Town council attempts to thread the needle on short-term rentals, preliminary discussions held

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The Little Elm Town Council discussed big picture short-term housing regulations last week as town staff prepares to draft the final ordinance in the coming months. Little Elm has been lacking specific language in its ordinance code on this issue as other cities surrounding the town have acted on rentals in many different ways. 

Mayor David Hillock seemed excited to welcome short-term rentals into the town and officially adopt them as a new way forward. With some restrictions, the town was looking to thread the needle between “encouragement” and protecting the integrity of the communities. By current estimates, there are about 15 to 20 properties that are short-term rentals in the town.  

“I want to encourage short-term rentals here. Especially until our hotel is finished, I want to encourage and promote its ability,” Hillock said. 

The town highlighted three different aspects it wants to install into the wording of the future ordinance. The town would pursue the right to inspect all short-term housing units, impose a $50 inspection fee and reserve the right to fine all rentals not in compliance up to $500. It would also ensure that the residential neighborhood, and the people living around a rented property, will not be “adversely affected”. The town would also institute a hotel operation tax on the property.  

“We want to take the approach that this is somewhat of a destination community, and there is not a lot of hotel stay opportunities,” Town Manager Matt Mueller said. “We do not want to be shutting out rental properties but have them coexist in neighborhoods nicely.”

Councilman Neil Blais was concerned the fee for noncompliance was too low. He argued that if the property is profitable enough, operators would gladly pay the fee of $500 and continue to violate to law. He also said, in light of the impending slashed local budget for the government, that the cost of the inspection may need to be higher. 

“In our general budget, we should not be supplementing someone making money,” Blais said.  

Mueller pointed to cities like Grapevine that have attempted to push out short-term rentals, which are rentals that last under 30 days, completely. These efforts have met opposition in the courts and caused controversy in the community. Mueller rejected that direction and instead pointed to the city of Waco as a model to go forward. 

These measures include limitations on how many people can stay in one room if an operator is only renting out one room. It also stipulates how many vehicles can be parked on the property, an issuance of licenses to rent out your home and not allowing any renting for the purpose of throwing a party. Mueller said the “biggest part” would be the licenses and revoking them if the operator has a consistent problem. 

There was some public pushback from this ordinance. A renter, who is also the president of the Sunrise Bay community, said Coppell only charges $20 as a fee for renting and $25 for an inspection. He argued that renters should not have to pay a hotel operation tax either, seeing as the rented properties did not violate zoning or usage law. 

Director of Community Integrity Fred Gibbs said that short term rentals did not fall under the usage of a residential home however, running against the spirit of the usage law. Gibbs argued that the hotel operation tax would have to be employed because renting out a home does not comply with the intended use of the residential space. Citing a court decision, the resident responded by saying that even though it is only for “one day or a week” the property was still being used residentially. 

This argument will likely continue as the final ordinance is drafted. Mueller said he would be "happy to work" with renters to get their take on the problem while the ordinance is being drafted.


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