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How to Build a Short-Term Rental Enforcement Program That Benefits Government’s Bottom Line

Not much is booming in 2020, but after a dip during initial lockdowns, short-term rentals (STRs) have emerged stronger than ever as travelers look for safe (and relatively close) vacation options. The rise in STRs has even outpaced the recovery of hotel stays—experts speculate this could be due to a number of factors including the dip in business travel and that vacationers may feel safer traveling to and staying in STRs.

This shift can make governance harder for local governments if they aren’t prepared. Hotels, for one, are relatively easy to regulate: they’re often relegated to commercial zones, are obvious to locate for compliance checks, and are fairly easy to identify. Not so for STRs. These properties are scattered around cities and counties, are often “de-listed” and then “re-listed,” and rarely in compliance. According to Granicus data, the average compliance rate of STRs in a given city or county hovers around 10%, but for cities that leverage technology platforms to help them manage compliance, the rate shoots up: Denver, CO, for example boasts an 85% STR compliance rate.

Without the help of a strong technological infrastructure, STRs are nearly impossible for government agencies to keep up with. Beyond maintaining compliance (by identifying illegal STRs, for example), these technology platforms create efficiencies for government agencies. In Garden Grove, CA, for example the city (which is next door to Disneyland) has banned STRs, yet due to its proximity to Disneyland many continue to pop up. Without a technology to help them identify illegal STRs and issue communications and citations, it took agents far too long to see a case all the way through.

“It took a lot of time for our officers to research properties and gather evidence,” Pete Roque, enforcement supervisor, Garden Grove, CA said in a recent webinar. “Ultimately there was too much work involved to find the properties.”

1. Use digital tools to get hosts to voluntarily comply with ordinances

STR hosts can’t maintain compliance if they don’t know about the ordinances they need to follow. A website with good search optimization will allow hosts looking for information to find everything they need to know in one place. Clearly explaining the ordinances on the site and this goes a long way in maintaining compliance.

“People will be much more likely to comply if they understand the reasons behind the rules,” Host Compliance founder Ulrik Binzer, said.

Beyond the website, government agencies can get the word out through digital communication with the help of community outreach and involvement. Binzer has seen success through local media outreach as well as local governments hosting permit registration workshops or including information about new ordinances on general property tax bills.

2. Make the permit process accessible from anywhere

Making the process accessible across multiple devices is an important part of meeting the hosts where they are. In fact, 49% of government website visits are on mobile. This accessibility creates a seamlessness that many constituents have come to know and expect from their favorite brands (including online rental platforms)—and that expectation extends to their government interactions, as well. It’s also beneficial to utilize all-in-one platforms like Granicus’ to get everything processed in one place. This way, hosts are less likely to drop off from an application due to frustration or time constraints.

3. Invest in software to identify non-compliant STRs

With over 100 different online platforms on which hosts can post their STR, it’s nearly impossible to manually identify STRs in a given area—especially because even if government agencies do identify listings manually, the platforms don’t provide STR addresses or contact information. Compounding this is the fact that many STRs are seasonal, so the roster of STRs is changing by the day. With the help of a platform like Host Compliance from Granicus, cities and counties have a birds-eye view into all of the STR activity in their area at a given time—including those that are non-compliant.

This was extremely beneficial in Garden Grove as the city banned STRs in 2017. Monitoring for violations is something Roque and his team were doing manually before Host Compliance and their discovery rate was much lower, while their investigation time was higher. Within the first three months of using Host Compliance, the City staff issued 80 citations which resulted in $160,000 in fines.

4. Make it easy to track and notify illegal operators

Invest in a platform that allows government agencies to document permit violations in one place. This will create efficiencies for government employees who are collecting the information: from easily uploading photos and screenshots to creating continuity if multiple people are working on the same case. Once illegal STRs are identified and evidence collected, utilize the information to not only inform hosts of their violations (including the photo evidence collected on the platform), but also provide them step by step instructions to allow them to become compliant.

As the STR industry grows during and beyond the pandemic, it’s essential that governments learn how to effectively manage these rentals in order to keep their communities safe and vibrant, and also to ensure city, county or state revenue isn’t left on the table. As many governments face budget constraints, the added revenue of an enforcement program and the efficiencies enabled by the right digital infrastructure will be imperative.

For more about building an effective STR enforcement program watch our webinar here.