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Friday, Feb. 7, 2020 | 2 a.m.
At a recent Las Vegas City Council meeting, councilwomen Michele Fiore and Olivia Diaz were fired up.
Although the council is technically nonpartisan, Fiore, a former Republican assemblywoman and outspoken conservative, and Diaz, a typically soft-spoken, former Democratic member of the Assembly, fall on opposite ends of the political spectrum. But during the Nov. 6 council meeting, they were united in condemning the operators of two short-term rentals who seemed to flagrantly disregard city code.
“You cannot run a short-term rental without being licensed, and it has been brought to my attention that this operation has been going on for years,” an exasperated Diaz told the offenders.
The property in question was a four-apartment complex at 312 S. Maryland Parkway. Property manager Paul Murad and owner Christopher Craig had been renting out two of the apartments as short-term rentals through the website Airbnb.
In Las Vegas, short-term rentals—residential properties rented for less than 30 days, typically through Airbnb, Homeaway, VRBO and other websites—are only permitted if the property owner has a council-approved business license. Under a city ordinance, properties must also be owner-occupied, meaning owners cannot rent out entire homes or apartments, and no more than one short-term rental is permitted within a 660-foot radius.
Nonetheless, the market is growing. There were an estimated 7,717 short-term properties listed on Airbnb in Clark County as of November 2018, according to Inside Airbnb, a website that retrieves listing data to highlight short-term rental impacts. Nearly 71% of Airbnb property managers throughout Clark County had multiple listings, and about 66% of all listings were entire homes or apartments, the website found.
Las Vegas officials who support regulating the industry say the regulatory ordinance is an attempt to preserve the character of residential neighborhoods and crack down on so-called “party houses” that disrupt quiet communities with noise, trash and debauchery. Murad and Craig say it constitutes government overreach.
Despite their protestations, given that Craig and Murad did not register their Maryland Parkway property and refused to cease their operations, the City Council on Nov. 6 unanimously voted to fine Craig $67,000 in civil penalties and $1,740 in failed inspection fees. The penalties were determined by the city’s code enforcement office.
Over two months later, rental activity continues to take place at their property. As of early February, both of Craig’s units on Maryland Parkway were listed on Airbnb, and one had been reviewed by guests twice that month. The city was unable to confirm whether or not Craig had paid his fines.
“We can only confirm the property is still under investigation,” code enforcement officer Vicki Ozuna wrote in an email.
The incident reflects a challenge Las Vegas- area communities face in their attempts to regulate short-term rentals: Although many people operating illegal rentals across the Valley do so without knowing it’s against the law, some have developed tactics to deliberately skirt local ordinances, to varying degrees of success.
“There’s lots of tricks people play,” said Ulrik Binzer, founder and CEO of Host Compliance. His company helps local governments, including Las Vegas and Henderson, implement and enforce short-term rental rules.
The properties listed on Airbnb are likely the tip of the iceberg in Clark County, Binzer said. The booming short-term rental industry is becoming increasingly fragmented, with more and more property owners using lesser-known websites to try to avoid paying taxes, fines or other fees.
“There’s something like 125 different vacation rental sites right now,” he said.
Enforcement gets sophisticated—and costly
Officials from Las Vegas and unincorporated Clark County—where short-term rentals are entirely banned—say most people agree to stop renting out their properties illegally once they’ve been contacted by a code enforcement officer. But the minority who refuse to comply cause a lot of headaches for overworked staff.
Ozuna estimates that of the 190 open code-enforcement cases related to illegal short-term rentals, about 60 of the owners or managers are putting up a fight. Roughly 15 of those individuals are “the worst of the worst” when it comes to noncompliance, she said.
To the frustration of city staff, individuals operating short-term rentals often purchase different properties and continue to rent them out after one has been shut down. Las Vegas’ short-term rental ordinance does not allow the code enforcement department to reapply old fines if a person has moved on to a new property, Ozuna said.
“We would like to look at coming up with ways to address the person and the activity, instead of having to start over again with each and every property,” she said.
Property owners trying to keep illegal rentals under the radar often list them on obscure sites that are difficult to find without Host Compliance’s specialized software, Binzer said. Other property owners take advantage of municipalities’ limited resources, presuming they can get away with illegal rentals for at least long enough to make a profit, he said.
Some use tactics similar to those of Craig, who is known in Clark County and Las Vegas for buying properties that have liens on them due to illegal short-term rental activity and then deflecting responsibility for the liens, Ozuna said. Craig admits to this behavior and says he could—and will—beat Las Vegas and Clark County in court. Communities in Nevada do not have the authority to levy such high penalties, he said.
