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Indy Explains: How Nevada’s new short-term rental law is playing out statewide

Tabitha Mueller
Tabitha Mueller
Housing
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As Southern Nevada governing bodies standardize rules and regulations surrounding short-term rentals in compliance with a state law that went into effect Friday, local officials have been clear — no one is truly happy with the new system.

Clark County Commissioners expressed frustration over their lack of input on the state law passed in 2021, AB363, which requires Clark County, Henderson, Las Vegas and North Las Vegas to adopt new regulations and strengthen enforcement mechanisms for short-term rentals such as Airbnb or VRBO.

“I have a lot of issues with this ordinance that I've expressed publicly and privately in my room at night to myself over time,” Commissioner Michael Naft said during a June 21 commission meeting. “When we talked about this a month ago, I think we all left with our hands up in the air, knowing that we would never get to a place where the fees would encapsulate the full burden to the county.”

Though all seven Clark County commissioners voted to approve an ordinance meeting requirements from the state law, many expressed reservations. The ordinance overturns a previous ineffective outright ban on short-term rentals in unincorporated parts of the county, and could prove a sizable revenue stream — experts estimate the untaxed short-term rentals represent a loss of about $45 million in annual room tax revenue.

“None of us up here wanted to be doing this … but this is where we are,” Commissioner Justin Jones said. “We’re not collecting a dime from any of the short-term rental operators. So no, this doesn’t cover the enforcement in any way. [The ordinance] sure as hell is better than what we’ve got right now.”

The July 1 implementation deadline stems from that 2021 legislation that aimed to standardize at times wildly different local regulations around short-term rentals. 

The continued popularity of online rental platforms such as Airbnb has drawn challenges in tourist-heavy Southern Nevada, including staunch opposition from the powerful resort association and concerns from neighborhood associations and others who fear a proliferation of short-term rentals could further exacerbate the region’s housing crisis and negatively affect the quality of life in neighborhoods. All the while, rental platforms and operators have complained that the new regulations will burden their industry in favor of well-entrenched and politically powerful casino resorts, despite clear market trends toward short-term rentals.

The new state law and subsequent regulations crafted at the local level are aimed at strengthening enforcement and establishing guidelines for a relatively unfettered market, but the true effect of the changes — whether harming the short-term rental industry or benefiting the housing market — may not appear until officials have data, outcomes and reports in hand. 

Any time market regulation takes place, there will be benefits and drawbacks, said UNR Assistant Professor of Finance Sean Wilkoff. 

“The question for me with regulation is always, who are you trying to protect? Who are you trying to help?” Wilkoff said. “Regulation usually implies there’s going to be more cost because there are regulations that people need to keep up with.”

Wilkoff said the short-term rental industry has the potential to sway investors to purchase and turn property into short-term rentals, thereby making it more expensive for locals to buy a house and reducing the region’s housing supply. On the other hand, he said access to short-term rentals can help drive tourism that contributes to the local economy and allow people to travel in a COVID-conscious manner, limiting the potential for disease spread. It can also allow people to rent out unused space in their house, maximizing living space.

“People traveled before Airbnb existed. People rented houses without Airbnb – not as easily – and people stayed in hotels. And so I think more people will have to go back to that model,” he said. “With everything that’s been going on these days, it will probably increase prices. So maybe some people will travel less, or people will change how they travel or where they travel to.”

A woman raises a sign while people wait to speak during the Las Vegas City Council meeting regarding short-term home rentals on Wednesday, June 21, 2017. Photo by Jeff Scheid.

Clark County’s implementation of short-term rental regulations

Before the state law went into effect, three counties (Clark, Washoe and Douglas) and a handful of cities had adopted formal policies on short-term rentals. The policies ranged from total bans (unincorporated Clark County), no regulations (Washoe County), allowing rentals only in owner-occupied homes (City of Las Vegas) to requiring each unit to have a landline telephone (City of Mesquite).

While developing an ordinance, Clark County conducted public outreach via town halls, three town board presentations and had a comment email inbox open since February. The county also conducted a community survey in December to guide the development of the ordinance.

Officials described survey results as showing a consistent 50-50 split in favor and against short-term rentals, though both sides largely agreed with certain good-practice policies, including 76 percent of respondents supporting a limit on guests to 16. More than 80 percent of respondents also favored having a personal representative required by the law to be able to respond to complaints within an hour.

