Why reasonable oversight of short-term rentals would protect Arkansas communities

Since the advent of Airbnb and Vrbo, short-term rentals have become an increasingly popular option for tourists, business travelers, and people looking to rent their homes for extra income.

But allowing short-term rentals to operate without proper oversight hinders the ability of local governments to protect their communities.

The Arkansas House Committee on City, County and Local Affairs earlier this year wisely rejected a proposal, known as Senate Bill 197, that would have handcuffed local governments from enacting reasonable regulations over short-term rentals. And in June, the Little Rock Board of Directors overwhelmingly adopted common-sense regulations for short-term rental properties, including requiring annual inspection fees, the installation of smoke alarms and carbon monoxide detectors, and proof of insurance. Other cities, including Hot Springs, also have put in place rules to protect local residents and guests at short-term rental properties. State lawmakers should not stand in the way of local leaders doing what’s right for their communities.

There is no dispute that property owners should have the right to legally rent their homes to earn extra income. But there need to be safeguards in place to ensure safety standards and prevent artificial inflation of housing costs.

State Rep. Brit McKenzie, R-Rogers, the sponsor of the bill that ultimately failed to advance in the House committee, claimed to the Arkansas Democrat-Gazette that “short-term rentals are a way for your neighbor, your auntie, or your cousin to generate some income.”

Eliminating regulations on short-term rentals is not actually a win for the little guy. In reality, unregulated short-term rentals often provide a way for big businesses that already have structural advantages to unfairly tilt the playing field even more in their favor.

Without proper oversight, online vacation rental behemoths like Airbnb and Vrbo are effectively allowed to operate lodging businesses in the form of short-term rentals without being required to pay the same taxes and follow the same regulations as hotels. That’s why all lodging businesses should be subject to the same rules to ensure a level playing field where competition can thrive.

Without regulations to stop them, large corporations are beginning to purchase all of the affordable houses in a neighborhood or metropolitan area. This is exacerbating the homelessness crisis across the U.S. by taking some of the country’s last affordable housing stock off the market.

Tourism-heavy regions are often facing housing shortages for workers. Federal Reserve Bank of Philadelphia President and CEO Patrick Parker recently called on local governments to limit the number of short-term rentals “to ensure that local residents have places to live.”

Short-term rental homes are also creating safety concerns, due to a lack of mandates that would require life safety devices. For example, they may not be required to install life-safety rings for backyard pools or fire extinguishers in kitchen areas. There is a reason why real estate owners subject to local laws are required to abide by these common-sense measures: to save lives and protect guests.

Further, without proper regulation and monitoring, short-term rental homes are increasingly becoming a hotbed for the expanding sex trafficking industry. That puts everyone at risk, including the neighborhoods where the short-term rental homes are located.

Beyond safety, short-term renters have less of an incentive to treat the community they are temporarily visiting with care and respect. Residents in communities with high concentrations of short-term rentals have raised concerns about noise and lack of maintenance that undermine the residential quality of neighborhoods.

We already have evidence that taking a hands-off approach to short-term rentals leads to unintended consequences.

In Arizona, a 2017 law that prohibited localities from restricting the use or regulation of vacation and short-term rentals was eventually modified to require rental hosting platforms to collect and remit occupancy taxes. The statute was also revised to allow local governments to require property owners to obtain local regulatory permits or licenses.

Arkansas, including Little Rock, should not repeat the mistakes of Arizona and other states. Adopting the city ordinance would ensure a level playing field for small business owners and prevent unintended housing and safety consequences for local residents.

By establishing reasonable oversight over short-term rentals, we can work together to find solutions that strengthen Arkansas communities.

Editor’s note: Danny (Chintu) Patel is a Conway, Arkansas hotelier and the Arkansas Regional Director for the Asian American Hotel Owners Association (AAHOA), the largest hotel owners association in the U.S. and whose members collectively own nearly 90% of hotels in Arkansas. The opinions expressed are those of the author.