Resident Margaret O’Donnell says she can see both the good and the bad of short term rentals - and believes regulations are a way to balance the needs of an accessible housing market with a growing tourism industry.
"The oversaturation of short-term rentals in communities - particularly tourist destinations, which Frankfort has become - price residents out of homes and probably stop an influx of new residents," said O'Donnell.
Speakers in favor of heavier regulation spoke of vacant homes, a loss of neighborhood identity, and a culture of unattainable homeownership. Another resident, Ruth Lorenzen, said she lived next to a short-term rental for a year, and was disappointed to see a neighborhood home turned into a "hotel across the street."
"What it actually manifests as is that property has been taken from residential zoning to commercial zoning," said Lorenzen, who also voiced concern that short-term rentals were not subject to landlord-tenant laws.
Kentucky - like the rest of the nation - is in the midst of an affordable housing crisis; the amount of available homes is insufficient to meet the needs of current and prospective residents.
An analysis released by the Kentucky Housing Corporation, found the Commonwealth is over 200,000 units short, split evenly among both for-sale homes and rentals. The shortage affects the whole income spectrum, but low income households are particularly vulnerable.
However, resident (and Franklin County Clerk) Jeff Hancock, sees the housing crisis as distinct from an overabundance of short-term rentals. Hancock is the owner of a rental property which accepts "Section 8" Housing Choice Vouchers; he also is the owner of an Airbnb. He says the residences which are being turned into short-term rentals are not necessarily the same ones which would be considered "affordable."
"The thing that I think we've missed the boat on is that our property tax increase in South Frankfort has gone up tremendously, which equals tax dollars for our schools and our kids," said Hancock. Rather than taking properties away from residents, Hancock spoke of short-term rentals as a factor supporting the city's tourism industry, bringing sustainable traffic to restaurants, wineries, and distilleries.
Frankfort City Commissioner Katrisha Waldridge responded that, though the city's big-dollar short-term rental properties aren't typically removing housing stock that could be used for affordable housing, they do indirectly add strain the market.
"It's not to say the people that need affordable housing will live in a house downtown that's half a million dollars, that is an Airbnb," explained Waldridge, "But, right now, the issue across Kentucky and across other states is that people that can afford those houses are living in homes that [people in need of affordable housing] can live in, because the house they'd like to live in is an Airbnb."
Currently, the city of Frankfort requires the owners of short term rental properties to register yearly with the city planning department, consent to an annual inspection, and operate with a business license. Owners also must collect and remit quarterly taxes: a 6% Kentucky sales tax, a 1% Kentucky transient tax, a 4% City of Frankfort transient room tax, and a 2% fine arts tax.
This year, 98 units completed the yearly registration. But City Commissioner Kyle Thompson said that’s not stopping people from listing unregistered short-term rentals on Airbnb and similar sites.
"There were 273 active listings inside the City of Frankfort boundaries; that would mean that there would be 180 or so that haven't complied," said Thompson.
In Frankfort, the average cost per night for an Airbnb is $261.30. Thompson did the math: he said the city's existing short-term rentals, booked at full capacity, could bring in a revenue of $13.8 million annually - raising upwards of $550 thousand in city taxes.
The city is now workshopping language about enforcement and fines atop the existing regulations, first established in 2018. Other proposed changes include revisiting a cap on short-term rentals by percentage of total housing units in particular historic neighborhoods and a new annual fee structure of $250 for the first unit and $100 for each additional unit.