Commissioners emphasized that residential developments in the county should be focused on providing permanent, affordable housing for residents and that a proliferation of short-term rental units could negatively affect housing stock in the region. The seven-member commission ultimately settled on a set of regulations including:

  • Limiting licenses to one per person or entity as a way of preventing a mass turnover of homes into temporary bed-and-breakfasts
  • Implementing a 1,000-foot buffer between licensed short-term rentals, and a 2,500-foot buffer around established or under-construction resorts within which another short-term rental cannot be built (aligning with the state law)
  • Issuing licenses for no more than 1 percent of housing stock
  • Establishing a two-night minimum stay and only allowing two guests per bedroom, with a maximum occupancy of 10 guests

Applications for the licenses are expected to begin on Sept. 1 and will run for six months. After that time frame, a lottery will determine who receives the coveted licenses. 

The ordinance exempts short-term rentals in Mount Charleston, Moapa, Moapa Valley, Mesquite and Bunkerville.

Critics have panned the decision. Shortly after the ordinance passed, Airbnb released a statement calling the state’s requirements a “gift for resorts at the expense of regular Nevadans who share their homes,” and criticizing the county’s regulations as overly restrictive.

The Nevada Current reported that the Greater Las Vegas Short-Term Rental Association has vowed to mount a legal challenge against the ordinance and has raised a little more than $51,000 out of a $100,000 goal.

But some supporters applauded the commissioners. Nevadans for the Common Good leader Barbara Paulsen said the ordinance will maintain the industry for “‘mom-and pop’ operators,” while curbing “the predatory practice of investors and large equity firms buying homes exclusively for the purpose of operating as hotels.”

Southern Nevada municipalities

State lawmakers designed the new law with existing regulations in mind, leading to relatively few shifts at the municipal level.

But there were some changes that each city needed to incorporate, such as the requirement that short-term rentals be located at least 2,500 feet from a resort or hotel.

Under the new state law, existing short-term rental properties are grandfathered in, but the grandfather clause only applies to lawful properties. For example, if a current short-term rental is within 2,500 feet of a resort, it may remain. A short-term rental application submitted after the law goes into effect on July 1 will not be approved if it lies within 2,500 feet of a resort.

All three municipalities stipulate that short-term rentals are only to be used as overnight accommodations and may not be used for weddings, special or sales events, bachelor or bachelorette parties or other similar events.

Lawmakers did not include Boulder City in the new legislation because city officials felt they did not have the resources to put together an ordinance and wanted to maintain the city’s ban on short-term rentals.

Henderson

Before the passage of AB363, Henderson required short-term rental managers to pay an annual $820 registration fee per property, and applicants had to submit a noise management plan as part of their registration. No more than 25 percent of all units in a multifamily complex could be registered as short-term rentals, and planned communities had the authority to ban them outright. 

Many of the existing regulations remained in place following the implementation of the state requirements, but the city did update its short-term rental regulations in mid-February to align with the new state policy, including:

  • Requiring registrants to obtain a State of Nevada business license when they register a short-term rental unit
  • Allowing a maximum of 16 people on the property (before the rule allowed the number of people on the premises to increase by 50 percent over the per-bedroom occupancy limit between 10 a.m. and 9 p.m.)
  • Limiting the number of short-term rental units on a property to 10 percent of the total number of residential units within a structure, and prohibiting them from being located within 2,500 feet of a resort hotel
  • Requiring hosting platforms to submit a quarterly report to the state and city with the number of bookings, listings, owners and lessees in the city among other data

Henderson property owners or site managers are also required to complete a certification program and offer guests a copy of the city’s Good Neighbor pamphlet containing information about quiet hours, trash regulations and contact information for police and the city’s short-term vacation rental complaint hotline.

The new policy passed unanimously and is effective as of its adoption on Feb. 15, with some policies fully implemented on July 1. 

Las Vegas

Within the City of Las Vegas, short-term rentals are only allowed in owner-occupied homes that have three or fewer bedrooms and are at least 660 feet away from another short-term rental. Rentals had to comply with licensing, noise and parking requirements. 

Applicants for short-term rental licenses from the city must have the proposed short-term rental inspected by a code enforcement officer and pay a non-refundable application fee of $50 and an annual permit fee of $500. Licensees are also required to provide proof of liability insurance with a $500,000 coverage minimum.

