Plaintiffs Ahmad and Marwa Zaatari operate a short-term rental as their piece of the American dream and in order to help afford the high-cost of living and taxes in Austin.
In November 2015, the Austin City Council approved a temporary moratorium on issuing new licenses for Type 2, non-owner-occupied short-term rentals (STRs). A few months later, the Council voted 9-2 to make permanent the moratorium on Type 2s in residential areas, while also putting in place nanny state regulations on existing STRs.[i]
As a result of the onerous new regulations, guests in short-term rentals cannot participate in outdoor “assemblies” of more than six people between the hours of 7:00 a.m. and 10:00 p.m., or in any “assembly” at all between 10:00 p.m. and 7:00 p.m. What is an “assembly?” According to the city, it includes “group activities other than sleeping.” Under that framework, short-term rental guests cannot hold backyard birthday parties, summer barbeques, or games of pickup basketball without risking thousands of dollars in fines.
The push to ban STRs originated with Austin neighborhood associations who alleged that irresponsible property owners were letting their vacation rentals turn into “party homes.” But this position is not supported by the facts.
According to the City’s own data, less than 10 percent of all complaints were actually related to noise or occupancy issues in licensed STRs. And absolutely NONE of those complaints turned into formal citations or tickets.
Austin’s restrictive new regulations on STRs…
- Impose new requirements for advertising;
- Set occupancy limits;
- Place new requirements on those seeking STR licenses;
- Give city officials the authority to deny, suspend, or revoke licenses and creates an appeals process;
- Set limits on the distances between some Type 2 STRs;
- Establish inspection-related requirements;
- Create requirements related to noise and music
- Prohibit certain types of gatherings; and
- Eliminates Type 2 short-term rentals by 2022.
Source: City of Austin
Austin’s new STR ordinance is not only bad policy, but also violates a host of Texas constitutional rights and protections, including:
- equal protection;
- due course of law;
- freedom of movement;
- right to privacy;
- freedom of assembly; and
- freedom from unreasonable search and seizure.
Observing Texans’ constitutional rights and protections is not optional. The City must respect the rights of property owners and their guests. Therefore, the City of Austin’s overreaching STR regulations must be struck down.
The Texas Public Policy Foundation, through its Center for the American Future and in partnership with the Center for Local Governance, represents several Austin families and property owners suing the City seeking declaratory and injunctive relief to halt the City’s unconstitutional STR ordinance.
Ahmad and Marwa Zaatari
Ahmad and Marwa Zaatari were both born and raised in Lebanon, immigrating to the United States during adulthood. The couple came to the United States to pursue the American dream, escaping government corruption and cronyism in Lebanon.
In May 2015, the Zaataris secured a Type 2 rental license from the City of Austin with the expectation of renting out their south Austin property and using any income to pay for the expenses of the home, to support themselves financially, to help pay for their child’s daycare costs, and to invest in their son’s future. However, Austin’s new STR ordinance has put the American Dream in jeopardy for the Zaataris, possibly forcing them to sell the property and seek opportunities elsewhere.
Mike and Jennifer Hebert
Mike and Jennifer Hebert live in California and own a short-term rental in Austin that acts as a home for the couple when they come to town. Since Jennifer owns a business in Austin, she is in Texas about 50 percent of the time.
Austin’s high property tax burden has created a significant financial hardship for Mike and Jennifer. In an attempt to help ease the burden, the couple decided to rent out their Austin-area home for 50% of the time that they were not here.
In 2014, the Heberts applied for and secured a Type 2 rental license from the City for this property. If the Heberts lose their ability to rent out their properties on a short-term basis, they will have to absorb much higher costs for living in Austin.
Lindsay and Ras Redwine VI
In 2011, Lindsay and Ras Redwine pooled together their savings, borrowed money from family, and purchased an investment property in Austin to rent it out on a short-term basis. The property includes both a main home and a guest home, which are rented together but hold separate short-term rental licenses.
The couple furnished the property, obtained two Type 2 rental licenses and began renting it out to pay their bills, relying on the revenue from the properties to provide for basic necessities.
If the Redwines lose the ability to rent their home out on a short-term basis, then they will not only have to sell the property but will also be left without a primary source of income.
Tim Klitch is an Austin banker and businessman, who moved into a Tarrytown duplex with his family in 1993. Over the course of the next 15 years, Mr. Kltich and his wife raised three children in the duplex. Then, in 2008, the Klitches performed extensive renovations and combined the two duplexes on the property into an 8-bedroom single-family home.
Nearing retirement age and concerned that they would not be able to afford Austin’s increasing property taxes, the Klitches decided to lease their home on a short-term basis. However, the Klitches’ ability to rent their home is impaired by the City’s six-person occupancy cap and invasion of the freedom of assembly and right to privacy, among others.
If Mr. Klitch and his family lose their ability to rent their home, they will be forced to either sell the property or redevelop the lots into more dense housing.
Hill, Allegra and Andrea Alvarez, “Austin’s Tornadic Short-Term Rental Regulations,” Austin American-Statesman, May 24, 2016.
Hunker, Kathleen, Bringing Down the Housing Restrictions, Texas Public Policy Foundation, May 2016.
Zaatari et. al v. City of Austin et. al