Wave of Lawsuits Emerge as Short-Term Rental Owners Battle Regulations

Regulators have been going after short-term rentals. Now homeowners are fighting back.

A group of 89 property owners in Summit County, Colorado filed a federal lawsuit, alleging that strict restrictions on short-term rentals infringe upon their constitutional rights and jeopardize their livelihoods. The homeowners in Summit County Resort Homes argue that the new regulations create disparities between “short-term rental haves and have-nots,” meaning those who rely on income from short-term rentals and homeowners who don’t. They allege that the regulations reflect the county’s unwarranted bias against such rentals. They claim that these restrictions violate their fundamental rights to property ownership and rental.

County commissioners were informed about the possibility of litigation in April, and the county attorney expressed confidence in successfully defending against any legal challenges. Summit County had implemented changes, including transitioning from short-term rental permits to licenses, and imposing caps on non-resident licenses and the number of yearly bookings.

This is not a lone instance. 

Earlier this month, approximately 300 property owners in Indian Rocks Beach, Florida were preparing to file a lawsuit against the mayor and city attorney later this week. Short-term rental property owners in the city feel a new ordinance — which restricts the number of guests to 12, limits occupancy to two people per bedroom, and requires short-term rentals to meet state building codes for new construction — goes too far. 

And the short-term rental association in Dallas, Dallas STRA, is raising money to be able to pursue a case at the district court level. Fort Worth short-term rental owners are also working on a lawsuit, collecting over 100 plaintiffs.

We spoke to Tiffany Edwards, president of Coletta Consulting. Edwards has over 15 years of government and advocacy experience in both the public and private sectors, as well as the same years’ experience in vacation rental operations.

She said, “Engaging in lawsuits should always be a last result. They are extremely costly and can be dragged out for years. For example, the final decision in Austin [ which found its ordinance unconstitutional] took over five years. This extended time often enables an ordinance to remain in place and can effectively shut down a business or prevent its ability to operate.”

Additionally, Edwards argued that since in many locations judges are elected, their rulings on short-term rental laws can be extremely biased.

That being said, Edwards also acknowledged that lawsuits are often necessary. “Historically our greatest successes are when a plaintiff can argue an incorrect procedure of drafting an ordinance, a ‘takings’ [such as local government encroaching on private property] or the absence of a grandfather clause, proving a restriction of interstate commerce (ex: New Orleans and Austin) and that local ordinance supersedes what is granted to them by state statute.”

To sum it up, we will see more of these.

Steamboat Springs Tax Revenue

Steamboat Springs, Colorado noted a 14.3% decline in accommodations tax receipts for June 2023 compared to last year. Moreover, the short-term rentals tax in Steamboat Springs contributed $564,579 in revenue during June. This brings the total collection from the new short-term rental tax to over $5.5 million for the first half of the year. Additionally, its building use tax generated $791,832 in revenue for June, Steamboat Pilot reported. 

Vacation Rental Payment Platform YapStone Gets Sold

YapStone, which offers the payment processing app VacationRentPayment, is set to be acquired by Velo Payments. The deal is slated to close later in August.

Using Velo’s open banking platform, this merger aims to streamline payments across international borders, and reduce the cost of transactions. 

Michael Orlando, CEO of YapStone, said, “The prospect of synergizing with Velo Payments opens a new, exhilarating chapter for YapStone. We can fortify our commitment to simplifying and optimizing the vast array of payments within the short-term and vacation rental industry, while also expanding our horizons into other dynamic marketplaces.”

Hampton, New York Postpones Decision on Short-Term Rentals

The fate of short-term rentals in Hampton, New York, remains uncertain, as the city council has postponed making decisions on pending applications until November. This delay is attributed to the council’s desire to thoroughly examine the potential effects on the neighborhoods involved.

Although certain short-term rentals are presently permitted in Hampton, they must adhere to stringent regulations. The expansion of criteria through a city ordinance has been temporarily suspended. Next month, the city is scheduled to receive a briefing on the legal implications that approving short-term rentals might establish.

Elsewhere on Skift

Saudi Arabia has undertaken measures to bolster its tourism sector as a component of its Vision 2030 initiative. This effort includes the introduction of a seasonal campaign titled “Rethink Summer.” The nation currently holds the distinction of having the most substantial hotel construction projects under way in the Middle East. Ask Skift, our artificial intelligence chatbot, listed four reasons why the kingdom is planning to invest more than $1 trillion in the sector in the next decade. 

Ask Skift: Why Is Saudi Arabia Making a Big Investment in Its Tourism Industry?