The moratorium on business licenses for short-term residential rentals inside the city ends in October, or sooner if the Hot Springs Board of Directors chooses to lift the pause before the end of the 135-day period that took effect June 1.
The ordinance the board adopted in May that established a regulatory scheme for properties listed for rent on online marketplaces such as Vrbo and Airbnb capped short-term rentals at 700 in areas zoned for residential use. Information presented to the board July 31 at its 2022 goal setting/budget priorities work session showed 378 STRs were licensed in residential zones prior to the June 1 pause, meaning 322 more licenses will be available in residential areas when the moratorium ends.
Those applicants will have to petition the Hot Springs Planning Commission for a conditional-use permit, a dispensation that allows land uses, with conditions, that aren't permitted in a zoning district. Planning commission action on conditional-use applications can be appealed to the city board.
Applicants who were approved prior to the start of the moratorium were exempted from the conditional-use requirement.
The board acts as a quasi-judicial body when it hears conditional-use appeals and is prohibited from soliciting or receiving information, save what the city presents in a board action request form, relevant to the appeal outside the confines of the appeals hearing.
"The conditional use is going to be the nightmare," City Attorney Brian Albright told the board. "The conditional use is going to become political, and unfortunately this is a quasi-judicial determination. The opposite thing of what you want to be political."
He said the conditional-use process puts directors in an awkward position, one where they either have to recuse if they talk to a constituent about an appeal or risk alienating the people they were elected to represent.
"You're an elected official, and you're telling your constituents, 'I can't talk to you about it,'" Albright told the board. "That's difficult for you and the constituent. It's hard to understand. Maybe it's not a conditional use. Maybe it's some other permit we could take through a different avenue, whereby an appeal doesn't come to you."
The board talked about lowering the cap in residential zones to 500, a ceiling Albright said makes the conditional-use requirement less necessary. It was intended to work in tandem with the cap to limit the number of STRs in neighborhoods.
"If you were inclined to lower it down to 500, I think a nice offset to that would be to eliminate the conditional requirement," he said.
Many city residents who spoke during public input sessions the board held in the spring complained about the proliferation of STRs, telling directors that the business practice has turned their neighborhoods into commercial areas.
District 4 in southwest Hot Springs has 120 licensed STRs in residential zones, the most of any of the six city director districts. According to the city's GIS map, most of the district's STRs are clustered on Lake Hamilton and in residential areas west of Oaklawn Racing Casino Resort.
District 5 in south-central Hot Springs has the second-most residential STRs. Many of the 98 are concentrated in the Lake Hamilton and Lakeland drives areas the city annexed in 2018.
District 1, the city's northernmost political boundary, has 81 residential STRs, and District 3 in west Hot Springs has 54. District 3 Director Marcia Dobbs-Smith told the board she supported the conditional-use requirement as a way to notify residents that an STR could be coming to their neighborhood. She said she was amenable to a less cumbersome means of notification.
"If there's another vehicle to notify the neighbors, I'm OK with that," she told the board. "To me, it was unfair to wake up one day and you have a business next door to you and you were never notified. Whereas as with a conditional use you have to go through a process and the neighbors get notified. That's the only way I knew of to get the neighbors notified."
The city issued 569 total STR licenses prior to the moratorium, including 97 in commercial zones and 78 in planned development zones. There's no cap on STRs in nonresidential areas.
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City board considers changes to STR ordinance - Hot Springs Sentinel
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