — half of the affordable, pet-friendly duplex he was renting.

But instead of becoming someone’s new residence, a Utah County woman is planning to rent both sides of the duplex, then sublet it to short-term renters. She now has five apartments set up in what is called “short-term arbitrage” and with little in the way of up-front cost, you can see the potential for this to take off.

The downside, of course, is that instead of giving someone a place to live, units like these will join the hundreds upon hundreds of short-term rentals in Salt Lake that are listed on the Airbnb site.

And here’s the real kicker: The vast majority of them are illegal.

That’s because in Salt Lake City and a host of other Utah cities, zoning ordinances prohibit short-term rentals in most residential areas. In Salt Lake City, that includes pretty much everywhere east of State Street, as well as large chunks of Poplar Grove, Glendale and Rose Park.

Short-term renters are also supposed to have a business license, but a considerable portion of them — there’s no way to know how many — do not.

So why not just enforce the law and alleviate at least part of the city’s housing crunch in the process?

Well, once again, the Utah Legislature has deprived cities across the state of the simplest means of enforcement. Because while it was easy for me to look at short-term rental listings and see which are illegally situated, in 2017 the Legislature enacted a law prohibiting cities from doing the same thing. The rationale was that, if someone’s short-term rental isn’t bothering anyone else, cities shouldn’t arbitrarily be banning them.

Cities can only respond after they get a specific complaint from a neighbor, usually about noise or parking issues, according to Blake Thomas, director of the Salt Lake City Department of Community and Neighborhoods.

Currently, the city is investigating two dozen short-term rental enforcement cases, Thomas said. Half of the owners have the required business license.

In Park City, Mayor Andy Beerman said he warned lawmakers that things could get out of hand if they tied cities’ hands on enforcing short-term rentals — and they have.

Today there are 3,500 short-term rentals in Park City, more than a third of all the structures in town. More than a thousand of them aren’t licensed, the mayor said.

“That has just devastated some of our neighborhoods. I live in Old Town, just off Main Street, and I used to have neighbors,” he said. Now most of the homes are short-term rentals.

“Bottom line is it has accelerated our loss of workforce housing, it’s accelerated gentrification, it has given tools for buyers to justify high-end sales, which means it’s driving property prices up and driving renters out,” he said.

The average home price in Park City surpassed $3 million this year. With just 600 units of affordable housing in the city — about a quarter of what is needed — workers are having to move elsewhere and commute, as my colleague Sara Tabin reported this week.

Many are opting to find other jobs, leaving Park City businesses competing tooth-and-nail for workers or else, unable to find staffing, are scaling back hours, even closing down on certain days, Beerman said.

When he talks to his fellow mayors in resort towns in Colorado, he said the situation is so bad that they’re anticipating citizen initiatives to ban short-term rentals entirely.

Some Utah local cities have tried to manage the situation.

Cottonwood Heights Mayor Mike Peterson said short-term rentals in his city have to be zoned for multi-family or mixed-use residential and either be in a condo project or a planned development — which leaves very little of the city eligible.

Looking at the listings in Cottonwood Heights, many seem to comply with the zoning requirements but a considerable number of others do not.

The city can impose a $250 fine on the first violation, escalating to $1,000 each day there are subsequent violations.

“I’m sure we have some people who bought a home and decided they want to take advantage of our beautiful canyons and ski resorts,” but aren’t in compliance, Peterson said. Almost always when the city gets a complaint, Peterson said, the owner or landlords say they didn’t know about the rules.

Sandy City passed an ordinance in 2018 requiring short-term rentals to be licensed, and then capped the number of licenses issued in each neighborhood — a smart approach. Of the 294 licenses available, only 96 are in use.

But again, looking at listings, there are more rentals available in some neighborhood than licenses issued, and not much the city can do about it unless other residents complain.

If all of this seems absurd, I agree.

Local governments understand their community’s needs and should be the ones deciding where they do and don’t want short-term rentals. But then depriving them of the ability to actively enforce those regulations undermines the whole concept of local control.

“We would like tools to regulate this,” Beerman said. “We would like to determine what zones and neighborhoods [short-term rentals] are allowed.”

At a minimum, the Legislature should let local governments use the simplest tool — the rental listings — as a starting place to identify who might be skirting local zoning ordinances.

Local councils may want to consider restricting short-term arbitrage before it explodes and bleeds off long-term rental properties.

And lawmakers could give resort communities like Park City or Moab the ability to charge an additional tax or impact fee on short-term rentals with the proceeds dedicated to affordable housing to offset the effects of the short-term rentals.

If we do this right we could convert hundreds, perhaps thousands, of units back into affordable long-term rentals, alleviate a very real housing crisis and maintain the integrity of our neighborhoods.