After four public workshops, Marfa officials to finalize proposed short-term rental ordinance

MARFA — Marfa is almost done with the final draft of its proposed short-term rental ordinance. City leaders have discussed the document for weeks, holding hours of workshops to get public comment on the issue.

As their next step, city leaders want to talk among themselves and with lawyers to iron out some controversial details, including possible caps on Airbnbs, said Teresa Todd, city attorney for Marfa. She hopes city council will have a final document ready for a vote by early next year but stressed there is still lots of work to do.

“This is still very much a work in progress,” she said of the ordinance. Residents in Marfa have had “ample opportunity” to comment on the ordinance, she said. Now it was time for local officials to do the same.

As city leaders have workshopped the ordinance, they’ve faced criticism from many short-term rental owners and managers, who have shown up in force at the virtual meetings.

Those residents and homeowners have criticized many aspects of the ordinance as overly burdensome, including proposed caps on Airbnbs and a possible requirement that short-term rental hosts quickly respond to complaints from guests and neighbors. Some, including short-term rental owner Robert Spiegel, have argued that such rules could have unintended consequences on Marfa’s tourist economy.

“I just really, really want this to be something that helps rather than hinders,” Spiegel said at a meeting last month.

But many in Marfa feel differently, as the city’s fourth workshop on the ordinance last week made clear. At last week’s virtual meeting, for the first time, the public comment period was largely attended by supporters — not critics — of new regulations on short-term rentals.

Resident Caitlin Murray said the proposed rules were “straightforward,” “not prohibitive” and could help “prevent the proliferation of illegal short-term rentals, which seems to have been a problem in the past.”

Katy Rose Elsasser, a co-owner at Convenience West, pointed out that other businesses like restaurants had to comply with basic regulations. Rachel Monroe, another resident, agreed, arguing that all businesses needed “boundaries” and that sending health inspectors to restaurants did not equate to “banning or blaming restaurants,” as some short-term rental owners have sought to portray these new rules.

Other residents spoke about the shortage of affordable housing in Marfa and argued that vacation rentals contributed to a lack of housing stock. Natalie Melendez, who until this month served on Marfa City Council, cited declining population figures in Marfa in remarks during the public comment period. More restrictions on short-term rentals could be “one piece of a larger puzzle” to solve this problem, she said.

Claire Lindsay-McGinn, another resident, said there were a “lack of rentals for people who actually live and work here.” Her own home used to be a short-term rental, she said.

“I think it’s really important to support the people who live here,” Lindsay-McGinn urged the council. “If you just make it unaffordable, people will leave.” (Lindsay-McGinn, who runs a small business in Marfa, is also a designer at The Big Bend Sentinel.)

As city officials continue to fine-tune their ordinance, it remains to be seen what exactly the final rules will look like. But one aspect city officials will likely focus on in internal discussions is a proposed cap on short-term rentals.

That could take the form of San Antonio’s short-term rental ordinance, which imposes per-block limits on the number of non-owner occupied Airbnbs. Or, it could mean caps on short-term rentals in certain zoned areas, another possibility that city officials have floated in their discussions.

That’s the rule that could have the biggest effect on Marfa’s short-term rental industry, and it’s one that some short-term rental owners and managers have been fiercely critical of.

Lauren Meader Fowlkes, a realtor and short-term rental manager, argued at previous meetings that because many short-term rentals in Marfa are owned as second homes, the owners of those properties would likely never turn them into long-term rentals. Marfa’s proposed ordinance has “nothing to do with affordable housing,” she said last month, because if second homeowners couldn’t rent out their vacation home to tourists while they were away, they would just keep them vacant instead.

Todd Mackenzie, a part-time resident who spoke at last week’s meeting, said his family were “part-time residents as of this summer” and were already renting out their Marfa home to vacationers.

“We’re new to the scene, and we do happen to have the house listed as an Airbnb,” he said. If Marfa prevented them from renting the house as a short-term rental, “it would just sit vacant. There would be no tourists staying in it or making money.”

Meghan Gerety, a short-term rental owner, said last week that while she agreed “there’s a problem with a lack of affordable housing in Marfa,” she didn’t feel comfortable putting “the blame on short-term rentals.”

Kathleen Shafer, a resident who said she didn’t own or manage a short-term rental, agreed that the city was “putting a lot of pressure and blame onto homeowners.”

“It’s not up to the homeowner to create affordable housing,” Shafer said. “It’s up to the city to create those opportunities.”

When reached for comment this week, economists and short-term rental experts were ambivalent on whether many properties in Marfa were bound to be vacation homes regardless of local restrictions.

“There are some owners who would not rent to a regular year-round tenant,” Edward Kung, an economics professor at California State University who has studied short-term rentals, wrote in an email. “It would be more efficient in that case to let them rent to short-term renters on Airbnb, which can bring tourism and business to the local economy without negatively impacting the supply of homes.”

Luis Torres, a Texas A&M economist who also studies the issue, disagrees. Extremely wealthy people might be willing to pay for a house even if they barely used it, he said in a phone interview Monday. But in most cases, the ability to turn a second home into a vacation rental was a “a major incentive to buy that second home,” he said.

He cited the case of a neighbor in College Station, who bought a vacation home in Mexico because he knew he could make passive income off of it when he wasn’t there.

That trend might not be an issue if people were just buying ranches or mansions as second homes. But if part-time residents bought “starter homes,” it could hurt local renters and prospective homebuyers, Torres said.

“When you start eliminating starter homes, that’s when you have a problem,” Torres said. And in Marfa’s case, it’s the cheaper two-bedrooms — not just the mansions and ranches — that have turned into Airbnbs.

Justin Bragiel, a general counsel at the Texas Hotel and Lodging Association, represents both short-term rentals and full-service hotels in his work. For that reason, new proposed rules on short-term rentals were a controversial issue in the organization, he said.

Still, even Bragiel agrees that part-time residents could be incentivized to purchase properties in a way that could affect local housing stock.

“It’s pretty clear to me there are a lot of folks who buy properties knowing they can do short-term rentals,” he said. “It pushes them to do the transaction when they wouldn’t otherwise.”

Regardless, studies are clear on one fact: As the number of short-term rentals increase in an area, the number of long-term rentals goes down and the average property values and rents go up.

In New York City, researchers estimated that doubling the number of local Airbnbs could increase property values by more than 30 percent, bringing up rents with them. Researchers in Boston noted similar effects. And a nationwide study of Airbnb’s effect on the housing market found that increasing the number of short-term rentals would “decrease the supply of long-term rental units,” making each one more valuable.

It’s basic economics, said Davide Proserpio, an economist at the University of South California who has studied these issues and who contributed to the last study.

“Reallocation [of homes to short-term rentals] reduces supply in the long-term rental market,” he wrote in an email. “Therefore, rents go up.”

As Marfa city leaders iron out the final details of their ordinance, they’ll be working with lawyers to help make sure Marfa won’t face immediate challenges to its rules, City Attorney Teresa Todd said. After all, other Texas cities like Austin have faced lawsuits as they’ve worked to set up regulations on short-term rentals.

Marfa has already received multiple legal letters from lawyers representing vacation-rental owners, including one which The Big Bend Sentinel reported on this month. “We have our lawyers on board because everyone else has lawyers on board,” Todd said.

In the meantime, Todd figures city officials will continue hearing from locals who feel strongly about the ordinance. Those include not only the people who turned out for the virtual workshops, she said, but also people who are contacting the mayor and city council directly.

Even after four public meetings, there’s been unprecedented interest in Marfa’s proposed rules on vacation rentals. “There are very strong opinions on both sides,” Todd said. People have “definitely made their positions clear.”