In the wake of the coronavirus pandemic, people are starting to rethink where they want to stay when traveling — the result is a boom in short-term rentals.
That trend is felt in Kerrville, with applications for conditional-use permits growing, and with it some tensions about their approval.
On Aug. 5, opposition by landlords, arguing that a short-term rental wasn't the right fit for a neighborhood, was presented to the Kerrville Planning and Zoning Commission.
Sarah and Greg Lewis were looking for an opportunity to purchase a short-term rental property when they found a tiny house under construction on Aransas Street. The 288-square foot home is situated on a deep lot, is the only home accessible from Aransas on the block and has enough room for the parking required for the city's conditional-use permit.
The Lewises purchased the home, fixed it up with a privacy fence and other upgrades, and applied for their permit.
A stay-at-home mom, Sarah Lewis, wanted something to do and give back to her husband's hometown.
"My husband grew up here, and it was in our "five-year plan" to move back from Austin before we finally did it," Sarah Lewis said. "And now that we're here, not only do I want something I can do that my girls can see me doing, but we also want to invest in the community."
Their plan was met skeptically by James Van Patten, a Kerrville real estate investor who owns homes around the proposed rental. Instead, Van Patten said he's like to see it as a full-time rental to help combat Kerrville's housing shortage.
The P&Z Commission listened carefully to Van Patten's concerns, but delaying the Lewises would be a costly setback of a year for the couple. If the city rejects a conditional-use permit, it can take a year to regain approval.
Kimberley Richards, a local investor who also consults potential short-term rental owners, told the commission that potential problems can always be brought back to the City Council or regulated through code enforcement.
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"Don't deny this because you think this will be a problem," Richards said. "I hate to see people denied because they think there will be problems."
Drew Paxton, the city's development director, said his staff is working with the police department to keep track of the city's short-term rentals.
In the end, Sarah and Greg Lewis got the OK for the conditional-use permit, which ultimately needs City Council approval before they can start renting the space.
Increasingly, entrepreneurs and investors see opportunities to grab properties across Kerrville, especially near the Guadalupe River, and convert them into vacation rentals booked through websites like Airbnb. The growth in the sector is being fueled by people not wanting to stay in traditional motels or hotels — or at least that's the theory.
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One firm that tracks the short-term market, AirDna, wrote that the demand for rentals is hotter as the pandemic begins to ease.
"Unlike prior recessions, the rebound for the travel sector will not be predicated on consumers' ability to travel, usually limited by discretionary income. Consumer incomes have remained high — partly as a result of people cutting back on consumption to account for the pandemic, which has sent savings rates close to a record high — and in part due to government support," AirDna wrote on its blog. "This time, the recovery will be dependent on easing safety concerns, and the reopening of businesses and attractions to draw visitors."
Depending on the size and accommodations, the properties can fetch anywhere from $100 to $500 a night. In other parts of the Hill Country, short-term rentals can earn $1,000 per night.
The intimacy of a private residence versus a crowded hotel is a key selling point — especially in the time of the pandemic.
However, the challenge is collecting hotel occupancy taxes and code enforcement. Hotels and motels have paid occupancy taxes for years, but the short-term market is beginning to produce tax revenue. Despite the pandemic, Kerrville has continued to see an increase in hotel occupancy taxes, a partial credit to the city's short-term rental market.
Short-term rentals can also challenge neighbors who worry about noise and disruptive partying.
The conditional-use permits allow city officials to have a measure of control over the properties by setting standards, including parking and noise.
More than 60 of these properties have Kerrville conditional-use permits — a process ultimately approved by the City Council. There are dozens more that are not approved. Some of these are in Kerrville's extra-territorial jurisdiction — meaning not within the city limits.
