On Monday August 21, the Albuquerque City Council will be deciding to place a cap on the number of short-term rentals in the city in addition to the requirements of the 2020 short-term rental ordinance which requires short-term rental owners to obtain a permit and set certain occupancy limits.
The goal is to cap short-term rentals like Airbnb and VRBO in an attempt to stop housing units from being removed from the overall housing market reducing the availability of homes for sale. The initiative is intended to boost housing stock in Albuquerque. For the last year, the Mayor Keller Administration has claimed that the city is experiencing a crisis in housing with a shortage of affordable housing.
Under the legislation, the permit cap would be set at 1,800. The cap was raised from 1,200 in the original legislation to accommodate all current rentals in the city. In addition to the cap, the ordinance would do the following:
- Limit the number of permits per owner to 3.
- People who currently own more than three rental properties would be able to keep all of their properties, and renew those permits in perpetuity but they would be prohibited from adding properties.
- All existing rental properties would be grandfathered into the 1,800 cap.
- Require a manager, either the owner or another party, to live or be based within 20 miles of the city limits, and be available 24/7 to respond to maintenance issues, security concerns, and complaint.
- Require the manager’s contact information be included on the permit application
- Limit permits to natural persons, as opposed to corporations or other business entities.
- Limit the number of rentals to 3 per individual operator. People who already own more than 3 rentals would be grandfathered in and be able to renew permits for all their properties.
- Properties available for mid-length stays for traveling nurses or other transient workers would not be included. Only properties offering stays of 30 days or less will be included.
- Corporations would still be able to own short-term rentals, but they would need to find a local manager to list their contact information and be available to guests.
- Increase the civil penalties for non-compliance with the ordinance.
City Government Affairs Manager Diane Dolan said it doesn’t appear like there’s widespread corporate ownership of short-term rentals in Albuquerque.
CONFLICTING DATA
Data sources are conflicting about the number of short-term rentals currently in operation in the city. City officials say that there are about 1,200 short-term rentals operating in the city
City records obtained by the Albquerquerqu Journal show the vast majority of short-term rental owners with permits rent out just one unit. Of the over 600 people and companies that rent their properties out for short term stays, just a handful currently have permits for 3 or more properties. That number excludes the hundreds of unpermitted short-term rentals that the city has identified.
The number of rentals operating in the city fluctuates throughout the year. AirDNA tracks short-term rental data. It reports that just over a third of the rentals in the city are available full time. During the month of Balloon Fiesta last year, the number of available rentals shot up by about 600 units between August and October to 2,310 units. That number included single rooms, which currently make up about 13% of the rentals in Albuquerque. In July 2023, AirDNA found that there were 1,933 active short-term rentals in the city. About 200 of those are single-room rentals.
Even short-term rentals that are only available for a limited part of the year are still required to obtain an operating permit per the 2020 short-term rental ordinance, a spokesperson for the city’s Planning Department said. In July 2023, AirDNA determined that there are 1,933 active short-term rentals, defined as those with one or more days available to book, in the city. About 200 of those are single-room rentals.
Even short-term rentals that are only available for a limited part of the year are still required to obtain an operating permit per the 2020 short-term rental ordinance, a spokesperson for the city’s Planning Department said.
According to AirDNA, there are currently 1,954 active rentals in within the city. Albuquerque. Of those rentals, 241 are single room or shared room rentals, which would not be included in the cap which leaving 1,713 rentals which already comes close to the proposed 1,800 cap. City data collected places that number much lower.
As of May 1, city data shows 1,325 short-term rentals in the city. Government Affairs Manager Diane Dolan said the AirDNA data is overstated. She claims it includes some areas outside of the city, including Los Ranchos, and could potentially lump in medium-term rentals, geared at traveling nurses and other nomadic tenants. Only rentals under 30 days would be considered short-term rentals under the regulation.
According to Dolan, for several years the number of short term rentals has hovered around 1,200 in the city but between September 2022 and February 2023 the city has seen an unusual spike of about 400 rental units. Dolan said this:
“It’s like having the drain open, with the water on full blast. … We’re trying to pass down some housing, and meanwhile, some of it’s just trickling out the bottom.”
