Short-term rental moratorium, permit requirement being considered in Waxahachie

The city of Waxahachie is preparing to draft an ordinance to address short-term rentals, but the City Council could impose a moratorium on STRs while the process continues.
(Chris Roark/staff photo)

Waxahachie Daily Light
Chris Roark, croark@cherryroad.com
July 1, 2023

The city of Waxahachie continues to explore its options on how to regulate short-term rentals (STRs).

The city staff is working on drafting an ordinance that would provide guidelines for STRs with the goal of eliminating some of the issues that have come from homes being rented out as party houses.

While the staff continues to examine the issue, which includes studying potential legal ramifications and ordinances approved in other cities, Waxahachie may impose a moratorium on STRs until its own ordinance is ready to be presented to the City Council.

During a City Council work session Thursday the council and city staff discussed its options as it relates to STRs, which include requiring STR operators to apply for a specific use permit (SUP) and requiring the STR to be subject to inspections.

This follows growing concerns from residents in the Pecan Valley neighborhood over a home that is being used as an STR. Neighbors say there are late-night parties there multiple times a week, resulting in noise, trash, increased traffic and property damage.

Police Chief Joe Wiser said though the department didn’t keep track of calls specifically related to STRs until this year, it’s estimated the PD received one call about an STR in 2019, one in 2022 and has received six this year.

Councilman Patrick Souter said it would be good to get plans in place now as the city continues to grow.

“With everything we’re doing in Waxahachie we’re going to have more and more coming in,” Souter said, adding that something needs to be in place in the residential areas of Waxahachie.

STR options

Robert Brown, the city attorney, provided legal background on STRs and said the city has a few options. One option is to do nothing, which would allow STRs to continue to be operated with no specific guidelines.

Another is for Waxahachie to require STR operators to go through a registration process and for the city to use code enforcement, such as noise ordinances, to control the nuisances.

Brown said a third option is to conduct a deep analysis of STRs in hopes of providing evidence that back up a plan to restrict them in certain areas of the city. Brown said that analysis could be costly and take a long time. But he said some cities, including Arlington, took that approach before passing its ordinance.

“(Arlington) went out and got a lot of evidence to support its belief that short-term rentals had detrimental impact on certain areas and that it had some quantifiable negative impacts,” Brown said.

Another option is to completely ban STRs in the city or in single-family residential zoning areas. But Brown said that could lead to litigation from property owners who claim cities don’t have the right to ban STRs outright.

“I know a lot of cities that have done that, and they’re just waiting to see what happens,” Brown said.

Brown said there are important legal cases to consider before banning STRs. He pointed to the 2019 case Zaatari v. City of Austin. In that case Austin had banned STRs of non-homestead single-family residences. But the Austin Court of Appeals found that short-term rental was an established practice and a historically allowable use in the city and that STR owners had invested significant time and money into the property.

Further it said Austin’s ordinance had minimal, if any, public interest while impacting property owners’ rights. It also stated the ordinance that restricted the hours and number of people of outdoor gatherings infringe on the property owners’ right to assemble.

Brown also referenced the 2021 case City of Grapevine v. Muns. He said the city had for years allowed for STRs but in 2018 began interpreting its ordinance differently and started to restrict STRs.

But the Fort Worth Court of Appeals concluded the city had told residents before 2018 STRs were permitted and that the STR owners may have had reasonable investment-backed expectations in purchasing and improving their property. The city’s ordinances were struck down.

After the meeting, resident Michael McCorkle, who attended the work session and has voiced his concerns about the STR in Pecan Valley multiple times, shared information from the TX Neighborhood Coalition, an organization that looks to restrict or regulate STRs in Texas neighborhoods. The coalition states there are multiple court cases that conclude cities are not powerless when it comes to making zoning decisions for the public good even if it conflicts with previously approved property uses. The coalition points to cases such as City of Gatesville, Texas v. Hughes in 2011 and Mbago v. City of Dallas in 2018.

Moratorium

Brown said the city could enact a moratorium on new STRs while it explores data that could be used to justify restrictions that could be viewed as too strict, such as limiting them to a certain area. Most recently, Plano enacted a moratorium to May of 2024 while it studies the issue.

Brown said the city of Arlington undertook a two-year STR study. Once complete its council adopted an ordinance in 2019 that allows STRs only in an area of a 1-mile radius from the city’s entertainment district and in medium-density residential, multifamily and non-residential/mixed-use zoning districts.

