Louisville, home to the Kentucky Derby, attracts a booming tourist business year around that outstrips the availability of local hotels, especially in areas such as the Highlands, Clifton/Crescent Hill, Germantown, Schnitzelburg, and Old Louisville. Offering properties on Airbnb was considered illegal subletting, yet Kentucky had 80,000 hosts on that site alone in 2016, which caused the Louisville Metro Council and Planning Commission to address the growing phenomenon with new rules in 2016.
New Regulations To Govern Illegal Subletting
The concern of lawmakers was to balance the needs of tourists and the rights of citizens to rent out their property with that of neighboring property owners who object to a changing parade of visitors each week. The initial regulations that came out of Council included a requirement for all short-term rentals to pay a $25 annual registration fee and a transient occupancy taxes. In cases where the host is present when guests arrive or leave the premises, no conditional use permit is required except in Traditional Neighborhood Zoning districts such as old Louisville or Limerick. In these cases, permit costs jump to $130 for a pre-application conference and a $1,000 fee for new users.
The ordinance also limited guest stays to 28 days, limited the number of guests according to the size of the rental, and added a few health, safety, and parking regulations for rental properties. The regulations, which went into effect in August 2016, were challenging to interpret for homeowners who wanted to rent out property.
Louisville has taken a lenient approach to enforcing the new rules, and only tends to issue violation notices or levy fees if neighbors complain by calling Mental Call 311. The city will eventually become more stringent in applying the rules, but currently, the city is not monitoring Airbnb or similar sites to find violators. The city is also considering excluding Kentucky Derby weekend from regulations, given the great shortage of hotel rooms at that time.