The link to quoted and relied upon news source material is here:
OPPOSITION EMERGES
City official did meet with both national Airbnb representatives and local owners, but parts of the legislation have remained contentious with some short-term rental operators in Albuquerque.
Carl Vidal, who owns three short-term rentals and runs a property management company for other owners called a cap “inherently unfair.” Vidal questioned who would decide who receives permits if the 1,800 cap is reached. Vidal said this:
“If the city is capping it and saying, ‘Okay, we’ve hit our 1,800 cap … they’re basically telling all future generations of New Mexicans, ‘I’m sorry, you’re not allowed to use your real estate to produce extra streams of income.”.
Vidal also participated in discussions about the 2020 ordinance. He did not agree with all of the regulations but supported others like occupancy limits.
Stacey Seidel, a contractor and short-term rental owner, said he understands adding a cap on the number of permits and acknowledges that some housing is lost to the short-term market. However he doesn’t support the three rental properties limit on per person. Seidel said having additional properties allowed him to scale his business and hire several full-time employees. Seidel said this:
“Here’s what happens: now I can’t have full time employees. … So we’ve lost jobs out of our community … it really restricts our ability to give a good, quality service and high paying jobs.”
Seidel said he would rather see a tax increase on short-term rentals including his own that goes towards multifamily construction or other housing programs than a limit on the number of rentals per person.
REPLACING HOUSING
Government Affairs Manager Diane Dolan said the city faces a high cost to replace lost housing. Although the number of housing used by short-term rentals is about 1% or lower replacing even a few hundred units is costly. Part of Mayor Tim Kellers “Housing Forward ABQ” to address the city’s housing shortage is converting old motels and hotels as one of the cheapest ways to build new units. However, Dolan said replacing the 400 units lost between September and February would cost at least $40 million. For different types of housing, that number could double.
Rental property owner Carl Vidal owns both short- and long-term rentals. Vidal said that certain properties are more appropriate for one use. Industry members contend that not all properties are suitable for long-term rentals and vice versa. Vidal said this:
“I wouldn’t be able to cover my mortgages with [the short-term rental properties] as long term rentals. … I do have two additional long-term rentals … and those two houses don’t make short term rentals.”
Former City Councilor and former State Senator Eric Griego is now employed by the city as the Associate Chief of Staff for HousingPolicy at the city. Griego said the cap on rentals legislation isn’t intended to penalize short-term rental owners, and fits into the larger zoning changes passed in June by the City Council and amendments to the city’s zoning laws and Mayor Keller’s “Housing Forward ABQ” plan and other Mayor Keller Housing Forward initiatives, including allowing casitas in more residential areas in the city. Griego said the legislation can help ensure that when new casitas are built, they’re primarily used for housing rather than short-term rentals.
Griego said this:
“This is about making sure that we can maximize the number of units that we can put into the housing stock. … It’s looking forward as we bring more accessory dwelling units online … to the extent that we can, protect as many of those for affordable housing in particular.”
EDITOR’S COMMENTARY
Eric Griego has very little or no background on housing development in the private sector and is a politcal appointee of Mayor Tim Keller. He is the leading advocate for Mayor Keller’s “Housing Forward ABQ” plan. Griego has also made the misrepresentation at city presentations on Keller’s “Housing Forward ABQ” plan that the goal of the plan is to reduce homelessness when in fact its goal is to increase the amount of affordable housing and it has nothing to do with the homeless.
LOCATION, LOCATION, LOCATION
Contractor and short-term rental owner Stacey Seidel said that the area that units are in can affect their success as one type of rental. According to Seidel people might not want to live in Downtown Albuquerque. But tourists love to stay in the area. Similarly, tourists are less interested in visiting the North Valley.
Seidel, who also rents to four long-term tenants, said short-term rentals may eventually convert into long-term housing as the market oversaturates and it becomes harder to justify cleaning and management costs as nightly rates fall.
Seidel spent $250,000 renovating a historic boarding house in the historic Huning Highland area which he currently uses as a multi-unit vacation rental. Seidel said the goal has always been to convert some of those units into regular apartments fulfilling the “historic precedent” of the building as housing. Seidel said he wouldn’t have been able to afford the renovation without the increased immediate revenue from Airbnb, and the property may never have been restored.
