Years of neglecting implementation of city ordinances on short term rentals in Kansas City caused neighbors of short-term rentals to grow tired of the mistreatment of their neighborhoods. Complaints often were related to excessive noise, parties, extra traffic and safety concerns. They put pressure on the city to do something about the problem. Rather than work to enforce the regulations already in place, the city decided to adopt and enforce new ordinances in the summer of 2023.
Like Kansas City’s new Source of Income Ban, the city took action without seeking input from the business owners operating quality short term rentals. The new rules for registration as a non-owner-occupied short-term rentals include appropriate zoning and/or complying with a new density rule. This rule prohibits too many short-term rentals from being located within a certain proximity. The only exception is grandfathering in short-term rentals previously registered with the city under the old ordinance.
Those who have applied for a short-term rental registration and have had their application denied can appeal this decision. The city recently assembled an appeals board to begin processing the appeals. Their first hearing was Thursday, January 11th, 2024. As one of the short-term rental owners appealing the denial, I realized quickly after entering the appeal board meeting, we were unprepared for this process. Thankfully, due to the length of time it took to hear other cases, our hearing was postponed. Megan Duma, a real estate attorney representing many short-term rental owners with their appeals, was also there that day and has advice for others.
Preparing For Your Appeal Hearing
If you are in the position of awaiting your appeal, there are several things you need to know. Duma explained this appeal board is acting as a pre-trial. Bret Kassen is present as the City Attorney representing the Neighborhood’s staff. Therefore, short-term rental owners should also come to the appeal board hearing with their own legal representation. She said, “I’ve seen three main reasons folks are denied so far: (1) receiving incentives; (2) non-resident STR, which is residentially zoned, and applicant was not aware; (3) zoned business, but there is a non-resident STR within 1,000 sq. Ft. Radius.”
A vague letter from the city office didn’t explain much about the appeal process and meeting with the board. Having recently been through the Jackson County tax appeal, I thought it could be something similar… Bring evidence, plead your case and receive a logical/reasonable conclusion. I naively believed we would be ‘appealing’ to people. The board would listen to your case and make a decision if the denial would be over-turned. After observing the appeal board meeting earlier this month, I was wrong. As Duma puts it, “You need to prove the City is wrong on these issues to over-turn staff’s decision.”
According Duma, the city cannot prosecute a short-term rental owner while they are going through an appeal process. She advises everyone to “See if you can move your hearing to March or April and seek counsel.”
Learn From My Short-Term Rental Registration Problems
My mother and I became hosts of a short-term rental when one of our redevelopment projects was not selling. The renovation, of our property, took longer than expected. After months sitting on the market and countless price reductions, we were looking at taking a big personal hit or exploring alternate options. One main reason our property was not appealing to home buyers was the location. We were on the end of an urban one-way street with commercial properties as neighbors. We checked with our hard money lender to approve an investment strategy change. He agreed as long as it was short-term rental only and we didn’t sign a lease with any long-term tenants. Within 3 hours of posting the house on AirBnB, we had our first booking. With seasoned proof of income, we were able to refinance the property and have been short-term rental hosts since.
We learned a lot of lessons about how to be a good host and a great neighbor. The value of all the houses on the block increased and inspired more renovations. It’s been fun to host guests from around the world and provide them with an amazing stay close to downtown. The former owner even gave a nod of approval.
Initial Attempt to Register with Kansas City
Kansas City benefited by accepting our occupancy tax since the start. Initially we didn’t take the steps to register our property as a short-term rental. The city sent us a letter in December 2022 and we started the application. Some of the process was simple paperwork, we were able to complete and notarize. One of the rules was sending a specific notice to all of the neighbors whose property touched our property line and obtaining signatures of approval from the majority.
Commercial properties surround our short-term rental. The only adjoining ‘residence’ is a duplex which has been vacant at least three years. I would have to seek permission from neighboring businesses!? We sent completed forms into the city and sent the letters off to the adjoining properties and waited… The restaurants benefited from us referring our guests and we cooperated with another commercial neighbor for approving their development expansion only a year prior. Asking those businesses to approve of my business was not their top priority to respond. In hindsight I should have made more of an effort to get this resolved and be one of those cases grandfathered into compliance.
Only a few weeks after we got our letter from the city, I began hearing talk of changes to the Kansas City short-term rental ordinance. I was hopeful this would change the neighbor signature process. We waited for the new ordinance to pass and then submitted a new application in the summer of 2023. Unfortunately, while we were the first short-term rental operating on the block, we were not the first to submit an application over the summer. Due to the new zoning and density rules, our application was denied. This new registration is a race to find where the density has not been claimed and the appeal board is there to uphold the city’s decision. I am afraid our appeal may fail.
What’s Next?
The new short term rental rules and the ban on source of income are two ordinances which are deeply impacting small business owners and investors like myself. I am proud of the improvements to houses and neighborhoods I have completed projects in over the past 7 years. Leadership in Kansas City show little appreciation to the labor of people doing the work and investing in the improvements. Many investors have already sold off their properties to reinvest in other markets. My pride in the city has made me hold out but I can’t hold out for long.
If you are in a similar position and looking for help with your short-term rental appeal, you should consult with Megan Duma or another real estate attorney knowledgeable in the new ordinance. You may also consider making a changing to a mid-term rental. At our next MAREI meeting, Al Williamson, is making the case for why short-term rental owners should make the switch to extended stays. For more information on the February 2024 meeting click HERE.
