Lawrence City Hall, 6 E. Sixth St., Thursday, July 7, 2016

As the city prepares to regulate short-term rentals, the pivotal question will be whether the owner of the property lives in the home.

At its work session Tuesday, the Lawrence City Commission directed city staff to draft regulations that would treat nonowner-occupied short-term rentals similarly to bed and breakfast operations. That would require the property owner to obtain a special use permit, making such an operation a possible but not guaranteed use.

The majority of commissioners expressed concerns that nonowner-occupied short-term rentals could negatively affect neighborhoods and were in favor of using a discretionary process to permit them.

“I think that that is a good solution because that discretionary use can be revoked if it’s abused,” Vice Mayor Stuart Boley said. “…That’s the kind of protection I think we need to have.”

The city’s zoning regulations currently prohibit all forms of short-term rentals, which are typically leased through online platforms. Airbnb, one of the most popular platforms, currently has about 180 rentals listed for Lawrence. More than 100 of those listings, or about 60 percent, are for the entire home as opposed to a room in an owner-occupied home.

Commissioner Lisa Larsen also said she liked that the permit process would allow neighborhoods to provide input.

“The neighborhood has the opportunity to voice their concerns and make their case known,” Larsen said.

Management Assistant Danielle Buschkoetter told the commission the special use permit review process, at a minimum, takes three months and costs $725. Buschkoetter said the permit is required to go to the planning commission for review, which includes a public hearing and public notice. Various conditions can be put on a special use permit, and the City Commission must ultimately approve it.

Some of the nonowner-occupied Lawrence properties listed on Airbnb rent for more than $100 per night, meaning property owners could easily double what they would make if the properties were used as traditional rentals with long-term leases. In some larger cities, landlords and investment companies have bought multiple homes to convert into short-term rentals.

City Manager Tom Markus said the idea of requiring the permit for nonowner-occupied short-term rentals came about in part because city staff is concerned about those rentals proliferating in neighborhoods on a whim.

“We kind of settled on the special use permit because it gives the city some discretion and it opens it up to commentary from the neighborhood because there is a public process involved,” Markus said. “And it also allows you to impose very specific conditions that you may hear about from the neighbors about certain issues.”

Commissioner Matthew Herbert, who owns a property management company but does not use any of his properties for short-term rentals, was generally not in favor of such a discretionary process, asking whether it opened the city up to “really subjective interpretation of rules.”

“My concern is that we ought to have regulations that apply equally across the city,” Herbert said. “And when you set up the special use permit process, you throw that out the window.”

Short-term rentals in which the property owner lives in the residence would not require a permit, but the draft regulations require other conditions to be met. To begin with, the properties would need to be licensed and inspected just as long-term rentals are.

Owners of all categories of short-term rentals would be responsible for ensuring all applicable taxes are collected and remitted, according to the draft. Property owners would also have to provide proof of insurance, provide notices to neighbors with instructions for filing a complaint and conform to current occupancy limits.

City staff will continue developing the regulations, which must be approved by the planning commission and the City Commission.