By Zak Sonntag | [email protected]

The City of Holladay is going after Short Term Rental (STR) operators with a new law that exacts a punishing fine on rentals operating without a permit.

The ordinance, which passed the council in May by unanimous vote, increases the penalty to “a minimum fine of not less than $1,000” for each day of violation, which is the maximum amount allowable for Class B misdemeanors under state law. Additionally, the law requires violators to repay illicit rental income, while also including the prospect of jail time.

“I’ve looked at many Short Term Rental statutes, and I don’t think there is a more aggressive statue in the state. So I’m very happy,” said Councilmember Dan Gibbons, who has weathered earfuls of constituent complaints regarding the boisterous activities of an implacable rental in the Canyon Cove area of District 5.

“The purpose is to give people a double or triple pause. I don’t think the judge would actually throw someone in jail, but just the specter may be enough to make them think twice before operating [STR’s],” Gibbons said.

Weather the new law will chasten STR operators remains to be seen, however, because this category of landlords are notoriously hard to pin with convictions. State law prohibits cities from using online postings on rental websites, like Airbnb, VRBO and HomeAway, for example, as evidence in court. Instead, they must compile a preponderance of neighbor-based complaints. Furthermore, municipalities have shied away from cracking the whip due to logistical and enforcement concerns. Despite intense discontent amongst residents, the cities of Sandy, Riverton and Murray, for instance, have minced around the issue because there is little appetite to hire new staff and expend more city resources enforcing STRs.

“If we regulate these, that means we have to enforce our regulations. We do not enforce regulations to the degree that they need to be done [at the existing level],” said Murray Planning Commissioner Phil Markham.

But the pressure on Holladay representatives builds as the constituent complaints pour in about homes that “morph into a boarding house in the middle of a neighborhood zoned for single-family occupancy,” said Holladay resident Mailei Bucher, in a letter to the city council, in which she accused a neighbor of allowing “rent for up to 10 unrelated renters at a time.”

Surrounding homeowners complain about noise, excessive cars and trash, predominantly, but they also just want to know and trust their neighbors, which is difficult with the revolving-door style of occupancy seen with STRs. This small erosion in the community’s quality of life is what economists call a “negative externality,” which happens when someone incurs a cost for a transaction they had no part in. One Holladay resident complained in a letter to the council that a neighbor had “likely lost $50,000 in the sale of their home due to illegal rental operation” that degraded the neighborhood’s appeal, although the resident provided no evidence for the claim. Still, the worry is real, and cities are going to need to step up to arbitrate the issue between residents.

“Without serious financial penalties imposed, collected, and legal actions pursued, the landlords will not be discouraged from continuing their practices. To them, it is just the cost of doing business, and they get away with it,” said Susan Pohlman, Holladay resident, in a letter to the city council. “Their rentals are too lucrative to stop.”

Although in a culture with a vaunted respect for private property and generous deference to property owners, there is a sense held by some that property owners rights are being treated unduly by STR opponents. On the one hand, the popularity of STRs tells us something about a natural preference for homes to hotels. The marketplace has responded—this year, Airbnb was valued by Forbes at $38 billion. The financial power of the industry makes for a daunting foe in many cities who, like New Orleans, have seen pushback from companies like Airbnb in the requirement that it remove listings which violate STR regulations. As the popularity of Utah’s outdoor recreation viability spreads and the Wasatch Front attracts more visitors, the need for clear, smart STR policy—and enforcement—becomes imperative.

Now that the City of Holladay has made its intentions known, the next phase is working out the enforcement side. Time will tell if this dog’s bark comes with a bite.