Unlicensed Short-term Rentals Overwhelm Some KC Neighborhoods - Flatland - Flatland

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Above image credit: In this photo illustration, a woman's silhouette holds a smartphone with the Airbnb logo displayed on the screen and in the background. (Rafael Henrique | SOPA Images/Sipa USA via AP Images)

Kansas City has become a hotspot for short-term rentals in recent years — with many failing to comply with the city’s code.

An ordinance took effect in Kansas City on Aug. 6, 2018, regulating and requiring permits for short-term rentals.

Four years later, there were only 164 short-term rental permits issued in Kansas City, according to CompassKC, the city’s permit portal.

That figure is less than 10% of such short-term rentals available in the city.

In June, the number of active listings of short-term rentals in Kansas City on both Airbnb and Vrbo — two popular short-term rental platforms — reached 1,796, according to data from AirDNA. AirDNA is a company that compiles analytics on vacation rentals around the world.

Last Thursday, City Auditor Doug Jones presented plans for an audit of short-term rentals at a City Council business session.

The audit, to be released in November, aims to answer two questions:

“Are short-term rental hosts complying with city registration regulations?”
“Do short-term rentals impact city convention and tourism taxes and the arena fee?”

The audit is being done, in part, in response to complaints from residents.

“Short-term rentals are a topic of public discussion and the city receives 311 complaints about the illegal operation and disturbances related to short-term rentals,” Jones said during the business session. “The public also suggested that we audit this program.”

Jones also noted that the ordinance is almost five years old, making it a good time to check on it as well as to look at the impact on the city’s tourism-related taxes and fees.

Short-term Rentals in KC

Airbnb is a platform specializing in short-term rental listings. It had more than 6 million listings worldwide as of March, according to its website.

While other short-term rental platforms like Vrbo and TurnKey are available, Airbnb dominates the Kansas City market. In April, Airbnb had 1,613 listings — more than 95% of the total offered by Airbnb and Vrbo rental listings that month, according to data from Inside Airbnb and AirDNA.

The number of listings has continued to rise past pre-pandemic levels, and since that citywide short-term rental ordinance took effect in 2018.

While data on listings before June 2019 isn’t readily available, Diane Binckley, deputy director of the City Planning Department, estimated more than 800 short-term rentals were in the city during a recording of a city Planning, Zoning and Economic Development Committee meeting on Jan. 17, 2018.

The surge since then has largely affected particular neighborhoods.

Fourth District Councilman Eric Bunch said there has been a massive influx of short-term rentals in his district as well as along the KC Streetcar extension.

“Like in some cases, the majority of the houses — single-family homes — on a single block are short-term rentals,” Bunch said. “And I think that's problematic.”

Data on Airbnb listings from April showed a heavy concentration of listings in and around Midtown.

According to data collected by Inside Airbnb, the 64111 zip code had the fifth highest number of Airbnb listings in Missouri, behind zip codes in Branson, Osage Beach, Ridgedale and Lake Ozark in April. Inside Airbnb is described as a “mission driven project that provides data and advocacy about Airbnb's impact on residential communities.”

The 64111 zip code, which includes Midtown, is also home to neighborhoods, like Volker, that have witnessed an increase in short-term rentals in the past two years.

“It seems to be ramping, especially over the last 24 months,” said Patrick Faltico, president of the Volker Neighborhood Association.

Volker’s boundaries stretch north to south from 31st Street to 43rd Street. Its western boundary is State Line Road, and the eastern boundary is Roanoke Road north of 39th Street and Southwest Trafficway south of 39th Street.

According to Bunch, the issues with rentals that lack permits are also primarily isolated to a handful of neighborhoods not far from Westport, the Country Club Plaza and downtown.

Concern also exists regarding the hosts and how available they are to address concerns or issues at the rentals. In the Volker neighborhood, Faltico said he hears a lot from residents about Airbnbs being operated by out-of-state entities that don’t care about their neighborhood.

Of the over 1,600 Airbnb listings documented as of April, the top three hosts with the highest number of Kansas City rentals were not listed as being in Kansas City, according to data from Inside Airbnb. The majority of listings were hosted by Kansas City locals.

The Airbnb platform shares some information about hosts, including their first name, number of listings and where they are located.

“They don't know anything about the neighborhood. They just see it as investment dollars,” Faltico said. “As a real estate investor myself, I understand that rationale, but that's not working for the neighborhood, clearly.”

Mark Rodriguez, treasurer for the Volker Neighborhood Association, said there are responsible Airbnb operators, too. One across from his house was renovated and the owner made sure to notify neighbors. This makes it easier to contact them in case of an issue.

“We can get a hold of them. That hasn't been an issue,” Rodriguez said. “A lot of them don't say anything. They tried to hide in there.”

Permits and Process

An analysis of records in CompassKC, the city portal for permits, showed a total of 509 applications entered into the system for short-term rental permits as of Aug. 5.

Of those, 164 had a status listed as issued. Of the rest, 141 were listed as voided-city, which means they were duplicated, canceled or not acted upon.

In the portal, 89 were also expired and seven were listed as ready for issuance. The rest were listed under other permit statuses such as ready for issuance, hold, pending, in review, denied, inactive, canceled, revoked and renewed.

