BILL ANALYSIS

 

 

 

C.S.H.B. 2665

By: Gates

Land & Resource Management

Committee Report (Substituted)

 

 

 

BACKGROUND AND PURPOSE

 

Short-term rental properties and residential amenity rental properties are an increasingly popular lodging and recreational choice for travelers in Texas. In recent years, however, a number of municipalities have banned or attempted to ban these properties as a rental option, resulting in a patchwork of ordinances and lawsuits around Texas that has caused confusion in the market.

A study by the state, informed by ideas from various stakeholder groups, would help to resolve this ongoing issue and encourage the state to develop a legislative solution in the next legislative session. C.S.H.B. 2665 provides for this study by requiring the Texas Department of Licensing and Regulation to establish a task force to study, review, and report to the legislature on the impact of municipal ordinances, rules, and other measures regulating short-term rental properties and residential amenity rental properties.

 

CRIMINAL JUSTICE IMPACT

 

It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.

 

RULEMAKING AUTHORITY

 

It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.

 

ANALYSIS

 

C.S.H.B. 2665 amends the Property Code to require the Texas Department of Licensing and Regulation (TDLR) to establish a task force that is administratively attached to TDLR to study, review, and report to the legislature on the impact of municipal ordinances, rules, and other measures regulating short-term rental properties and residential amenity rental properties. The task force is composed of two members appointed by each the governor, lieutenant governor, and speaker of the house of representatives, one TDLR representative, and two members representing the interests of neighborhoods and is required to submit to the legislature not later than December 31, 2024, a written report that includes a summary of the task force's findings on the following:

·         the impact of rental properties and residential amenity rental properties on the quality of life in communities where those properties are located, including impacts on crime, noise, local school enrollments, and other unintended consequences;

·         the ordinances impacting short-term rental properties and residential amenity rental properties;

·         the economic impact of ordinances on short-term rental properties and residential amenity rental properties;

·         the remittance of state and local taxes by short-term rental property and residential amenity rental property owners;

·         local registration and reporting requirements for short-term rental properties and residential amenity rental properties;

·         the economic impact and hidden costs of short-term rental properties and residential amenity rental properties on communities, including certain impacts specified by the bill;

·         increased costs to municipalities, homeowners' associations, and residents from short-term rental properties and residential amenity rental properties in a community in which those properties are located and methods to reimburse those costs from the state; and

·         lessons from other municipalities and states on successes and failures with short-term rental property and residential amenity rental property regulations.

The bill also requires the report to include legislative recommendations regarding the following:

·         whether there is sufficient justification for statewide regulation of short-term rental properties and residential amenity rental properties, considering regulation of land use has long been entrusted to local governments;

·         potential benefits and costs of adopting statewide regulations of short-term rental properties and residential amenity rental properties;

·         appropriate protection of local health, safety, morals, and general welfare regulations;

·         methods to create greater accountability of entities engaged in the business of operating an Internet-based platform to facilitate the rental of short-term rental properties and residential amenity rental properties, including methods to audit and increase the payment of state and municipal hotel occupancy taxes and diminish or eliminate disturbances in residential neighborhoods;

·         methods for the state to reimburse municipalities for hiring additional code enforcement officers and to reimburse homeowners who suffer financial and emotional hardships as a result of living near a short-term rental property or residential amenity rental property;

·         the ability of municipalities to adequately address the effect of short-term rental properties and residential amenity rental properties on neighborhoods, neighbors, and families through the enforcement of nuisance regulations and criminal citations, with consideration given to the transient nature of short-term rental property and residential amenity rental property activity;

·         the ability of municipalities to impose reasonable density restrictions on the location and proliferation of short-term rental properties and residential amenity rental properties to maintain the character of single-family residential neighborhoods;

·         the value of elected municipal officials having the ability to adopt specific short-term rental property and residential amenity rental property regulations that can effectively address a community's particular needs and economic conditions; and

·         the effect of state preemption on short-term rental property and residential amenity rental property regulations in other states.

The task force is abolished and the bill's provisions expire January 1, 2025.

 

C.S.H.B. 2665 defines "short-term rental property" as a residential property, including a single-family dwelling or a unit in a condominium, cooperative, mixed-use development, or timeshare, that is rented wholly or partly for a fee for a period not longer than 30 consecutive days. The term does not include:

·         a unit that is used for nonresidential purposes, including an educational, health care, retail, restaurant, banquet space, or event center purpose or another similar use;

·         a bed and breakfast; or

·         a commercial lodging establishment, including a hotel or motel, that is not taxed as residential property under the Property Tax Code.

The bill defines "residential amenity rental property" as a feature or facility that is part of a residential property, including a single-family dwelling or a unit in a condominium, cooperative, mixed-use development, or timeshare, and that is rented for a period of less than 15 hours and for a purpose other than providing sleeping accommodations to the lessee.

 

 

EFFECTIVE DATE

 

On passage, or, if the bill does not receive the necessary vote, September 1, 2023.

 

COMPARISON OF INTRODUCED AND SUBSTITUTE

 

Whereas the introduced provided for certain authorized and prohibited regulation of short-term rental properties by municipalities and counties, the substitute instead provides for a study and related report to the legislature on the impact of municipal regulation of short-term rental properties and residential amenity rental properties to be performed and submitted by a task force established by TDLR and does not include any provisions from the introduced, except for a definition for "short-term rental property."