The city is encouraging current short-term residential rental business license holders and new applicants to get their properties inspected before the application window reopens on Jan. 3.
All of the more than 600 vacation rental licenses the city issued prior to the start of the application moratorium that took effect at the end of May will expire at the first of the year. The city said inspections have been completed for about 100 of the licenses. Those license holders won't have to submit to a subsequent inspection to renew their license for 2022 but will require an annual inspection to renew in 2023 and beyond, the city said.
"There is the ability to get your inspection now if you're doing a renewal," City Attorney Brian Albright said at Tuesday night's Hot Springs Board of Directors meeting. "We encourage holders of existing licenses to get those inspections done now so they're not caught in the log jam on Jan. 3.
"New applicants, while you cannot file your application until Jan. 3, if you don't mind paying for a $50 inspection, you could at least have that accomplished so that your timing on applying for a new one will not be delayed."
An amendment the board adopted Tuesday to the 12-page ordinance regulating short-term rentals makes the city responsible for inspections. The city was responsible under the 12-page ordinance adopted in May, but an amendment adopted in October required owners to hire a registered home inspector in good standing with the Arkansas Home Inspector Registration Board.
The city said the cost of hiring a home inspector was prohibitive for some STR owners. Scheduling an inspector in a timely manner was also problematic, the city said. Planning and development staff and the fire department will now inspect STRs.
"They will work in concert with one another to get these inspections completed," Albright told the board.
An amendment adopted in October to the 12-page regulatory ordinance lowered the annual cap on the number of STR licenses the city can issue in areas zoned for residential use from 700 to 500, creating more urgency for applicants in residential zones to be ready to reapply or apply when the city resumes accepting applications Jan. 3.
STRs in horizontal property regimes, or residential buildings with individual units that can be bought and sold separately, won't count against the annual cap in residential zones.
An ordinance the board adopted in March prohibited STRs from operating in the city without a business license. Albright told the board the certificate of occupancy, which certifies a property is in compliance with building and fire codes, issued with a STR license doesn't have to be renewed.
District 1 Director Erin Holliday said it wasn't clear from her reading of the ordinance regulating STRs that annual inspections are a prerequisite for renewing a license.
"Is the inspection only required for initial application?" she asked Albright. "Under renewals, because it's not mentioned there at all, has led to much confusion."
Albright said the ordinance requires annual inspections for renewals, citing the paragraph that states inspections may be requested "within 120 days prior to the initial application or renewal application for a business license."
Per the ordinance, licenses will lapse if they're not renewed by May 1. Renewal applications submitted after May 1 will be treated as an initial application, requiring STR owners applying for a license in areas zoned for residential use to apply for a special use permit through the planning and development department.
STR owners issued a license in a residential zone prior to the seventh-month moratorium weren't required to obtain a special use permit. Albright said the exemption won't carry forward after the license lapses.
"The reason that's super important for those renewals is that they may have been issued in a residential area that then did not require a special use permit which now would," he said. "If it lapses, they have to go back to square one like it's a brand-new application. It's no longer treated as a renewal."
The city is drafting notification rules for special use permits. Albright told the board the requirements will be similar to a conditional use permit, a dispensation allowing land uses, with conditions, that are otherwise prohibited in a zoning district.
Per the city's zoning code, the city is required to provide written notice to property owners within 200 feet of a proposed conditional use location and publish a legal notice at least 10 days prior to the planning commission hearing on the conditional use application. Conditional use applicants have to post a notification sign on their property at least 10 days before the hearing.
Albright said the one-time, $475 application fee for special use permits will cover the city's publication costs.
"It's not something that's a revenue generator," he told the board.
The regulatory ordinance adopted in May required STR applicants in residential zones to petition the planning commission for a conditional use. An amendment adopted in October replaced the conditional use requirement with the special use permit.
While the city board is the venue for appealing a conditional use permit, the city board-appointed Board of Zoning Adjustment will be the venue of first resort for appeals challenging the issuance of a special use permit. BZA actions can be appealed to circuit court.
The special use permit, along with the annual cap of 500 STR licenses in residential zones, is intended to protect the availability of affordable housing, which the city said is at a premium in Hot Springs. Albright has asked the board to consider a means for limiting STRs in residential areas other than the special use permit process.
The permits run with the property, meaning they can be transferred when a property is sold.
"It creates an additional layer of what we would call a commodity," he told the board last month. "If we ever reach the cap, the special use permit can transfer on sale. One house next door may be perceived as more valuable than the house that doesn't have a license or permit."
The city said several homes with STR licenses are being listed at twice the asking price of adjacent properties that don't have a license. Like the special use permit, the exemption that excuses current license holders from obtaining a special use permit also transfers when a property is sold, potentially making those properties more valuable than properties that don't have an exemption.