Our Response to the City's Property Owner's Letter
Last week a one page Notice Letter (with a Public Comment Form on the back) was mailed to every owner of property in the city limits of Fredericksburg. The letter was entitled “NOTICE OF PLANNING & ZONING & CITY COUNCIL PUBLIC HEARINGS: AMENDMENTS TO THE CITY’S ZONING CODE REGARDING SHORT TERM RENTAL DEFINITIONS”.
FBGNC’s position, based on our understanding of what is proposed, is to ask you to please circle the word Approve on the back of the letter, sign it, and mail it to:
Development Services - Zoning
126 W Main St.
Fredericksburg, 78624
Our Reasoning
We support the need for a prompt amendment to the STR Ordinance in order to make the definitions for two types of STRs, which are still allowed to be permitted in R1 zones meet the guidelines established by a recent court case. Currently, portions of those two definitions do not meet U.S. Constitutional requirements. "Exhibit A" below outlines the changes to the definitions that the FBGNC suggested that the City make, however the exact language that the City is proposing will not be known until it is posted on the Agenda section of the City website and read into the record at the 12/7/22 Planning and Zoning Commission meeting.
Although there is no detail in the Notice Letter to inform citizens as to what they are being asked to provide comments on, nonetheless, based on communications with members of the City Council, the FBGNC supports the need for these amendments. We will track this process closely and keep you apprised if the language deviates materially from what we expect.
So that the Council receives some positive responses in addition to the expected responses it often gets which oppose any change, we request that FBGNC supporters follow the instructions above to voice their approval of the changes.
A more full explanation of this issue is detailed below – it is long, but we lack the ability to more succinctly describe this matter.
MORE DETAILS
Purpose of the Notice Letter
The purpose of the letter was to provide notice to all property owners that the City is considering revisions to the Zoning Code. In accordance with the City Charter, a notice letter of this sort must be sent to the owners of any property which may be impacted by a proposed change to the Zoning Code (and the STR Ordinance is part of the Zoning Code). You will recall that a similar Notice Letter was mailed out last spring ahead of the final P&Z and Council votes to approve the extensive revisions to the STR Ordinance which went into effect 4/1/22. A notice is also expected to be posted soon in the Fredericksburg Standard. Near the end of the 11/15/22 City Council meeting, a motion to initiate this process was approved.
The Notice Letter does not state specifically what changes are being proposed to the STR Ordinance and we don’t find anything on the City’s website that details what is being considered. But based on communications with members of the City Council, we outline below FBGNC’s understanding of what sections of the STR Ordinance are being considered for revision, and a short summary of the recent court case which has prompted this potential action.
Recent Court Case
In a ruling released this past August by the Fifth U.S. Circuit Court of Appeals, the Court issued a ruling which struck down a provision in the City of New Orleans’ STR ordinance. The New Orleans ordinance required that in order to get a short-term rental license, the owner must use the property as their primary residence – a residence for which they claim a homestead property tax exemption. The Court held that requiring the owner to reside on the property in order to get an STR license is unconstitutional under the Commerce Clause of the U.S. Constitution. This is because it restricts interstate commerce by discriminating against out-of-state owners by preventing them from participating in the STR market on equal footing with in-state residents. Many cities in Texas, including Fredericksburg, have similar requirements for owner-occupied STRs. The Federal 5^th Circuit covers Texas, thus this ruling is binding on those cities and they/we are prevented from enforcing this owner-occupancy requirement.
Changes Proposed to the Fredericksburg STR Ordinance
In Fredericksburg’s ordinance that became effective 4/1/22, two types of “owner-occupied” STRs are still allowed to obtain permits in R1 zoned areas. Those are: “Short-Term Rental, B&B”, and “Short-Term Rental, Accessory”. These are defined in the Definitions section at the front of the STR Ordinance. But essentially these types of STRs are:
1) a traditional B&B type STR where a room in the home of the owner is rented out, and
2) an STR where a separate structure on the property of the owner is rented out.
Fredericksburg’s ordinance requires that the property be “the owner’s principal residence (as evidenced by a current residence homestead exemption filed with the Gillespie Central Appraisal District)”. As you can see, this language is very similar to that which was struck down by the New Orleans case. In order to make our STR Ordinance comply with the Constitution, for these two types of STRs it is our understanding that the proposed amendments will revise the definition for each to allow that the primary structure on the property be the principal residence of either the owner OR the Local Contact Person.
We View This as a Fix – Not a Long-Term Remedy
While we do support this immediate action to fix this “hole” in our R1 STR Ordinance resulting from the New Orleans case, we do not think this is an effective long-term remedy. The 4/1/22 STR Ordinance adopted a “no new STRs in R1” concept that allowed an exception for those STRs where the owner lived on-site. Unfortunately, the court case prohibits the city from requiring that type of owner occupancy. This is unfortunate, because the very reason that owner-occupied STRs were allowed was because it was felt that the owner had “skin in the game” and would be motivated to see to it that visitors in their STR would be good neighbors and quickly resolve any problems. And while allowing someone other than the owner (i.e. the Local Contact Person) to live on-site will meet constitutional requirements, that person would be merely a renter and would not have the same “skin in the game” as an owner would.
In addition, it will be very hard to enforce whether the Local Contact Person is actually residing on-site. It was easy to refer to a homestead exemption to prove that an owner resided on the property, however there is not a similar easy way to prove that a person other than the owner is residing there. For that reason, we believe that the long-term solution to this issue is to allow no new STRs in R1 – period. While the proposed language may meet constitutional muster, and it is needed to be in place for the existing properties which are Short-Term Rental, B&Bs and Short-Term Rental, Accessory properties, it fails at the very purpose for which this exception was created in the first place and no further new STRs should be allowed in R1.
We are hopeful that the STR Task Force chaired by the Mayor will consider this issue and recommend that new STRs of this type should no longer be issued permits for R1. But action on that may be several months away and the currently proposed amending language is needed to fix the “hole” NOW.
Exhibit A
SHORT-TERM RENTAL, ACCESSORY
A short-term rental providing transient or guest lodging accommodations for compensation within a lawful Guest House on the same lot as the primary structure which is the principal residence of the owner (as evidenced by a current residence homestead exemption filed with the Gillespie Central Appraisal District or the Local Contact Person. The Guest House shall not exceed the size of the primary structure.
SHORT-TERM RENTAL. B&B.
A short-term rental providing transient or guest lodging accommodations for compensation within the rooms of the primary structure which is the principal residence of the owner (as evidenced by a current residence homestead exemption filed with the Gillespie Central Appraisal District) or the Local Contact Person. Separate short-term rental permits shall be required for each separate bedroom unit within a Short-Term Rental. B&B which may be rented.
