Lexington council advances major changes to short-term rentals

The Lexington council on Thursday advanced changes to its short-term rental ordinance, including restrictions on how many new vacation rentals will be allowed in neighborhoods.

The current short-term rental ordinance, which was passed in July 2023 and took effect in January , includes no such restrictions.

The Lexington-Fayette Urban County Council’s General Government and Planning Committee voted Thursday to move the changes to the ordinance to the full council.

It will take months for any potential changes to get final approval.

If the full council approves the zone text amendment, which changes the city’s zoning ordinances, it will go to the Urban County Planning Commission for review. If approved by the commission, the changes will then be returned to the council for final approval.

After the current law was implemented at the beginning of this year, many neighborhoods saw a jump in the number of short-term rentals in their neighborhoods, prompting the council to revisit its ordinance , said Councilwoman James Brown.

There have also been complaints from operators, he said, about inconsistencies in approving unhosted rentals — properties that don’t have an owner living in them. Brown helped craft changes to the short-term rental ordinance.

Unhosted short-term rentals in residential areas have to get a conditional use permit through the city’s Board of Adjustment.

Under the proposed changes, the application could be turned down if there was another short-term rental within 500 feet or if more than 3% of housing units within 1,000 feet are short-term rentals.

The proposed changes would allow short-term rental operators to appeal that decision if the short-term rental is located adjacent to a business zone, city officials said Thursday.

Other proposed changes include:

• Tightening regulations regarding the definition of a “hosted” short-term rental. Hosted rental operators would have to show a government I.D. proving they live at the property.

• Changing the maximum occupancy from 12 to 10

Existing short-term rentals would be grandfathered in.

The rules apply only to areas inside the urban service boundary, or the city’s growth boundary. Rules for the rural area will likely be discussed in September, said Councilman Preston Worley, chair of the General Government and Planning Committee.

Frustrations from operators, neighborhoods

Councilwoman Jennifer Reynolds said she has heard from both neighborhoods and operators. It’s a complex issue, she said. Some operators have found the city’s licensing process confusing and frustrating, she said. One operator she spoke to recently was in tears.

“It was impossible for her to go through the process,” Reynolds said.

Councilwoman Hannah LeGris said she hopes that the changes will help “strike more of a balance,” she said. “I’ve heard a lot of discussions about the need for density requirements.”

Councilman Chuck Ellinger operates a hosted short-term rental. Ellinger said other operators have also questioned whether maximum occupancy means total guests in a rental at one time, or the number of guests who can sleep there.

Traci Wade, planning manager for the city, said the number is the maximum amount of people allowed on the property.