Debriefing Monday’s Meeting

Monday night's City Council meeting lasted 6-hours. View the recording.

After numerous citizen comments, the council went through each part of the proposed ordinance to determine where there was consensus.

Notable exceptions were in the “transfer of permit” in R1 areas. Kathy Sanford O'Neill wants permits and the STR use of the property to terminate when the property is sold. This was a change in most of the other councils opinion and there was a lot of discussion about this. It ended with a request to the city attorney to research if this could be done without triggering a “taking” by the city. Of course, the termination of permits is the most significant measure for us as we wish to restore the neighborhoods to permanent residents.

Kathy also modified the “stranded residence” language to remove the % stipulation- which is included as an “or” (properties adjoining the residence are STRs OR the block has 75% STR density) Kathy removed the density % - because the "or" allows either to be true for a CUP to be favorably reviewed. The council voted to change the language from describing a percentage to shared property lines. The “stranded residence” is a rare and special circumstance that should not be used to open the way for more than a handful of new STRs.

There was discussion on penalties for STR non-compliance, which Tom Musselman wanted to be more severe. Jason was instructed to come back with more specific language on infractions and penalties. Notably, the penalty for operating an STR without a permit would be a ban on operation for one year. And operating at a guest capacity in excess of a permit limit and failure to timely pay taxes would each result in escalating fines and a potential permit suspension.

The council was clearly feeling the heat on the looming timeframes. The council has 20 days to acquire findings on this language before being required to meet again on March 21st We do not anticipate major changes to the ordinance. We expect it will be voted into law.

- Ray Rodgers

REBUTTALS TO PRO-STR COMMENTS

I am offering rebuttals to the arguments provided in the public comments made by pro-STR citizens in order to provide you with talking points. - Michael Perkola

Claim: The ordinance violates property rights.

Rebuttal: The right to a peaceful existence in a residential neighborhood supersedes the opportunity to turn a home into a business. A long-term rental for a permanent residence is clearly different from the operation of transient lodging.

Claim: The process was rushed and closed/backdoor.

Rebuttal: Kent Myers, Jason Lutz, and their team have devoted 75% of their valuable time to this project for more than a year while holding public events to receive input from citizens. There have also been many public council meetings on this topic, all of which were recorded and are available on YouTube.

Claim: The STR industry provides jobs.

Rebuttal: It does provide jobs. For example, the housekeepers who require a minimum of $30 per hour to drive from San Antonio to clean STRs. Yard workers, tradesmen, and administrative staff all benefit from the STR industry. The majority of these jobs will remain because, even under the new ordinance, the existing STRs will remain. But many of the housekeepers, yard workers, and tradesmen would still find work with residents living in these homes if they were not converted into STRs. This job creation argument ignores the fact that most of these workers do not live here. Even worse, it ignores the hundreds of open job positions in Fredericksburg that cannot be filled due to the critical lack of housing. The current average gas price of $4 per gallon has made commuting into Fredericksburg even more expensive, which will prompt workers to quit their STR-industry jobs and work closer to home.

Claim: The ordinance will be defeated in court.

Rebuttal: This is unlikely. Even in the example of Austin, the STR ordinance remains largely intact and no new STR permits have been issued to businesses seeking to operate in residential neighborhoods since the ordinance took effect. Waco, Grapevine, Arlington, and other municipalities are successfully regulating STRs and these have survived court challenges.

Claim: Any limit on new STR permits will cause a fall in home values.

Rebuttal: Home values are greatly inflated by STR investors because they are purchasing a home for above market value because they expect $70,000+ in annual rental revenue. Home values will not likely fall greatly because many people still wish to live in this still wonderful community. However, if Fredericksburg becomes a German-Texan Las Vegas wholly dependent on tourism and alcohol, then the future of the residential community is grim indeed.

Claim: STRs do not cause the housing shortage.

Rebuttal: Every home that is commoditized into an STR is lost to a permanent resident. FBG STR Alliance leader Randy Briley said “One-and-two-bedrooms make up 64% of the current STR dwellings,” he said. “We believe one-and-two-bedroom homes are not ideal for single families due to limited size.” This is an elitist and offensive statement and it means there are at least 600 homes that could serve families but do not because of STR use. In 2020, 168 new homes were built while 140 new STR permits were issued. And some of those new homes were built to be STRs, not family homes. Fredericksburg has had a decades-long shortage of housing due to a lack of policies and actions that would have created housing. While this must be corrected, STRs have made the problem much worse.

Claim: We need more data. We only need more enforcement of the current ordinance.

Rebuttal: When the FBG STR Alliance says “more data,” they wish to show how their enrichment trickles down to others and they wish to postpone any action that would reduce revenue. On enforcement, the city has lacked reporting infrastructure and processes. This should be improved by the Granicus software system. Part of this solution is to issue and require the display of a permit number on the home which police, code enforcement, and neighbors can reference when an issue is reported. And with only one or even two code enforcement officers the City has been unable to effectively monitor a thousand STR properties on weekend evenings, and may still be understaffed to do so even with an improved reporting infrastructure. Lastly, Jason Lutz pointed out that the enforcement provisions contained in the old ordinance have been weak and ineffective. Enforcement is important and language in the proposed ordinance should be better in this regard – provided the City is adequately staffed to address issues that are identified by the reporting infrastructure.