A Threat to Savannah’s STVR Ordinance

During the last week of February, a member of the Georgia House of Representatives dropped a bill (HB523) that would have completely preempted any local ability to regulate, license, or even just register any short-term rental businesses or properties, investing full authority for that at the state level, while not actually creating any state regulation for that industry. Not even being able to register the entity would mean no ability to be certain those businesses pay the appropriate sales and lodging taxes.

Make no mistake. Vacation rentals are a business; big business. A couple of years ago the National Trust for Historic Preservation estimated, “STVRs are now a $25 billion industry in the United States, comprised of large commercial enterprises with multiple non-owner occupied properties.”

Air BnB’s initial model of couch surfing in someone’s apartment has not been the operative model for quite a while, and even though the State of Georgia treats these properties as residential use, the Federal government requires an STVR owner to pay income taxes after 14 days of rentals, and that makes it a business operation to me.

In an effort to stop or at least constrain this attack on municipal Home Rule, Bridget Lidy, City of Savannah's Director of Planning and Urban Design and I were at the State Capitol first thing Monday morning, March 4, attempting to talk to as many representatives as possible to protect the years worth of effort Savannah has put into developing her ordinance. We were helped immensely in this by Marci Rubensohn and Katy Sharpe from the City’s lobbying firm, Connect South, as well as other lobbyists, Michael McPherson from the Georgia Municipal Association (GMA), Larry Ramsey from the Association of County Commissioners of Georgia (ACCG), and Jim Sprouce and Chris Hardman from the Georgia Hotel and Lodging Association (GHLA).

Representative Kasey Carpenter from Dalton was the House member tasked with shepherding the bill. He invited us to his office and we found National level representatives from Air BnB and Expedia camped out there. Although we expected a less than welcoming reception, Rep. Carpenter was at all times gracious and willing to listen to our concerns. He was also very transparent in pointing out he owned a restaurant in Dalton and is building a 31 room hotel across the street from it, to be managed by Air BnB.

When we described various provisions of our ordinance -- regularly complimented and emulated by others from around the state because of the thoroughness of our process in crafting it -- Rep. Carpenter was quick to concede some points and agreed to layer in our ordinance. While our preference was for the state to drop the whole thing and leave management of this activity to local control since every city will have different issues, we also felt like we should make sure, as much as possible, that we had input on the bill that might pass.

As various iterations of the bill were amended, including much of our language, Bridget and I testified before the subcommittee, indicating even more concerns.

All involved continued to work on this through the week and ultimately we wound up with language in the final version of the bill that gave a blanket grandfathering protection to Savannah’s ordinance and to our zoning restrictions on where lodging can exist, and gave us the right to modify our ordinance as we might need to going forward. That was a win of sorts, but we were still concerned that the whole thing had been done so rapidly that we might have missed some detail that could come back on us in a court challenge.

The outcome to date is that the final bill did not make it out of the Regulated Industries committee in time to get through the Rules Committee and to a floor vote in the House by Thursday evening. That was Crossover Day in the legislature when any bill has to have been approved in one of the two chambers to be considered in the other, in this case the Senate, for passage in this session of the legislature.

There is still a possibility that some portion of the bill could be pulled out and attached as an amendment to a bill that did cross. The combined lobbying forces that helped us so much will continue to monitor and let us know if this comes back up.