Should Air BnB (short term rentals) be regulated in Sioux Falls?

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The short answer is YES, but it is complicated. I’m all for regulating this industry but we should probably only do some small changes instead of broad sweeping changes that will hurt the industry.

One thing to remember is that most of the people who manage and own short term rentals in Sioux Falls are local owners who use local contractors and local goods and services. In other words any capital made from these rentals is circulated back into the local economy unlike a franchised hotel.

Minnehaha county has dialed back a bit on their recommended regulations;

Regulations for these short-term rentals would include:

  • A maximum occupancy of no more than three people per bedroom,
  • Requiring a minimum of one off-street parking space per guest bedroom,
  • The properties must be registered with the state as a vacation home,
  • And contact info for the owner/manager of the rental must be both submitted to the county planning department and displayed within the home.

I think two off-street parking spots is plenty. But instead of regulating how many people can stay in a room or how many cars can park there there should be regulations when it comes to registration of the property (state, city and county). There should also be quarterly health inspections, a small registration fee and a BID tax.

The city has just been mulling the idea, but there is talk they want to remove short term rentals from residential neighborhoods. First the obvious, if these are NOT in residential neighborhoods, where would they be? This of course would be an attempt to eliminate the short term rental business in Sioux Falls to delight of the hotel industry.

Short term rentals already have to follow the same ordinances as a homeowner or a long term rental so any other regulations would be above and beyond. But since this is a hospitality industry operating in Sioux Falls there should be a BID tax applied. All the other regulations are simply mushy-mash busy work bureaucrats cooked up.

$200 a day rent for Downtown Sioux Falls Loft Apartment

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Yes, that is the daily rent, for the month it will cost you $5,950. I purchased my home 20 years ago, before I bought the house the rent I paid for a nice 1-bedroom behind U-Haul in Pettigrew Heights was $350 a month which included gas and garbage service. For $5,950 a month you could pay a mortgage on a 1 million dollar home. You can rent a decent hotel room in Sioux Falls for about $100 a night. Heck even Hotel Phillips only 2 blocks from this loft charges between $140-$220 a night. An VRBO or Air BNB is even cheaper. This 3 bedroom short term rental in McKennan Park will run you about $162 a night. Even if you had 3 people renting the loft, they would still have to pay $2,000 a month in rent. In fact what you would pay for rent in a year for this place ($70K+) was more then the original purchase price of my home.

Normally I wouldn’t give two rips about what a wealthy property owner/developer in DTSF charges for rent, I’m a free market person and if they can get that kind of ‘rent’ money, good for you. Where I take issue is that this building received a facade easement grant* (basically the city gives private developers money to fix up their historical facades with little oversight). I asked a councilor recently if the half-Inch faux brick that they glued on the front of Lucky’s facade was considered historic? Faux brick has been a trend lately, but I still think it looks fake. I thought one of the requirements of historic restoration was for it to be actually historic, you know, like the fiberglass bulstrades on the Pavilion’s new roof.

Besides the atrocious monthly rent, this really doesn’t make the city look very good when they are handing out TIFs for condo parking ramps and facade grants DTSF but on the other hand are promoting(?) affordable and accessible housing.

*The facade easement program was mysteriously and suddenly re-instated by the urging of Central District Councilor Curt Soehl. No surprise the 1st recipients for the grants were the former campaign treasurer for Soehl (for the 9th and Grange coffee shop that he is restoring) and the investment group that owns the Lucky’s loft who has given thousands of dollars in campaign contributions to Mayor TenHaken and his various supported candidates. The program is nothing but a pay to play payback to these campaign contributors. The program was originally ended because there really is NO need for taxpayers to be propping up these private developers.

The city really needs to get out of the wealthy developer welfare program business and start incentivizing affordable housing DTSF with programs that help build housing density while focusing on the individual property and small rental owners. Instead the city’s solution is to build slab on grade tract homes in a cornfield in Southern Brandon. Even a chicken playing tic-tac-toe is smarter than that.

UPDATE: In 2017 Rapid City used a very small TIF to support affordable housing (H/T Mike Zitterich). It was 5 years ago, but for a $26,500 TIF the developer was able to build 5 Town Homes – the cheapest with the price tag of $109K. Even with inflationary adjustments, that same place would only be about $130-150K today. It was built on a blighted empty lot.

We could legally do this in the core of the city, and we could do it for multiple properties.

Here is a video of the project;

Minnehaha County Commission trying to put the cat back in the bag on Short-Term vacation rentals

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I guess short-term rentals in MC have become the wild west of vacation rentals;

The Minnehaha Planning Commission is looking to propose a clearer definition – and tighter regulations – for Airbnbs and other short-term vacation rentals in the county. Here’s what an early draft would mean for local rentals.

While I support some regulation, and many neighbors do also, I think some of the recommendations are extremely broad, ignorant and unneeded.

It would also create a separate conditional use permit specific to Airbnb-type rentals. That permit would have its own set of requirements.