The city has not yet implemented the state-mandated changes. Updates to the existing rules were introduced at a city council meeting on June 15, and are set to be heard by the city’s recommending committee on July 18.

Documents included in the June 15 meeting agenda indicate that the new additions to the city’s short-term rental laws will bring the city into compliance with the state law.

North Las Vegas

On June 15, North Las Vegas city council members unanimously approved and adopted amendments to the city’s existing short-term rental ordinances to bring the existing regulations into compliance with AB363 and streamline regulations. 

North Las Vegas allows short-term rentals as long as a property owner applies for (and receives) a conditional use permit. After property owners receive such a permit, they must apply for a city and state business license. An owner must also send a copy of the city’s Good Neighbor brochure to all property owners within 200 feet of the short-term rental. The conditional use permit has a one-time fee of $100, and the short-term rental license fee is $900, paid annually.

North Las Vegas also requires a 660-foot separation requirement from other short-term rentals and a 2,500-foot separation from hotels. Property owners also must install noise monitoring equipment outside. Short-term rentals can only exist within multi-family zoning where the units are individually mapped. Individual room rentals are only permitted if the residential unit is owner-occupied.

A short-term rental sign near Tahoe's Incline Village on Monday, June 28, 2021. (David Calvert/The Nevada Independent)

Washoe County

For years, Washoe County collected taxes on short-term rentals, but had no restrictions or regulations in place, leading to complaints about party houses from neighbors and lack of cleanliness from guests.

The county, which includes the city of Reno as well as Incline Village and other communities bordering Lake Tahoe, features a robust short-term rental market and has faced decades of tension between residents and tourists, exacerbated by the housing crisis.

While lawmakers were discussing the new short-term rental laws, county officials were adopting a policy related to the same issue and were ultimately excluded from the provisions of the new law. The county enacted its first short-term rental ordinance for unincorporated areas of the county in May 2021, which did not include the cities of Reno or Sparks. 

The ordinance established a permitting process but does not require a business license.

The permits are valid for one year after the date of issuance and previous approval of a permit does not guarantee that a subsequent permit will be issued. Owners of a short-term rental are required to submit annual renewal applications and fees, which hover around $800. Each short-term rental must have its own permit and account. The county also requires owners to have a minimum of $500,000 liability insurance coverage.

As of Monday, Washoe County officials reported that there are 1,356 short-term rental permits in the county. 

County officials have recently made changes to the regulations based on feedback during the first year of the ordinance being in place. 

Updates to the ordinance include changing processing requirements around applications, implementing a requirement for a notarized certification that the short-term rental owner has insurance that provides for a minimum of $500,000 liability coverage, and mandating that properties in Incline Village have a bear box.

Washoe County Commissioner Alexis Hill ran on a platform that included regulating short-term rentals and addressing disruptions caused by a lack of parking guidelines, stay limits and guidance, among other issues. 

She described the county’s approach to the regulation as implementing guidelines, monitoring the situation and then adjusting and updating the rules as needed through an ongoing conversation with short-term rental owners, residents and businesses.

“It's a new frontier,” Hill said. “It’s untested in the courts, according to the district attorney's office. It's a really tough situation for local governments because you have to balance that risk aversion, property rights, ensuring that you have a healthy community and that neighbors are getting along and that regulations are being followed.”

The county is still hearing concerns from residents about the effects of short-term rentals on the affordable housing market and how short-term stays may be preventing workers from moving into the area. 

Hill said officials will conduct an assessment of the situation later this year and determine if other steps need to be taken, such as placing a cap on the number of short-term rental permits or encouraging property owners to rent long-term by paying the difference lost from such a switch.

“When they come back at the end of this year, I think that we'll have a better idea of [whether] we need to mimic some of these regulations that are happening across the state,” Hill said. “We've really tried to strike a balance of being fair but also being tough on the owners.”

As far as the effect of the new ordinances, Wilkoff said it will undoubtedly change the industry in Nevada, but the outcomes are not yet clear.

The ordinances could also create changes within the housing market, he said. Those who bought investment properties for short-term rentals and do not receive a license in Clark County or do not want to deal with the new regulations could be forced to sell or rent long-term, potentially leading to increased housing availability. 

“We might see those people just being able to buy a place finally, or we might see more long-term rentals coming online,” Wilkoff said. “There will definitely be a shift. I don’t know which way it will necessarily go, but one possibility is providing more housing.”

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