A lobbyist for the short-term rental industry urged a Kentucky legislative committee Tuesday to pass legislation that would restrict local governments’ ability to regulate vacation rentals listed on popular websites such as Airbnb and VRBO.
The industry wants two bills — one that would ban conditional use permits for short-term rentals — and a second that would allow tenants to rent out their apartments if the property owner gives permission.
Many local governments, including Louisville, Lexington and now Frankfort, require non-hosted short-term rentals — where the owner does not live on site — to obtain a conditional use permit, a type of permit granted by planning boards.
“They’re used on people’s private residents to create a lot of hoops for them to jump through,” said Jason Underwood of Capitol Strategies, a lobbyist for Airbnb. “It’s the ‘not-in-my-backyard’ attitude that’s holding back growth.”
Underwood testified Tuesday before the Kentucky General Assembly’s Interim Joint Committee on Local Government. Underwood said he would work with lawmakers to support both bills when the General Assembly meets in January.
Underwood said Airbnb estimates its total economic impact in Kentucky at more than $606 million. Short-term rentals are necessary to keep one of Kentucky’s main tourism engines, the Bourbon Trail, running. Many of the distilleries along the route are in rural areas, and short-term rentals help fill markets where hotels are not located, Underwood argued.
“It’s critical to the tourism industry,” Underwood said.
Airbnb and short-term rental operators believe that local governments can regulate short-term rentals through parking, noise and other requirements, but they should not over-regulate through zoning regulations, including requiring a conditional use permit, he said.
The decisions planning boards make on conditional use permits are often arbitrary, difficult or sometimes impossible to appeal and often require homeowners to hire an attorney, he said.
The second bill that Airbnb wants will make it clear that tenants can rent out their apartments for short periods. This would help people in the military, people who travel often or even people who want to rent out their apartments for big events like the Kentucky Derby, Underwood said.
“It’s a tenants’ rights law,” Underwood said.
Lawmakers express concerns about unpaid taxes
Rep. Randy Bridges, R-Paducah, said during Tuesday’s legislative hearing that multiple local governments have contacted him about concerns about Airbnb not paying local hotel and motel taxes.
Underwood said Airbnb has agreements with major cities like Lexington, Louisville and Bowling Green to remit local hotel and motel taxes. However, the country could not pay these taxes to every place because there are so many of them, he said.
The Kentucky League of Cities and other tourism groups have sued Airbnb for failing to remit these taxes by December 2023. That lawsuit is still ongoing, Underwood said.
Bridges, a short-term rental owner, said he disagreed. Bridges said he lists his properties on VRBO because it pays his taxes to local governments and tourism boards, the main beneficiary of local hotel taxes.
Underwood said this may be because VRBO doesn’t have the same market share as Airbnb. Bridges said online listings showed VRBO had more listings in Kentucky than Airbnb.
Sen. Cassie Chambers Armstrong, D-Louisville, is a former member of the Louisville Metro Council. The conditional use permit requirement for non-hosted rentals was put in place because it is a business that operates in a residential area, she said. Chambers Armstrong also represents the Highlands, where there is a concentration of unhosted short-term rentals.
Unhosted short-term rentals are much more likely to cause noise and other complaints, which could result in more costs for city governments, including more police calls, she said. It’s also a burden on neighbors, Chambers Armstrong said.
“The regulation of short-term rentals received broad bipartisan support,” Chambers Armstrong said of Louisville’s short-term rental ordinance. “I have serious concerns about what you are proposing.”
The Legislature has shied away from local control in the past
This isn’t the first time the Kentucky General Assembly has considered bills that would prevent local governments from adopting local regulations on housing-related issues.
Lexington passed an ordinance in January that prohibits landlords from discriminating against potential tenants based on their source of income, including the use of Housing Choice or Section 8 vouchers.
Those who supported the ban on income sources said it would help those using vouchers find housing across the city instead of in certain areas.
The Kentucky General Assembly then passed a bill in February that would prohibit local governments from enacting revenue source bans, overriding a veto by Gov. Andy Beshear to do so.
Several local governments have enacted ordinances regulating short-term rentals.
Lexington’s short-term rental ordinance for rentals within the city limits, which went into effect in January. The Lexington-Fayette Urban County Council is now considering several changes to that ordinance, including stricter rules on the number of short-term rental properties in a neighborhood.
These changes came about after several neighborhoods saw a proliferation of short-term rentals in their area, including Kenwick near downtown Lexington.
The city is also considering regulations for short-term rentals in rural areas or outside the urban service boundary. These rules are stricter than within the urban catchment area.