Of two revoked permits in the portal, one was revoked due to a forged signature of an adjacent neighbor, according to the CompassKC portal. The other includes an attached letter in the portal, explaining the revocation, “due to the property failing to meet the provisions of Chapter 18-Kansas City Building and Rehabilitation Code of Ordinances.”

Faltico, who also is a real estate investor, recently went through the process himself to get the proper permits to operate a short-term rental. He said he has insight into both sides of the issue with the permitting process.

“It's not a real simple thing to do,” Faltico said. “So I think just the fact that it's not really simple is kind of a hurdle for probably some folks.”

In Faltico’s case, his short-term rental is located next to his home, so while he needed to obtain signatures from adjacent properties for permission to operate, he already knew his neighbors.

“For people who are out of town or property owners that don't live in the neighborhood, (it) takes a much different ask,” Faltico said. “Not saying they shouldn't do it. But I think I start to understand why maybe people don't.”

Faltico obtained a type 2 year-round short-term rental. In the city’s ordinance, permits for short-term rentals are broken down into type 1 and type 2 permits. Type 1 permits are for owner-occupied short-term rentals, while type 2 permits are for non-owner-occupied short-term rentals.

Type 1 permits are defined by city ordinance 88-321 as, “a principal residential dwelling unit that is occupied by the resident (who may be either the owner or the tenant/lessee of the owner authorized by the owner to offer the unit for short term rental) for a cumulative minimum of 270 days per calendar year.”

Two different permits also exist within the type 2 permit. Year-round permits for non-owner-occupied short-term rentals are rented more than 95 days a year, and seasonal short-term rental permits are issued for rentals operating fewer than 95 days a year.

To be issued a type 2 permit and operate year-round, 55% or more of adjacent property owners to the short-term rental must agree and provide a signature.

The permit process is outlined on the city’s website and includes the necessary forms to fill out for each permit type.

While a spokesperson declined to comment for this story, Airbnb offers guidance to hosts on its website about different types of local regulations.

“We're committed to working with local officials to help them understand how Airbnb benefits our community. Where needed, we will continue to advocate for changes that will allow regular people to rent out their own homes,” said the page about regulations on Airbnb’s website.

Enforcing the Ordinance

Enforcement of the short-term rental ordinance remains a concern for residents, especially in highly concentrated areas like Volker.

“It's not that the city refuses to do it, it's that they just can't because there are not enough resources,” Faltico said.

“So my hope is that as a neighborhood advocate, I can help organize and muster support for encouraging the City Council to make changes to how we compensate and try to retain these employees,” Faltico said. “Because we need them. This is ridiculous that we have so many short-term rentals that are not licensed.”

"This is ridiculous that we have so many short-term rentals that are not licensed."
Patrick Faltico, president of the Volker Neighborhood Association.

Residents like Rodriguez have taken on a role in their neighborhoods to report short-term rentals that are not in compliance with the ordinance.

In addition to being treasurer, Rodriguez also helps neighbors by filing short-term rental complaints for those who are afraid of facing retribution by a landlord. Some live in duplexes that are part long-term and part short-term rental.

Rodriguez has reported four unpermitted short-term rentals in Volker. One has been addressed by the city, Rodriguez said. The complaint was dismissed, with the city issuing a status of, “insufficient evidence to proceed.” Rodriguez filed the complaint on May 3 and it was closed on June 30.

The planning department currently has two investigators that enforce the zoning ordinance in the whole city, Joseph Rexwinkle, division manager for the development management division of the City Planning Department, said in an email. There are only six planners who issue permits.

The department is in the hiring process for more investigators and one additional planner, the planning department’s Binckley said in an email, also noting that planners issue multiple types of permits.

During the council business session last week where the short-term rental audit plan was presented, Bunch commented on the investigations, saying that there was no need for the planning department to send someone out to a rental. All they needed to do was check if a listing exists.

Kansas City Council member Eric Bunch waits for a Troost Max bus at the corner of Locust and 12th streets. — Fourth District Councilman Eric Bunch. (Carlos Moreno | KCUR 89.3)

“And if they're not registered with the city, it’s the same thing as them actually renting it out,” Bunch said at the business session. “So there is no investigation needed, which for some reason the planning department is still sending out people on like a Tuesday afternoon to see if there was any activity that looked like, suspiciously like a short-term rental.”

An exact number of complaints about short-term rentals overall or for what specific reasons is not easily documented. For example, when “short term rental” is searched in the code case category, 200 results show up as of Aug. 5. When “Airbnb” is searched, 145 results are returned.

“The data we have is dependent on the language used by the complainant. As an additional complication, any one property may have, for example, 1 complaint or 20 complaints,” Binckley said in an email.

Part of the short-term rental audit will include categorizing the 311 complaints in addition to comparing short-term rental registration and listing data, evaluating the short-term rental registration process, analyzing sales tax and room night data, and to also review the laws on the collection of taxes related to short-term rentals, according to the audit plan.

The audit, which began in May according to Jones, is set to be published in November of this year.

“Like some of the other process improvements (the City Planning Department) has made in recent months, we are interested in and working toward streamlining and updating to meet current needs,” Binckley said in an email when asked about how the ordinance is working.

Annie Jennemann is a Dow Jones data journalism reporting intern. She is a graduate student at the University of Missouri.