Last month, Santa Fe city officials said they expected 750 permit applications from short-term vacation rental operators seeking to fall in line with a new city ordinance passed in January.
But through Thursday— four days before the deadline— only 185 applications had trickled in to the city's Planning and Land Use Department.
That's a surprise to officials who had figured the number would come in far above the cap of 350 that was established to regulate the controversial trade in residential areas.
Planning and Land Use director Jack Hiatt said he's been waiting for a flood of last-minute applications to come in before Monday's deadline. As of Thursday, however, that hadn't happened.
Under the ordinance, if the number of short-term rentals drops below 350, the city is to develop a lottery system to allow new operators to come on board in the future.
A shortage of applicants could mean less revenue for the city from permit fees.
The Planning and Land Use Department is planning to hire three full-time staffers— to be paid with the permit fee revenue— to handle enforcement and administration.
Hiatt on Thursday said his department is moving forward with enforcement preparation. Inspections for zoning, fire safety and water are under way; inspectors must come back with a satisfactory report for a permit to be issued.
"We're on our way to a reasonable implementation of a difficult ordinance," he said.
Hiatt said enforcement of the short-term rental ordinance could begin as soon as Tuesday, the first day after the application submittal deadline. City staffers will be assigned to actively search the Internet for those people illegally renting vacation units, he said.
However, operators can't be cited for leasing units without a permit until May 30, the day the ordinance officially goes in to effect.
Under the recently approved ordinance, existing rental units can continue to operate as long as owners secure a permit and can prove appropriate taxes have been paid. People who operate multiple units will have to pay a permit fee of $1,000 for the first unit and $250 for each additional one.
The ordinance, which was approved by the City Council on Jan. 30 by a 5-3 vote, came after years of discussion on the controversial topic. Critics maintain short-term vacation rentals damage neighborhoods and their residential character, while driving up home costs. Supporters say they support Santa Fe's tourism industry and that there have been few complaints about short-term renters causing problems.
Less than one month after passage, the new ordinance was targeted by a lawsuit filed in New Mexico's 1st District Court by a half-dozen plaintiffs who are active in the short-term rental business.
Among other things, the plaintiffs alleged the ordinance is arbitrary and capricious and imposes an unfair permit fee.
In response, the city is considering amending two provisions in the ordinance:
- One would clarify that only one rental is allowed in a seven-day period.
- The other would strike a clause preventing rental units from changing ownership in the next five years if they want to continue operating.
"I think that (condition) is, perhaps, vulnerable," City Attorney Frank Katz said during a council meeting earlier this week.
A hearing on the proposed ordinance changes is scheduled April 30.
In addition to the cap and permit requirements, the new law will also impose other requirements on short-term rental operators. For example, rental units with no owner on the premises may be rented no more than 17 times annually.
