Letters, legislation show City serious about protecting neighborhoods, preserving availability of housing

COVINGTON, Ky. – Covington property owners who illegally operate short-term rentals – also known as vacation rentals or Airbnbs – are about to face stiff penalties for failing to acquire the mandatory rental dwelling license and zoning approval and for not paying the required occupational license fee.

Those penalties include:

• A fine of $500 to $1,000 a day.
• A one-year ban on applying for a license.
• A tax audit.

The consequences are spelled out in warning letters being mailed to about 250 such owners today, as well as in legislation to be considered Tuesday night by the Covington Board of Commissioners that would codify the potential ban.

“We’ve tried to bring operators into compliance and have allowed ample time for them to apply for a license, but unfortunately many of them apparently have chosen to disregard the law,” Covington Neighborhood Services Director Brandon Holmes said. “So now they’re going to face the consequences for their decisions. The City must act to protect its residents, the availability of housing for rent and purchase, and the very residential character of its neighborhoods.”

Covington joined cities around the state and country in early 2021 in regulating short-term rentals as a way to get a handle on their increasing numbers and to create common-sense rules that protect both the people who rent the properties and those who live around them.

In the two years since those requirements were made known, only 43 short-term rental licenses have been sought and issued, less than half of which are “host-occupied.” However, a software company recently hired by the City has found at least 424 units in Covington that were advertised for rental on on-line vacation rental platforms. The software also lists confirmed stays for those units. That number is thought to be much higher.

The warning letters are from the City’s Code Enforcement Division and they’re being sent to the owners of the properties being rented.

December moratorium

The crackdown follows months of discussion by the Board of Commissioners about the explosion of short-term rentals and how to deal with it. Motivated by complaints from numerous residents, the discussion culminated in late December with the approval of a six-month moratorium on the issuance of new licenses.

City leaders said the use of residential properties for commercial purposes had “gotten out of control” in Covington, just as it has in other communities across Kentucky and the nation. The Board directed City administrators to take the six-month period to review regulations, the application process for zoning approval, and the tools for bringing violators into compliance.

To signal and formalize its intention to invite the public to participate in Covington’s discussion, the Board at the same meeting adopted an order requiring a public hearing and/or other public input opportunities in the months ahead.

That will give both people who own these units and those who live near them the chance to voice concerns, City Manager Ken Smith said.  

Why the concern?

City leaders say that short-term rentals on their face aren’t the problem, if managed correctly and if limited in number on any particular street or in any area. But left unchecked and unregulated, the commercialization of property has an array of negative consequences, including:

• HOUSING AVAILABILITY: The surge in short-term rentals has reduced the availability of affordable housing for purchase or rent in some parts of Covington as investors have squeezed out families in search of the proverbial American Dream.
• HOUSING PRICE: Seemingly unlimited profit margins will lead to permanent and drastic increases in rental prices for long-term renters, again squeezing out residents.
• ‘CHARACTER’: Left unchecked, the surge and concentration of short-term rentals is threatening to change the “nature” or residential character of certain communities, such as MainStrasse Village, Licking Riverside, and Mutter Gottes/Old Town, effectively turning residential neighborhoods into commercial lodging areas.
• COMPLAINTS: The influx of one-night and weekend “tenants” – some in large groups driving multiple cars – has led to increased complaints about parking and traffic problems and life and safety issues related to non-compliance with the building code, trash, and noise at all hours. Those complaints are exacerbated in areas facing concentrations of such uses.
• ACCOUNTABILTY: If property owners aren’t licensed, the City has no way of holding them accountable for the problems they may cause. The license fee is nominal but requires an inspection to make sure the property is up to code, a way to protect the health and safety of renters and neighbors.

City leaders say they have received a number of complaints and requests for action.

“Communities across the country are wrestling with this trend, and there is little doubt that residents in Covington are feeling the squeeze,” Smith said. “We’re going to take the time to address this strategically.”

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