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Residential Real Estate

FEATURE - Short-Term Vacation Rentals Ordinances finalized, affecting Savannah’s Historic, Mid-City and Victorian Districts only

PHOTO: Photo of a home advertising on AirBnB in Savannah that advertises the property as: "A gorgeous one bedroom, one bathroom apartment on Gordon Street at Barnard will make your trip to Savannah memorable!" The first weekend available is Dec. 1 - 3, for $315.00 from Friday to Sunday, plus cleaning fee. 

By Lou Phelps, Savannah Business Journal

September 28, 2017 - By a unanimous vote, the Savannah City Council voted to cap the number of Short-Term Vacation Rentals (STVR) business certificates that can be issued at 20% of the properties in each of the city’s Wards in three zoning districts.

There are 28 Wards, established hundreds of years ago, in the Historic, Mid-City and Victorian Districts – the only three districts affected, so far.  

Allowing short-term vacation rentals was approved as a zoning usage within the City limits in certain areas years ago, long before VRBO, AirBnB and similar companies became popular.

But the current Mayor and Council has been wrestling with controlling the dramatic conversion of what were once owner-occupied homes into investment properties – some by local residents, but many by outside companies now in the business of buying up homes in residential areas and converting them to STVRs.

Savannah-based lobbyist Mike Vaquer spoke at today’s meeting, stating that he represented the international company EXPEDIA, which he said owns investment properties – the company does not just connect a traveler with a hotel or privately-homed home or room in a home for a vacation stay.

An STVR Business Certificate is only granted if a property is in an1-R, 2-R or 3-R or a Historic Property Designation home.  STVR’s are also allowed in the city’s Commercial District. 

To date, in those 28 wards, the City has already issued more than 1,000 STVR certificates, and there are 102 more applications that have not been processed yet, according to Bridgit Lidy, head of the City’s Tourism Management & Ambassadorship Dept.

Her department have counted all properties in each Ward, as a base line. 
All current certificate holders are grandfathered in, even if a Ward is already over its 20% cap of the maximum number of certificates.

If a property is sold, a current certificate can be transferred to a new owner, but only if they apply in the first six months. Alderman Julian Miller questioned this, concerned that some property owners will get a certificate and hold onto it, even if they don’t plan to use it, because it could affect the value of their property in future years.

But, to get a certificate, property owners must first get a business license, and register with the State of Georgia to pay hotel/motel taxes.  There is also a cost for a STVR certificate.

The cap does not affect the ability of any owners to rent out rooms in their home if they live there, if they are in the correct zoning designation.

In theory, every homeowner on every block can rent out a bedroom – there is no cap on that.

The cap is only when non-owner-occupied property owners seek to rent out a home.   
An hour was spent debating an amendment to the main text motion, made by Alderman Bill Durrence, which eventually passed 5 to 3. It effectively reduced the total number of STVR certificates per Ward, and was contrary to what the City’s staff and Lidy had negotiated with the legal representatives of various vacation rental firms for months.

Only Aldermen Carol Bell, Estella Shabazz and Tony Thomas voted with the staff, and against Durrence’s motion.

The Mayor, Durrence, Van Johnson, Julian Miller and Brian Foster all spoke about protecting the residential nature of the city ... supporting Durrence who represents the Historic District.

His motion means that to stop outside companies from coming into a block and turning local residences into rental homes, just few need to apply for the Certificate, insuring that their Ward hits the cap.

And, in fact, according to Lidy, of the 28 Wards, at least 12 are already over the 20% cap.  That will be even more soon, when the 102 outstanding applications are reviewed. 

There is a little more flexibility in the zoning language passed today in the Mid-City district – any property can apply for an STRV certificate, and is guaranteed to be approved if other requirements are met, as long as the cap has not been hit. And, in Mid-City, owners do not have to live in the main home; they can live in a carriage house on the property, and rent out the entire main house.  

There are other limits: a maximum of four adults can be rented if a property has one or two bedrooms.  If a home has more than two bedrooms, there can only be two adults per bedroom.  Alderman Tony Thomas questioned how the City had the staff to enforce this and other aspects of the entire ordinance.

No business tax certificate can be transferred to a person or a property. 

The Attorneys Line Up at the Mike

Atty. Robert McCorkle, representing ShareSavannah, said that the attorneys for multiple stakeholders had negotiated in good faith with the City staff for months, as it became clear during the debate that there was support for Alderman Durrence’s amended motion.

“We did what you asked us to do … in good faith and reliance .. the DNA and all our clients…” he said.     

“The City of Savannah petitioned the MPC to exempt owner-occupied from the cap,” he added, and he said that the text amendment before them today was already approved unanimously on the First Reading.

But the Mayor said that that was irrelevant; nothing is passed until after the Second Reading and they vote, he made clear. 

And, McCorkle argued, ‘What is being suggested by Alderman Durrence is not practical. Designating yourself as owner-occupied could reduce your property values.”  

Atty. J. Patrick Connell with Ellis Painter Ratteree and Adams of Savannah, also spoke. “This flies in the face of your charge to make a compromise …making a change to what the stakeholders agreed to with the City.”   

Lobbyist Vaguer added, “You have established a stakeholders process. If we can’t have faith in the validity of the agreements coming through that process, then why bother to participate?”

Corey Jones with Lucky Savannah Vacation Rentals also spoke. “This decision affects business already existing; and existing homeowners with already vested property rights.”  

Atty. Bates Lovett with Fisher Broyles of Savannah and Atlanta,  representing the Downtown Neighborhood Association, said, “Yes, there was a framework of an agreement. But the question is how do you analyze that framework – with the words?  As we sit here, there is no such thing as an owner-occupied or non-owner occupied property, practically; they don’t exist yet legally. He said that all of the attorneys had been working with the City to formulate a text amendment that was “easily, legally defensible.”  And, he pointed out that in Georgia, ‘there is an existing right that a homeowner has right now,” explaining that if a home next to you has a STVR certificate, he was concerned that they could be denied – that the new text amendment could be challenged legally.  

“My fear is that when you change that designation, you’re going backwards. it's ‘a taking’ and that's not something you want to get into.”

The industry that has been buying up properties to be used as short term vacation rentals wanted  a 35% cap, the Council was told.

“We made a determination as a council that every citizen had a right to be an STVR,” said the Mayor, acknowledging that that battle had already been settled.  

“The question here has to do with how you calculate the cap,” he added.

And those who already have a STVR in an area where they are not allowed, are grandfathered in. “It’s a vested right that goes with a house … like a grandfathered bar.  It becomes a non-conforming use, even if the area is over the cap,” Lidy added. 

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