A bid by the legislature to stop cities from banning short-term rentals has local stakeholders concerned the bill could strip residents of their constitutional rights to petition the government and also unravels hard-won compromise between rental operators and neighbors on the island.
Like other Texas tourist destinations, Galveston’s short-term rental sector has grown dramatically in the past decade and with it attempts to regulate the market.
In Galveston, residents can petition the Galveston City Council to grant their neighborhood a special zoning district that prohibits new short-term rentals if 75 percent of the homeowners agree, according to city land development regulations.
Any law that would revoke the ability of islanders to petition for zoning in their neighborhoods would trample on the constitutional right of any U.S. citizen to petition a government official to show dissatisfaction of a law, said Mary Branum, president of the Short Term Rental Owners Association of Galveston.
While attempts to regulate the short-term rental market has created tension in many cities, this solution works in Galveston, Branum said.
The petition solution came after many months and much discussion in Galveston about complaints about so-called “party houses” in quiet neighborhoods and concerns from people who invested in short-term rental properties and expected to be able to get a return on that investment.
“We’ve been able to maintain a delicate balance,” Branum said. “I’m also sympathetic to the residents. I’m also a resident.”
The bill proposed by Rep. Angie Button would strip Galveston of its ability to ban short-term rentals in specific neighborhoods, Branum said.
Requests for comment to Button’s office were not returned by deadline.
Galveston has three neighborhoods with the rental-banning zoning district: Colony Park, Cedar Lawn and Adler Circle.
It’s important for cities to have the local control over short-term rental regulations because each place has different needs, said Claire Reiswerg, co-owner of rental property company Sand ‘N Sea Properties.
“It unravels the work we put in, Reiswerg said. “There are so many people here who work hard to fashion Galveston into a livable place.”
The system works for residents, Adler Circle resident Carolyn Clyburn said.
Adler Circle adopted zoning that banned short-term rentals in January.
“I think short-term rentals have been a boon to Galveston but I can also see that some neighborhoods do not want them,” Clyburn said. “I think we have good ordinances here.”
The state shouldn’t get involved; it should leave it up to the cities, she said.
The proposed legislation isn’t trying to impose on residents, but is trying to protect property rights, said Philip Minardi, director of policy communications for HomeAway, an international vacation rental marketplace.
Cities shouldn’t be able to ban all short-term rentals, Minardi said.
“We now have a bill that we believe gives cities the right to regulate this industry in a responsible way,” Minardi said. “It addresses a lot of those concerns that cities have about local control.”
Galvestonians could still petition for neighborhood bans on short-term rentals owned by people who don’t live in the city, he said.
But the neighbors couldn’t ban owner-occupied rental properties, he said.
“The reality is bans don’t work,” Minardi said. “It doesn’t give cities the tax money that it needs. It drives the industry underground.”
Although the tourism promoting Galveston Park Board of Trustees is funded by hotel occupancy tax, which short-term rentals must pay, the board wants a balance of tourism interests and residents’ quality of life, Chairman Spencer Priest said.
“We need to support the process that is currently in place,” Priest said.
The park board does support other bills currently in the legislature that allow short-term rental owners to report their hotel tax through online agencies if those agencies follow guidelines that ensure cities collect all tax, Priest said.
Galveston has a good system, but other cities have overstepped on people’s ability to do business, said Rep. Mayes Middleton, who represents the district Galveston is in.
“The bottom line is that Galveston’s plan does not need fixing and balances private property rights with local liberty, while Austin’s is a prime example of local overreach,” Middleton said.
The bill prohibiting bans on short-term rentals could be discussed in the House of Representatives committee again as soon as Thursday, Reiswerg said.
She wants to ensure control is kept in the local field, where stakeholders can talk about what’s best for Galveston, she said.
“We see people,” Reiswerg said. “We have relationships. We live together and we figure out what’s best for us.”