It also passed a regulatory ordinance that prohibits outside congregation of occupants between 10 p.m. and 9 a.m.; limits the number of STR occupants and provides parking restrictions, amplified sound equipment regulations and trash restrictions at STRs.

Brown said a group of STR owners sued the city for violations of tenants’ freedom of assembly rights and freedom of movement rights, owners’ equal protection rights and more.

But the Fort Worth Court of Appeals in 2021 held that the ordinances were intended to strike a balance between the rights of STR owners and residents and that it was adopted after significant review input. Brown said the city presented evidence establishing a rational relationship between the ordinance’s restrictions and legitimate governmental interests of minimizing STRs’ adverse impacts on neighborhoods.

Future ordinance

Some Waxahachie council members appeared to favor a moratorium for the immediate future until it determines how the city’s ordinance should look.

Shon Brooks, executive director of development services, said there are several things to consider, such as if the city wants to limit the locations of STRs and if so, where. He said possible areas could be the Historic Overlay or the Central Area.

Brooks said the city can consider requiring registration and inspection, and if so, how frequently.

He said it could mandate that the STR property owner remains local in case there is an issue, but the city would have to determine what’s considered local.

Council members seemed eager to require an SUP for an STR, which is the same process that bed and breakfast establishments must go through in the city.

Souter said that could give neighbors a say in the matter since the SUP would come before the council.

“As it is right now if we require them to go through an SUP process like the bed and breakfast it gives the neighbors the opportunity to contest it, right?” Souter said.

He said it would also prevent unfairness with the bed and breakfast operators.

“Frankly I think those who are operating a bed and breakfast could easily say, ‘I don’t need to do this anymore. I don’t need to pay taxes, I don’t need to satisfy the city because y’all aren’t making (STR owners) do it,’” Souter said.

Souter said at the very least an SUP process could slow down the number of STRs coming to the city.

Mayor Pro Tem Chris Wright asked if the SUP process would be retroactive, thus solving the issue in the Pecan Valley neighborhood.

But Brown said if the non-homestead single-family residence was purchased primarily to rent out then banning STRs would be problematic since it was an established practice, pointing to Zaatari v. City of Austin.

“I think if someone has a homestead and rents their home occasionally and you say you can’t do that anymore unless you get an SUP … you’re not undermining their investment because they bought a home to live in it and the ancillary use was a short-term rental,” Brown said.

Wright said the permit for the home in Pecan Valley was issued as a single-family home, so previous investment as an STR shouldn’t come into play. But Brown said STRs are considered a residential use.

“The question is at what point it gets turned closer into a business than, if someone rented out a room to a college student,” Brown said. “You can’t hang your hat that our zoning allows single-family residential use because short-term rentals are a type of single-family residential use.”

Councilman Travis Smith said with an SUP process the operator can be denied an SUP renewal with too many complaints against them.

“That would be a way for us to control the bad actors,” Smith said.

The council next meets July 17. A moratorium on STRs, or possibly a draft ordinance, could be on the agenda.

Other options

Brown said in addition to an STR ordinance, HOA deed restrictions can be amended to prohibit STRs, following a Texas Supreme Court decision in 2022 (Jbrice Holdings v. Wilcrest Walk Townhomes Association).

Brown said while the city is working on an STR ordinance it can use existing ordinances, such as its noise ordinance, to see if an issue at an STR can be handled with that, or possibly if disorderly conduct charges would apply.

In June the council approved an amendment to its noise ordinance that would allow the property owner of a home where excessive noise is taking place to be cited, in addition to the individual(s) making the noise.

Councilwoman Billie Wallace said for that to work residents have to report violations to the police department.

“I want to encourage people if they have problems in their neighborhood to call the police and once the police respond if the noise or whatever the issue is doesn’t stop then call the police again,” Wallace said. “That’s the only way we’re going to have the documentation we need to do something about it.”

McCorkle said he was happy to see the city taking steps to address the issue.

McCorkle said there are 79 homes in Waxahachie listed as STRs, according to AirDNA.

“I’m optimistic that something’s going to get done,” McCorkle said. “There needs to be something given the continuous issues at the one home in our neighborhood and the potential for more issues if this isn’t addressed.”

McCorkle also said while noise and trash are some of the main concerns that come with STRs there are other issues that don’t get talked about enough.

“It also impacts long-term housing,” McCorkle said, adding that investors purchase these homes to use as STRs. “It takes away from families who need affordable homes to rent.”