Public Notice: The Mystery of Type 3 STRs

You can hardly make it through a City Council meeting these days without someone decrying Austin's current housing shortage. Yet despite the alleged crisis, Austin continues to allow 25% of units in multifamily complexes located in commercial zoning districts to operate as full-time short-term rentals.

In practice, this means up to a quarter of apartments in many areas may be legally off the market – not available for actual Austin residents to rent and live in. If our housing shortage is as severe as city leaders say, why are we letting this particular brand of lunacy stand?

In Austin, short term rentals in multifamily complexes are called Type 3 STRs (Types 1 and 2 are single-family, owner-occupied or not). As the sprightly prose of the ordinance states: "... For a short-term rental use regulated under Section 25-2-790 (Short-Term Rental (Type 3) Regula­tions), located in a commercial zoning district, no more than 25% of the total number of dwelling units at the property ... are short-term rental (Type 3) uses as determined by the Director." By comparison, full-time Type 2 STRs and Type 3 STRs located in noncommercial zoning districts are both capped at a far more reasonable 3%.

For just one example of how this plays out on the ground, check out a website called The Guild, which currently rents STRs in Austin, Dallas, Miami, Cincinnati, and Denver. Though the website says it's "a collection of hotels," in Austin, at least, all properties listed are apartment buildings – none are actual hotels.

Currently, The Guild lists 23 STRs in the AMLI on 2nd, 27 in the AMLI Downtown, 20 in the Arnold, 21 in the Beverly, 12 in the Lamar Union, an undisclosed number at the Indie (which, unlike the others, doesn't list its STR licenses), plus a whopping 47 in Corazon. And those 150 apartments – all in desirable areas on transit corridors – are just The Guild's holdings; that doesn't count the hundreds, likely thousands, of additional apartments listed as full-time STRs on Airbnb or Vrbo.

The impacts of this harebrained ordinance will only become more pronounced as the Austin market increasingly focuses on multifamily development (multi-unit would be a more apt term – few families are actually occupying the luxe new projects targeted to affluent singles). The city demographer's must-read Multifamily Reports note that the 4th quarter of 2018 saw over 5,000 new units submitted for site plan review – "more than any other quarter in modern history" – and that 2Q19 "blows the top off" that number with more than 6,400 new units submitted. Similarly, the demographer's Pipeline Summary shows 22,533 multifamily units currently under construction, with a total of 66,685 incoming units as of the second quarter of 2019. Too bad 16,670 of those new units can simply go off the market as short-term rentals, depending on their zoning.

With the land development code rewrite pushing upzoning across many neighborhoods to create more housing for Austin residents, it's hard to justify letting up to a quarter of all commercially zoned apartments stay off the market as full-time tourist digs. If City Council is serious about addressing Austin's housing shortage, this should have been fixed yesterday. Fortunately, there's still time to close this gaping loophole in the new code – and put these units back on line for Austin residents.

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Thursday on Barton Creek: Start your evening next Thu., Oct. 3, at the Equal Justice Center's 18th Anniversary Celebration Golf Tournament at Peter Pan Mini-Golf: "All the mini-golf you can play. All the justice you can support." 6:30-8:30pm at 207 Barton Springs Rd. $25 donation; $5, kids; $20, students; bottomless beer cup $10, and it includes food from Franklin Barbecue and Taste of Ethiopia. You'll have to leave early, though, to make it down the street to Zilker Park for Sen. Kirk Watson's 14th annual Concert Under the Stars at 8pm, with Grammy Award-winning singer-songwriter Bruce Hornsby & the Noisemakers. Tickets are $50 to $10,000.