Fredericksburg

The History and Impact of Short-Term Rentals in Fredericksburg, Texas

Fredericksburg has been a tourism hub in Central Texas for a few decades due to its convenient location north of San Antonio and West of Austin. Homeowners operated bed and breakfasts while the small motels and hotels serviced the majority of visitors. In 2008, the City of Fredericksburg noticed a new phenomenon - the short-term rental of a limited number of entire homes. At that time, these were usually second homes of wealthy people who wanted some added income. The property was managed by a local property management company. In the past 5 years, Airbnb encouraged the proliferation of commercial short-term rentals beyond the scale of which the town had previously seen and the scope of existing ordinances.

In 2013, the City of Fredericksburg revised its ordinances to have an inspection and permitting process for STRs, but it made the mistake of not restricting the areas of the city where they could operate. Not long after, Airbnb exploded the STR market across the United States. Entrepreneurs, such as Tammy Pack of Absolute Charm, a luxury real estate and STR management company, invested heavily in the expansion of STRs in Fredericksburg. She expressed the vision to Texas Monthly in 2020 that Fredericksburg was to be "the Aspen of Texas."

The number of short-term rentals in the region has soared to more than 1,900 in June 2022, approximately 25% of all homes. Worse yet, since STRs operators were attracted to many of the same streets and neighborhoods, the consequences were especially damaging for the central and historic neighborhoods. Rentals have displaced permanent residents on whole streets, streets which are now bereft of families, children, and friendships. Now, transient tourists party in these homes, creating noise, trash, and congestion.

 
 

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Use of Homes

Percentage of Ownership

The negative effects of STRs of not limiting the areas where STRs could do business are well-documented in Fredericksburg, which include:

  • The loss of community neighborhoods due to a heavy saturation of STRs. Neighbors no longer know who is spending the night next door. The fabric of the neighborhoods in many areas of the city has been destroyed. Short-term renters don’t participate in the community, whether it be coaching youth teams, attending churches, or sending their children to local schools.

  • Nuisances, such as noise, excessive parked cars, trash, public drunkenness, and public urination. Efforts to police this bad behavior have, as elsewhere, proven to be failures.

  • Residential property appraisals are increasing by 18-24% annually. The county appraisers do not discriminate between a private residence and an income-producing STR. The result is a crushing tax burden on full-time resident homeowners.

  • Nearly no long-term rental inventory. Due to the mismanagement of STRs and housing in general, there are nearly no homes for workers in schools, police departments, offices of the city government, or the tourism industry. The economic growth of the town is greatly suppressed by the lack of workforce housing.

  • The city has had to incur added expense trying to track down STR operators that have failed to register and remit hotel taxes, as well as hire additional code enforcement officers and administrative staff.

Unfortunately, the City of Fredericksburg poorly enforced even the permissive 2013 ordinance in part due to a lack of staff and resources, political apathy on the part of city leadership, and a fear of lawsuits from the now-powerful STR industry.

Having suffered enough from the STR invasion of neighborhoods, in late 2021, a group of citizens organized Fredericksburg Neighborhood Coalition to focus the political will of average citizens who were on the receiving end of the misery generated by STRs. They successfully encouraged the City Council to pass a comprehensive revision and strengthening of the STR ordinances. The STR industry organized as FBG Short-Term Rental Alliance to defeat the ordinance. Although well-funded, the voice of the majority of residents prevailed. The major achievement of the ordinance was the prevention of the development of new entire-home STRs in the single-family neighborhood zones. The ordinance took effect on April 1, 2022.

In May 2022, the citizens of Fredericksburg elected a new mayor and two new City Council members. The turnout was double that of past city elections and the voters chose pro-neighborhood candidates over pro-STR candidates by a nearly 2-1 margin. Clearly, the mission of reclaiming and restoring residential neighborhoods ignited the passion of the voters. However, there will be a long-term struggle to police STRs, to track down and stop unpermitted operators, and to restore homes in neighborhoods to residential use. The citizens will expect the new council to act urgently and effectively to achieve these goals.

What began as permission to operate humble B&Bs exploded into the Airbnb industry. The loss of vibrant residential neighborhoods could have been avoided if the city council had strictly defined and regulated STRs, as well as actively enforced zoning ordinances. We know from the experiences of other cities such as Arlington and Grapevine that the integrity of neighborhoods can be successfully protected and applicable rules enforced to ensure a healthy community.

 

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NEWS

After STR ordinance rewrite, housing concerns persist in Fredericksburg, TX. Locals are concerned the city isn’t doing enough to curb the inflationary effect of STRs which made up 17% of local properties in March according to US Census data. See also in newspaper. (2023)

 

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