“The majority view, all the way across the United States in the supreme courts that rule, has been that the local governments cannot regulate it. They cannot ban [short-term rentals],” Craig said.
For its part, Las Vegas is exploring whether it could issue criminal citations to those who refuse to shut down illegal businesses or pay their fines, Ozuna said. The city also hopes to classify at least one persistent short-term rental as a chronic nuisance. If the Las Vegas Municipal Court agrees with that assessment, the city could request to “board up the house and put it out of commission for a year,” Ozuna said.
“That’s one of the new processes we’re looking at now,” she said.
While Ozuna says it has gotten easier to crack down on illegal rentals since Las Vegas began working with Host Compliance, there’s no denying that enforcement comes with a price. Henderson and Las Vegas each pay Host Compliance more than $37,000 per year for its services.
Las Vegas spent another $369,500 in fiscal year 2019 on staff costs for short-term rental regulations, Ozuna said. Clark County, which enforces its ban on short-term rentals based on complaints alone, spends approximately $400,000 annually on code-enforcement staff devoted to crackdowns, spokesman Erik Pappa said.
While communities generate some revenue from short-term rental applications and/or fines and fees, many fines remain unpaid. Las Vegas assessed $685,504 in civil penalties on 42 properties during Fiscal Year 2019, but only $69,250 in penalties was paid over the same period, according to Ozuna. Clark County issued $897,600 in fines and liens in 2019, but only $50,750 of those fees have been recovered, Pappa said.
Despite different rules, communities are collaborating
Municipalities across the Valley have taken different regulatory approaches to short-term rentals, but they have some overlapping priorities, such as protecting permanent residents’ quality of life. As such, they are starting to work together. Representatives from each jurisdiction hold periodic meetings to discuss enforcement tactics and property owners who are operating— and breaking local laws—in multiple jurisdictions, said Clark County Chief of Code Enforcement Jim Andersen.
Before the Henderson City Council approved a short-term rental ordinance in July, city officials consulted neighboring communities to determine which aspects of their ordinances worked well, according to Henderson Planning Manager Eddie Dichter.
“We saw that they were going back and forth and modifying their ordinance over the years, so we kept modifying [ours], pulling out the best things and talking to different jurisdictions,” Dichter said.
Under Henderson’s ordinance, short-term rental operators must register with the city and pay an annual registration fee of $820. Planned communities can ban short-term rentals, and the city will limit short-term rentals in multifamily complexes to no more than 25% of all units.
Because the city’s ordinance includes neither a cap on the number of properties someone can operate nor an owner-occupancy requirement, short-term rentals could have a different effect in Henderson compared with that in Las Vegas.
Entire-home short-term rentals have the most detrimental impact on housing markets and affordability, according to a 2017 study on short-term rentals in Canada by McGill University researchers. Owners of multiple, entire-home short-term rentals can reduce the supply of long-term housing, thereby driving rent prices up, the study authors argue.
Craig acknowledged that many investors prefer short-term rentals to permanent ones because they can make more money from them.
“There’s nothing wrong with short-term rentals, and they are better than long-term rentals,” said Louis Koorndyk, who once operated two short-term rentals in Clark County until he was forced to shut them down. “When you’re renting your property as a short-term rental, you have the backing of Airbnb and everyone else.”
As the creator of the Greater Las Vegas Short-Term Rental Association, Koorndyk advises people trying to get into the business to move to Henderson, which sees short-term rentals as a win for the local economy. Henderson City Council members say the system can provide residents struggling to pay their bills with a way to earn extra money, said city spokeswoman Kathleen Richards.
“Especially at a time when housing prices are going up, we don’t want our residents to have trouble paying their mortgage payments if we can do [this] in a way that’s respectful for the community,” Richards said.
Representatives from both Airbnb and Expedia Group, which owns Homeaway and VRBO, described Henderson’s short-term rental ordinance as fair, even-handed and beneficial to the local economy.
“It just so happens that in the Vegas area, you have one city, Henderson, that did it responsibly, and a city like Vegas that, in our opinion, should probably come back to the table and follow what some of these other cities have done in the recent past,” said Philip Minardi, director of policy communications at Expedia Group.
Following Henderson’s footsteps, North Las Vegas is working on a short-term rental ordinance of its own, according to spokeswoman Sandy Lopez. It’s unclear what path that will take, but Host Compliance’s Binzer advises communities to act sooner rather than later. That way, officials have a better shot at getting ahead of the regulatory and enforcement challenges surrounding the growing industry.
“Put in place the regulations before it becomes a hot button issue in the community,” Binzer said. “Because if you have rules in the books and enforce them, you can shut down these bad actors before they start ruining the lives of the neighbors.”
This story appeared in Las Vegas Weekly.
