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

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.