Lawrence resident Kay Pettit stands in front of her property at 2242 Barker Ave., which she uses as a short-term rental.

The small, two-bedroom house on Barker Avenue has brought in twice as much money renting by the night on Airbnb than it did as a regular rental.

The property is one of more than 100 in Lawrence listed with the short-term booking company, and the house’s owner, Kay Pettit, said it’s been in high demand.

“It’s so popular that I have to block it out, because I have a full-time job,” Pettit said. “So pretty much every weekend it’s rented, and I could rent it a lot more if I wanted to.”

Pettit isn’t alone in her success. The number of bookings for short-term rentals in Lawrence more than doubled last year, helping make the city the most popular Airbnb destination in the state. Along with the revolving guests — accounting for about 4,600 bookings last year on Airbnb alone — comes debate at City Hall as to how the up-and-coming industry should be regulated.

Short-term rentals aren’t currently allowed by city code, but a new report lays out the various options if the city were to regulate the industry. Potential regulation includes zoning restrictions, permits, inspections, as well as restrictions on when, where and how properties can serve as short-term rentals. The report, put out by the city manager’s office, will form the basis for an upcoming discussion by the City Commission.

City Commissioner Lisa Larsen said what the city needs to look for is a balance.

“I think the main thing is we need to get a balance of safeguards between the neighborhood, the impact to our hotel industry, and the idea that somebody can rent out their house and be an entrepreneur about it,” Larsen said.

While Larsen said she thinks the commission should consider all forms of regulation that are on the table, other commissioners don’t agree. Commissioner Matthew Herbert, a high school teacher who also owns a property management company, said he doesn’t think the city should put limits on the number of short-term rentals allowed, as some cities have.

“That’s just not even an arena I want to get into,” Herbert said. “We either allow the policy or we don’t.”

Potential business regulations

The city’s report outlines 10 of the most common ways that other cities have regulated short-term rentals. Those options range from permit and safety requirements to business-related regulations.

Airbnb and other sites like it provide a service somewhere between hotels and long-term rentals, but currently have no oversight from the city. Short-term rentals can be just one room in an owner-occupied home, or the entire house. In Lawrence, room rentals account for about 60 percent of short-term rentals, according to Airbnb.

Pettit said she absolutely thinks that short-term rentals should be regulated within standing safety-related codes, but was against business regulations that would limit or prohibit her from using her secondary property as a short-term rental.

“I think that Hilton shouldn’t be the only person that can make money off of lodging,” Pettit said. “I don’t think that those giant corporations have a corner on lodging. I would like to have the freedom to use the property that I own the way I want to, with some limitations.”

The report presents several options. On the business-related side of the spectrum, one option is a requirement that the short-term rental be within the host’s residence, in essence ruling out rentals of secondary properties. The report notes that residency requirements inhibit landlords from converting long-term rentals into short-term rentals, a practice that could potentially affect the affordability of housing in the city.

Other business-related regulations limit the number of rooms dedicated to short-term rentals, the number of occupants or the number of days a property can be rented, according to the report. Some cities have also restricted the number of permits that can be issued citywide or within each neighborhood.

Herbert said he doesn’t think residency within the short-term rental should be a requirement, and he is concerned with the precedent that could be set by limiting by neighborhood or citywide.

“We should not say, ‘We’re going to allow it, but only for 200 homes in the city,'” Herbert said. “That’s not a level playing field in my opinion. It’s either an acceptable practice or it’s not.”

Larsen said she thought all the regulation options included in the report should be considered, as well as any others that the city hasn’t yet looked into.

“I think we’ve got to look at all of them and look at the positives and the potential impact to not just the possible short-term rentals, but also how it potentially impacts other businesses such as hotels, neighborhoods and so forth.”

Fully booked

With its brand new white siding and crisply painted red doors, the house itself is perhaps the most visible sign of Pettit’s business.

Pettit, who lives a block over from the short-term rental, has listed the property on Airbnb for the past two years. Before that, she said she rented it out long-term for $800 per month. Though it is more work, Pettit said she makes twice that amount now, renting it out for about $95 per night.

With the extra money, she said she has been able to make various improvements to the home, more than $15,000 worth in the last year. In addition to the new siding, she also bought new stainless-steel appliances. She said keeping the house up is important because Airbnb allows guests to review hosts and properties.

Because hosts can block off days or even weeks that they don’t want to rent a house or room out, Pettit said the setup also provides other advantages.

“It also allows me to use the house when I want it, when my folks come up or I have visitors — I love that part of it,” Pettit said. “And also, ironically, it’s easier on the house, because nobody is in there ensconced; I get to clean it every week, several times.”

She said the vast majority of her guests are parents of University of Kansas students who are in town for sporting events, graduation or parent weekends at Greek houses. At the same time, she said she understood neighbors’ concerns with renting bigger houses to large numbers of people, but that she doesn’t see her rental as having a negative impact.

“I can totally understand the neighbors’ problem with that, and the safety problems with that,” Pettit said. “But a small house, to give people a feel of what it’s like to live in Lawrence, I don’t see any problem with it.”

For instance, some short-term rentals listed on Airbnb rent for more than $1,000 per night, providing lodging for more than 10 people.

Safety regulations

On the records and safety side of the spectrum, options listed in the report include a registration, permit or inspection process. Inspections could be required to receive a permit, or be done on a complaint basis. Some cities also require notifications to be sent to neighbors to inform them of the short-term rental, along with instructions on how to file a complaint.

Neither Herbert nor Larsen is opposed to regulations that could provide inspections or improve safety at short-term rentals. And Herbert emphasized that regulating short-term rentals isn’t creating a new industry.

“I want people to understand this already exists in our community now,” Herbert said. “This policy is not inventing a new problem. Short-term rentals are here; all this does is it allows the city to finally regulate them for safety and it allows the city to finally generate revenue off of them, for tax purposes, for transient guest tax purposes.”

Pettit, too, had no opposition to permitting or inspections, and also thought that a notification process for neighbors would be beneficial to all involved.

Pros and cons for the city

The report lists benefits and concerns associated with short-term rentals.

Benefits include the increased income for hosts, which could help hosts pay their mortgages and make improvements. The sales and local guest taxes collected on short-term rentals, which Airbnb began automatically collecting and remitting this month, also offer revenue for the city.

Concerns include how short-term rentals can potentially commercialize or otherwise disrupt neighborhoods. Increases in their popularity could also reduce the number of affordable long-term rentals. Herbert said he thought those concerns were valid, but that the issue was more nuanced.

“I don’t think any of the concerns are made up,” Herbert said. “In terms of validity, I’m sure they all have validity. One of the things I’ve been trying to make sure people understand is that every story has two sides.”

For instance, increasing the city’s stock of affordable housing is one of the commission’s main goals, and Herbert said he thinks that there’s another side to the argument that short-term rentals negatively affect affordable housing.

“When we talk affordable housing, I don’t think affordable housing just means making new housing for people affordable,” Herbert said. “I think it also means instituting policies that give people more leverage to be able to live in their home, to stay in their home, to not lose their home.”

Larsen said she thinks the commission should “strongly consider” whether the host should be required to live in the short-term rental, whether that be part-time or full-time residency. She also said she thinks there needs to be a mechanism in place for all short-term rental operators, not just Airbnb, to pay their taxes. And across all those issues, it’s a needed discussion.

“It’s definitely a conversation we need to have, because it’s becoming more and more prevalent in Lawrence,” Larsen said.