O'Fallon Progress

Short-term home rentals maybe heading to the metro-east, but regulation is lagging

O’Fallon City Administrator Walter Denton
O’Fallon City Administrator Walter Denton

A new house-rental concept has made its way from the big cities to smaller suburban communities like O’Fallon, but regulations have yet to catch up.

At the Illinois Municipal League conference in September in Chicago, O’Fallon City Administrator Walter Denton learned more about services like Airbnb.

“(Recently) I stayed in (an apartment) through Airbnb in California after learning about it at the IML conference,” Denton said. “It’s interesting because we are seeing this occur in O’Fallon even, but it’s difficult to regulate.”

The conference session revolved around whether or not a municipality wants to regulate short-term rentals of homes, and how one might go about creating such regulations, Denton said.

“It’s like homeowners using his or her home(s) as hotels in residential subdivisions, but paying the hotel/motel tax is the tricky part. In O’Fallon the short-term rental concept is a violation of our city’s residential zoning. If we wanted to regulate it, we would have to amend the current ordinance, but now we don’t have anything. I imagine at some point the council will have to discuss or review it,” Denton said.

The City of Mascoutah recently passed an ordinance to allow regulation of short-term leases in residential homes.

Mascoutah City Manager Cody Hawkins said the concept for such an ordinance began over the summer.

According to Mascoutah City Council documents, the item went before council for consideration June 8, with additional readings and public hearings subsequently held through August.

Mascoutah Assistant City Manager Mike Bolt said the regulatory ordinance is currently in place.

“We currently have one (rental property) available in town,” Bolt said.

“The Doll House” is off Main Street in Mascoutah, and at a cost of $90 per night for the whole two-bedroom, one-bathroom home, it can accommodate up to six people.

Bolt said proof of liability insurance with a minimum coverage of $100,000 must be provided to the city annually, along with a short-term-rental business license, which costs $50.

Guest stays of 30 days or more will not be considered as part of the short-term-rental limits.

The number of nights a property can be rented in a 12-month period cannot exceed 90 days for those properties located in residential zoned districts, or 120 days for those properties located in commercially zoned districts, according to the Business Code Ordinance 16-17.

Also required are quarterly reports from the property owners or operators detailing the number of stays and the length of time per stay, the ordinance stipulates.

Mascoutah has a tax of 5 percent of the rent charged for the privilege and use of renting a hotel or motel room within the city, according to Bolt.

One O’Fallon listing found on Airbnb can accommodate two guests for each of the two private rooms. It was listed for $22 per room, per night — much cheaper than your average hotel stay in the area.

Denton said staying in an Airbnb home beats a hotel or motel stay any day of the week.

“What’s interesting is there are so many options out there for people who may be traveling alone, or with a significant other or the whole family. You can rent a whole home temporarily or just rooms in a currently owner-occupied home with flexibility and low cost,” he said.

As for now, O’Fallon and Shiloh do not have ordinances on the books to regulate services like these, but Denton thinks they probably should be considering since there’s no hotel tax being applied.

Just last week, O’Fallon City Council approved a 4 percent increase in the city’s hotel tax — taking O’Fallon from the lowest rate in the area to the top of the list. This increase is being implemented to cover the cost of a 20-year bond for the construction and installation of a new project called Destination O’Fallon.

Destination O’Fallon is an economic initiative that hopes to construct a state-of-the-art multisports complex at the O’Fallon Family Sports Park with the addition of about 12 lighted, all-weather, turf fields and a new multipurpose community plaza in downtown O’Fallon.

Robyn L. Kirsch: 618-239-2690, @BND_RobynKirsch