I agree there needs to be registration, but it should be a simple filing fee of $50 or so, not $500 per year. I also think the city should piggyback on the proposal and impose quarterly health inspections to insure there are no issues with bed bugs, plumbing, HVAC, etc. just like hotel rooms. There should also be a county and city BID tax applied to such entities. But there are some pie in the sky proposals;

  • Vacation rentals can’t have more than two guests per bedroom.

There is absolutely NO way of enforcing this. Is the county and perhaps the city going to show up in the middle of the night to every single rental when they have a resident and make sure this rule is being abided by? Hell No! Making rules you won’t or can’t enforce reminds me of the tobacco ban in city parks or texting and driving. When you make a law, and ordinance or rule, you must also have a plan for enforcement, what is that plan?

  • Minimum parking requirements are one space per guest. (So, if you’ve got an Airbnb that sleeps 12, you need 12 parking spots minimum.)

This one made me bust up laughing. So if a family of 6 rents a place, they have to have 6 parking spots for the two adult parents and 4 children? Or the individual business traveler who takes and UBER to their destination? While I do support some kind of parking requirement, it should only be a minimum two spots per unit. I have used VRBO in the past, and their has only been ONE parking spot provided (that I didn’t use).

There is also NO reason to regulate this private property industry past health inspections and registration since the industry does a pretty good job of regulating BAD clients. You can’t just show up an hour before booking and move in, you have to be vetted by the the service providers and can be denied for any reason.

I have to say the reason I think short-term vacation rentals are so popular is because they are more affordable then hotel stays and my experience has been stellar. It’s like having your own condo on vacation without room service but the comforts of home. Here is a picture of my building patio view at my last VRBO which cost about 75% less then a hotel room miles from the beach.

I wonder if the MCC even did a nationwide study of what other cities and counties do, or if they just listened to some whiny neighbors on Wall Lake?

Short term rentals DO need regulation, but it should be applied in baby steps, and it should have a plan for enforcement.

Sioux Falls City Council considering banning short-term rentals in residential neighborhoods

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Imagine my surprise when I read this article this morning;

Members of the Sioux Falls City Council have begun conversations with the city attorney’s office about drafting an ordinance that could include prohibiting any new listing in residential-zoned neighborhoods. And that would all but eliminate the use of Airbnb and VRBO in Sioux Falls, where nearly every property listed on those sites now is located.

Right now, short-term rentals are subject to few regulations. State statute requires that rentals where occupants stay for fewer than 28 nights at a time remit sales tax. The city of Sioux Falls does not regulate short-term rentals. And at the city level, there’s almost no oversight from municipal government.

For a time, under Mayor Mike Huether, the city planning office held that Airbnb-listed properties fell under the Sioux Falls bed and breakfast ordinances, which required residential properties to meet minimum parking standards. But that interpretation on short-term rentals did not come with any enforcement. And since Mayor Paul TenHaken’s administration took over, the city has shifted to a position that existing ordinances are silent on short-term rentals listed on online platforms like Airbnb, VRBO, Furnished Finder and Guestly.

I find how this is evolving to be interesting considering former city councilor Erickson has a pretty good family business with short-term rentals and was rumored to convince former Mayor Huether to lift the restrictions on them, which he did, I believe through executive order or simply instructing the health department to NOT inspect them anymore.

Rumors aside, I do agree Schmidt;

Rather than overhauling the city’s rental ordinances, Sioux Falls Experience Director Teri Schmidt said the council could enact changes that level the playing field between short-term rentals and the traditional lodging industry.

Schmidt’s convention and visitors bureau organization is funded by a $2 fee paid by hotel and motel guests visiting the city, which is used to lure potential tourists to the area by marketing Sioux Falls attractions.

Those efforts drive demand for lodging in the city, and Schmidt says that includes short-term rentals. But the short-term rentals are not subject to the $2 fee, therefore not directly contributing to Sioux Falls’ tourism industry, she said.

“There is no doubt that with the increase in the number of Airbnbs in South Dakota, hotels are losing that business. Otherwise, they’d have stayed in a hotel,” Schmidt said. “They need to pay their fair share into the (business improvement district).”

Soehl said a formal proposal likely won’t come forward until spring.

Not only should the short term rentals pay a BID tax, they should also be registered with the city as short-term rentals AND be subject to at least ONE surprise inspection per year by the health department.

I have used VRBO in the past and there is a screening process, that is actually way more restrictive than using a hotel. I think there are many misconceptions about who uses VRBOs. Users are NOT renting a home in Sioux Falls to party like it’s 1999. If the city council tries to do this, there will be backlash.

CVB & Hoteliers talk ‘BID TAX’ on Air BNB

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I guess the CVB had a luncheon (today?) and a little birdy told me the discussion quickly went to how Air BNB is hurting the hotel industry in Sioux Falls and maybe it is time to start charging them a Bid Tax.

Gee. I wonder whose idea that was? Probably some idiot blogger.

The operators of Air BNB already have skirted paying other lodging taxes (they pay sales taxes) and avoid the same health inspections Hotels, Motels and Bed & Breakfasts have to endure.

Maybe it was just idle bitching, but I have never known the leader of the CVB to remain idle to long.