Short term rental key in downtown city

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FAYETTEVILLE — Most of the city’s short-term rentals are downtown, where vacancies are low and rents generally higher.

City Geographic Information System employees work on an online map showing the type and location of registered business licenses in the city, including those for short-term rentals. The map shows 289 short-term rentals registered to date. Of these, approximately 60% are within two miles of Dickson Street and West Avenue in the city’s entertainment district.

Owners of short-term rentals, such as those listed online on Airbnb and Vrbo, must obtain a business license and building inspection to operate legally in the city. The deadline to apply is Saturday.

City regulations classify short-term rentals as Type I or Type II. Type I rentals are homes that have full-time occupants with one bedroom made available for overnight stays, or the entire home is made available to guests when its occupants are out of town. Type II rentals are residential units that welcome guests year-round.

Most of the short-term rentals shown on the map are Type II – 241 of 289. About 140 of the Type II rentals are within 2 miles of Dickson Street and West Avenue.

The downtown real estate market is tight. The Center for Business and Economic Research at the University of Arkansas counted 339 multifamily housing units for rent downtown, excluding student housing complexes, in the second half of 2021. Of these, seven were vacancies – about 2%. The boundary was generally Maple Street on the north, College Avenue on the east, Martin Luther King Jr. Boulevard on the south, and University Avenue on the west.

Rent is also generally higher downtown than in other parts of town. Average one-bedroom housing, excluding student housing, was $761 per month, compared to $683 for the rest of the city. The average two-bedroom unit is $970, compared to $793 citywide. Three-bedroom units cost an average of $1,403 downtown, compared to $1,015 in the rest of the city.

While the center hasn’t specifically tracked the effect of short-term rentals on the downtown housing market, the basic principle of supply and demand certainly applies, said Jeff Cooperstein, senior research assistant at Walton College of Business.

“People doing these short-term rentals are definitely making it harder for people to actually try to live there, not just vacation there,” he said. “I don’t think there is any doubt about that.”

Ben Manatt said he had lived in an apartment complex near Meadow Street and Church Avenue for nearly 15 years before receiving notice last year to move out due to renovations. He said he was quick to find another apartment near the city center, but the rent was significantly higher. The rent for his old place was $600 a month and the rent for the new place was $1,200 a month, he said.

Manatt returned to the Meadow Street apartments a few weeks ago after renovations were completed. The rent is now $1,000. He said some of the other units are now short-term rentals.

“With all of this, these were households, these people had to go somewhere,” Manatt said. “I know we want to develop growth and bring in tourism, and that’s all great. It’s Fayetteville and northwest Arkansas. But at the same time, the vibe of Fayetteville can’t really survive the shift.”

Other cities have faced housing issues in neighborhoods resulting from short-term rentals. A bill making its way through the Arizona legislature would repeal a 2016 ban on local governments’ ability to regulate rentals. Lawmakers say the 2016 law had unintended consequences, according to a January article from tucson.com.

In some areas, investors have bought entire blocks and converted housing into short-term rentals. According to the article, up to 40% of residential properties in tourist destinations such as Sedona are short-term rentals. The repeal of the 2016 law would return control to local municipalities.

Short-term rentals have driven up rental rates, contributed to soaring real estate prices and served as a driver of gentrification in historically black New Orleans neighborhoods, according to an April op-ed on nola. .com.

New Orleans has largely failed to enforce its own rental rules, the editorial says, and many are operating illegally. The rules include where rentals are allowed, limits on the type of properties that can be rented out short-term, and occupancy limits. The city administration recently announced that short-term rentals would be treated like any other commercial use in a residential area, requiring a permit and building inspection.

EVOLVING MARKET

Fayetteville has updated information on short-term applications and approvals, which differs slightly from what’s available on the online map. As of Thursday, the city had received 503 applications for both types of short-term rentals, of which 293 had been approved.

This leaves 210 still under review or awaiting more information. Owners of short-term rentals had about a year to apply. The city council passed by-laws for short-term rentals in April 2021 and extended the application period several times thereafter.

The regulations mainly deal with security measures and obtaining a business license to operate. No more than 2% of all housing units in the city can be short-term rentals, and no more than one unit or 10% of all units in a multifamily building can be short-term rentals.

However, the city code does not address the concentration of short-term rental units in a particular area. The council floated a proposal that would have limited the number of units on a block, but it never reached the final draft of the ordinance.

The data the city collects from the registry could help employees better understand the dynamics of the effects of short-term rentals on neighborhoods, and the city council could potentially make policy decisions based on that information, said Jonathan Curth, director of development services.

“The order has been amended three times since it was passed,” he said. “I wouldn’t be shocked if it was changed once or twice more.”

After the Saturday deadline, owners of Type II short-term rentals will need to obtain a permit from the Planning Commission to operate legally.

Charlotte Maggard of Bodkin Properties said she had managed four homes near the town center that were once long-term rentals and were later renovated for short-term use. Different companies started running them after they became short-term rentals.

For example, a two-bedroom, one-bathroom home on Mitchell Street, west of campus, recently rented for $750 a month, Maggard said. The owner has renovated the house and it now welcomes guests all year round. The house is booked for the week for graduation at the University of Arkansas, she said.

“I guess you would make that much money in four days,” Maggard said.

The city’s bylaw limiting short-term rentals to 2% of all residential units is helping to create a mix of tourist accommodations and residents’ accommodations, said Logan Humphrey, owner of Cohobnb, a local business that runs multiple rentals. short term in the region.

“That 2% cap should be considered 98% instead,” he said. “Ninety-eight of the 100 doors you knock on will be Fayetteville residents.”

It’s the nature of short-term rental business to focus around a city’s attractions, Humphrey said. Being centrally located helps attract tourism dollars to the city. Alternatively, tourists may choose to stay in other towns in northwest Arkansas, such as Bentonville, he said.

Tourism and residents who live in a community go hand in hand, Humphrey said. Tourism helps make a downtown great, and the residents who live there contribute to a culture that attracts tourists, he said.

“There will always be concessions there,” Humphrey said. “I don’t really have an answer as to what should or shouldn’t be done based on proximity and location. But I know that’s where our tourists want to stay.”

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