Seidel said this:
“If it were going to be long-term rental, the cost of the restoration would have prohibited me to restore that building …While we are losing some things to the STR market, we are also gaining things.”
CAPPING SHORT TERM RENTALS OCCURING STATEWIDE
Other cities and counties in the state are implementing or considering short-term rental caps. Santa Fe capped the number of permits at 1,000, and the Town of Taos capped them at 120. While both locations have reputations as tourist towns, they both have much smaller populations than Albuquerque.
According to city officials, before 2020 short-term rentals were “completely unregulated.” City officials are now saying 59% of Albuquerque short-term rentals are permitted — a provision of the 2020 ordinance. In September last year, just 39% of rentals were permitted. The number increased after an enforcement push on the city side, although as of June 2023, no fines had been issued.
The link to quoted and relied upon news source material is here:
COMMENTARY AND ANALYSIS
A controversial provision of Keller’s “Housing Forward ABQ” plan is pending consideration by the City Council of City Council Ordinance 0-23-69 seeking to regulate and cap short term rentals, also known as “Bed and Breakfast” rental units. The Keller Administration argues that there is a need to protect existing housing stock to make it available to all permanent residents and future residents so that they will always have access to a safe, stable home. It has nothing to do with providing housing to the homeless.
EDITOR’S DISLOSURE: The below commentary was provided by Associate Broker Carl Vidal with the Irvie Homes Property Management.
“Despite Mayor Keller’s claims that short-term rentals reduce available housing to permanent residents, there is no evidence that banning or capping the number will increase the city’s overall housing supply to permanent residents. AirDNA, a leader in short-term rental data, reports that 66% of short-term rentals in Albuquerque are part-time units. These homes are rented out periodically by locals to support their families and cover monthly bills. The locals often reside in these homes while they’re not rented. In Albuquerque, short-term rentals account for only 0.007% of the housing inventory, and only 0.003% if we consider just full-time rentals.
Short-term rentals have significantly contributed to Albuquerque’s economy, generating an impressive $216 million in economic impact and creating over 2,280 jobs locally. Moreover, the city, state, and county have collected around $14 million in taxes in 2022 alone from these rentals. With over 2,500 hosts leasing short-term rentals across the city, last year’s 431,000 guests spent an average of $361 per overnight visit. These figures demonstrate the essential role of short-term rentals in the city’s economy, making them a vital asset that should be allowed to exist and thrive..
Short-term rentals play a crucial role in providing housing for transient workers in various industries, including healthcare traveling nurses and locum doctors, traveling contractors, actors, directors, film workers, and staff from Intel, Facebook, Sandia Labs, and Kirtland Airforce Base. These rentals serve as a lifeline for workers who would otherwise struggle to find affordable housing during their stay. Without short-term rentals, many of these workers simply will not be able to find housing locally, highlighting the critical role these rentals play in supporting the local economy and workforce.
Short-term rentals provide an accessible investment opportunity for local Albuquerque residents, with over 2,000 hosts across the city relying on the income they generate. In contrast, building hotels requires a vast amount of funding that is typically only accessible to the wealthiest members of our society. For instance, a mid-tier 100 room hotel costs an estimated $22.5 million, with a minimum down payment of $4.5 million, making it unaffordable for the vast majority of New Mexicans. As a result, out-of-state corporations often finance these projects, taking profits out of our state. Short-term rentals serve as an investment vehicle for the 99%, ensuring that the income generated stays within our community and benefits local residents.
Limiting short-term rentals to only 1,800 units will strip future generations of New Mexicans of their opportunity to benefit from this innovative and growing sector. The “Housing Forward ABQ” plan to limit short term rentals is a restriction on commerce and interfere with property owners’ rights. It will give an unfair advantage to out-of-state owned hotels in supply and demand economics. By limiting the number of licenses available, the city is undermining a vital source of income for thousands of locals. Short-term rentals offer a valuable opportunity for the future and should be given a chance to thrive.”