FAYETTEVILLE -- The city likely will soon reach its cap on the number of standalone short-term rentals allowed to operate, meaning hundreds would be forced to stop or have water service shut off, a City Council committee discussed Wednesday.
The City Council voted in July to limit the number of standalone short-term rentals that can operate legally to 475. Only homes that accommodate guests year round, without a full-time occupant living there, contribute to the cap.
The city has had regulations for short-term rentals since April 2021. City code describes them as dwellings rented out to tenants for fewer than 30 days. The city classifies the rentals as either Type I or II.
Type I rentals have a full-time occupant living in the home with a room rented out, or the entire home is rented to guests for only brief periods. Type II rentals have guests most of the year without a full-time occupant.
Owners of short-term rentals must get a business license and building safety inspection to operate legally in the city. Type II rental owners have to take the additional step of getting a conditional use permit from the Planning Commission.
The council's Ordinance Review Committee, made up of four of its members, on Wednesday discussed enforcement and other aspects of the regulations. It took no vote but plans to meet again at 5:30 p.m. Sept. 12.
Committee members agreed short-term rental owners who operate illegally or violate rules should have water service to the property shut off promptly after having due process. The process would largely mimic the city's existing procedure for revoking a business license.
There are 395 Type II rentals licensed in the city, according to Development Services Director Jonathan Curth. Thirty-four more are pending review at the Planning Commission. If all are approved, that would leave 46 more permits available.
The city hired a consultant to audit the number of short-term rentals operating legally or illegally. So far, the consultant firm has found 183 short-term rentals operating illegally, with 122 more having an unknown status.
The city already has a process to revoke business licenses. As it stands now, short-term rental owners can have a hearing with the mayor's chief of staff if they have a business license and are accused of violating a rule, such as allowing parties, piled up trash or illegal parking. City administrators can revoke the license, suspend it for 30 days or put the property owner on probation for 90 days. This has never happened, Curth said.
Enforcement is easier if the property owner is operating a short-term rental illegally, without a license or permit. The way code is written now, the city could refer the case to the city prosecutor. However, that process can take months, and any punitive action would be up to a judge, City Attorney Kit Williams said. If the property continues to operate illegally, it can have its water service shut off.
Committee members agreed involving the criminal court system would not sufficiently address issues and said they think shutting off water service as a last resort would be the best option instead. Council member Scott Berna pointed out that once the city hits the 475 cap, a property owner without a permit wouldn't have the option to get one.
Council member Sarah Moore said property owners have had more than two years to get into compliance, and the cap was meant to help address the city's severe lack of long-term housing options for residents.
Council member Holly Hertzberg said she wanted the full council to adopt the rule about shutting off water service soon. Otherwise the cap should be raised to a higher number, she said.
City staff agreed to present a written draft of the proposed rules at the next committee meeting.
On the web
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