SIOUX FALLS, S.D. (KELO) — How many city or county steps are there to renting property through Airbnb and VRBO?
Not many when it comes to some cities or counties but others, have ordinances.
Short-term rentals through platforms such as Airbnb and VRBO are growing across the U.S. including in South Dakota.
In August of 2021, South Dakota had 3,668 short term rentals listed on Airbnb and VRBO, according to the South Dakota Department of Tourism. In 2017, there were 1,487.
The city of Sioux Falls has no regulations that cover short-term rentals, said Jason Bieber of the city’s planning and zoning department.
A short-term rental would classified as a rental, instead of owner-occupied, Bieber said. But a homeowner who lives in the house can still rent out the property on a short-term basis, he said.
The city of Lead has a new ordinance the regulates short-term rentals. City finance officer Billie Jo Inhofer said the ordinance is effective this month.
Those who rent their properties for short-term rentals need to apply with the city for a license. Applicants must show proof of inspection from the South Dakota Department of Health and if they can’t get a DOH inspection, they must be inspected by the city.
While some cities may have ordinances on short-term rentals, the requirements are uneven at best.
Short term rentals aren’t treated like motels in South Dakota, said Jasper Diegel, the executive director of the South Dakota Hotel and Lodging Association.
“The big thing is, we just want a level playing field,” Diegel said.
Rentals with Airbnb and VRBO may pay state sales tax but they generally aren’t required to pay room or occupancy taxes or a fee often called a Business Improvement District (BID) fee, Diegel said.
Many cities in South Dakota have a BID and room/occupancy fee, Diegel said.
Sioux Falls has a 1% room/occupancy tax and a $2 per room BID fee, said Terri Schmidt, executive director of Experience Sioux Falls.
Such taxes and fees often help fund tourism and marketing efforts in cities, Diegel said.
A property owner who rents property through Airbnb or VRBO does not pay the 1% room feed or the BID, said Shawn Pritchett, the finance director for the city of Sioux Falls.
Schmidt said if short-term rentals benefit from the marketing of Sioux Falls, the question is, Should they pay the room and BID taxes?
It’s not that short term rental properties that use Airbnb and VRBO wouldn’t pay, Schmidt said, she isn’t sure if it’s been presented to them.
“I haven’t talked to any (property owner) opposed to it,” Schmidt said.
Ceca Cooper and her husband rent the main level of their Sioux Falls home through Airbnb.
“We would be more than willing to support that,” Cooper said of paying the room/occupancy tax and BID fee.
To her, it’s a way to support the growing city. Cooper also said the efforts to market Sioux Falls have been successful as some of her guests have said they heard about the city’s downtown, for example. The Coopers have had guests who stayed because of they came from North Dakota and Omaha for the downtown burger battle.
Lindsay Chicoine and her husband own a home they rent through Airbnb in Sioux Falls.
She’d want to consider the room tax and BID fee before deciding she’d support it. Their home is mostly rented to traveling nurses and similar health care workers. They don’t target travelers or tourists, Chicoine said.
The South Dakota Department of Revenue collects the sales taxes from those who operate short-term rentals through Airbnb and VRBO, said Bobi Adams, the deputy director for administration, strategy and communication for the DOR.
Those taxes are provided to the state through Airbnb and Vrbo. “That would include state, tourism, municipal, and the municipal gross receipts tax,” Adams said.
Have rules kept pace with the growth of short-term rentals?
Diegel said not only are short-term rentals exempt from many hotel and BID fees, the state does not require them to be regularly inspected.
“Our hotels are inspected by the (state) department of health, those same rules don’t apply to Airbnb or VRBO rentals,” Diegel said.
That is health and safety concern because how does the public know if there is an adequate number of exits or fire extinguishers, Diegel said as examples of what inspections find.
Jake Hoffner owns Dakota Country Home about 15 miles west of Yankton with his wife.
Health and safety, keeping the place clean are primary concerns, Hoffner said.
Guests at rentals through Airbnb and VRBO rate the stay. Negative reviews can possibly lead to removal from the platforms.
In some cases, it appears city and county rules haven’t kept up with the rental industry.
Minnehaha County has a conditional use permit (CUP) requirement for bed and breakfasts. The planning department said those who rent through Airbnb or VRBO would apply for a CUP the same as a bed and breakfast.
Yet, a bed and breakfast description does not really accurately describe an Airbnb or VRBO rental where no food is served, when the entire house is rented or even if the owner lives and stays in one level of the house that’s rented for the short term.
John Steever and his wife have operated a bed and breakfast for more than 20 years in rural Lennox.
The Steevers live at the home and are there when the guests stay. They serve the guests breakfasts. There are no kitchenettes and no kitchen access.
“We’re a different animal…,” Steever said. “Our license allows us to serve breakfast but does not allow an overnight meal.”
Airbnb and VRBO have an application process for those who rent through their platforms.
Cooper said Airbnb’s process has worked well for their property. They’ve never had renters who would be considered “a security issue.”
A city official in Yankton said rentals through Airbnb and VRBO are happening in the city.
The city of Yankton has not yet determined there is a need to regulate short term rentals such as those rented through Airbnb or VRBO, said Dave Mingo, the community and economic developer for the city.
The city of Spearfish does not have regulations on short-term rentals, said city planner Jayna Watson.
City zoning allows for up to five unrelated people to live in a single family house, Watson said.
But, it is realistic to expect a city to enforce that zoning requirement, she asked. That could require city knock on the door of all houses and ask people to prove who they are, Watson said.
Lynette Gohsman is the general manager of Holy Smoke Resort in rural Keystone. She is also a former member of the Keystone Town Council.
A business license allows a person to rent a property but the town has no planning and zoning to cover the use, Gohsman said.
The town’s resident don’t generally favor zoning regulations but yet, “they still complain when the house next to them is now a vacation rental,” Gohsman said.
Concerns about losing single family houses to use as short term rental houses have been raised in Keystone, she said.
The loss of single family houses has contributed to a decline in the town’s population, Gohsman said.
Zoning ordinance can be developed to fit a town, she said. “It’s not just a cookie cutter (approach),” Gohsman said.