The City of Charleston has settled on a software company to monitor the up to 3,000 short-term rentals estimated to be operating within city limits.
The city's Ways and Means Committee approved a contract with Bear Cloud Software, owner of STR Helper, on July 17, and the software is already compiling information on Charleston properties listed across a range of websites such as HomeAway, TripAdvisor, and Airbnb.
For now, city officials are giving residents time to get acclimated to the new permit system before full enforcement — in the form of summonses issued to violating renters — takes effect.
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The protracted city battle over what homes are allowed to participate in the booming short-term rental market was, in many ways, a battle for the soul of Charleston. As more travelers ditch traditional lodging options for app-based alternatives, investors and second-home owners are flocking to cities, sometimes upending entire neighborhoods and displacing whole communities in an effort to get a bite of the "sharing economy" pie. Scores of concerned citizens, lobbyists, preservationists, and renters have attended public meetings on this one issue for the better part of the past two years.
On April 10, Charleston City Council finally passed an ordinance
Only owner-occupied homes, as determined by their four percent property tax assessment, are eligible to receive a permit, and only four adults may be hosted at one time. Whole-house rentals are not allowed.
The 160 existing short-term rental units in Cannonborough-Elliotborough — the only neighborhood where they were legal until April 10 — will not be affected by the new rules.
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Bear Cloud Software will make sure renters stay in line.
The company is headquartered in Garden City, Utah, co-founded by the town's former mayor, John Spuhler, and former city manager Bob Peterson. The sleepy area of about 1,000 full-time residents morphs into a bustling summertime tourist destination, Spuhler says, thanks in part to the picturesque Bear Lake State Park and mysteriously turquoise water, which earned the town the nickname "
Issues with littering and noise — common complaints heard at Charleston City Council meetings — combined with a lack of traditional lodging inspired Spuhler to devise a way to monitor private rentals in 2015.
Bear Cloud claims that Garden City's compliance rates now approach 95 percent and that gross tax revenues are up 52 percent, according to the company's website.
Spuhler says Charleston's similarity to Garden City makes his company a perfect match. Unlike resort towns or packed urban landscapes, Charleston must protect two communities critical to its lifeblood: residents and tourists.
"In our mind, Charleston is one of the most unique cities in the country, which really caters to what our software is capable of doing," Spuhler tells City Paper. "In a tourist city, we recognize tourism is a quintessential part of your economy and you're trying to provide space for those visitors and making sure there's flexible inventory. At the same time, you have to balance this livability perspective for the people who live year-round with traditional jobs in traditional neighborhoods."
Bear Cloud Software is also under contract with Folly Beach and Charleston County, which passed its own, far less strict short-term rental law on July 24. In unincorporated areas of the county, there is no limit as to how many adults can stay in one rental, and whole-house rentals are allowed.
Bear Cloud also provides services to cities like Sacramento, California and Minneapolis, Minnesota.
The 42-person company beat out Toronto-based LTAS Technologies, which runs a similar software called Harmari, and San Francisco-based Host Compliance.
Allen Atamer, the CEO of LTAS Technologies, estimated close to 3,000 short-term rental listings in the Charleston area in an interview with CP in May. About 23 percent of that inventory is controlled by a little over three percent of operators, he says.
Those mega-renters are likely to have the resources to get their legal ducks in a row as mom-and-pop renters navigate the approval process, which could take a month, on their own.
Dan Riccio, head of the city's Department of Livability and Tourism, says cost and compatibility were the key reasons why STR Helper was chosen. The software can be integrated with InterGov, the program used by the City of Charleston. The year-long contract for monitoring services was signed for a total of $55,000, $5,000 of which acts as a "buffer" in case extra services are needed. Riccio says other compliance companies were asking as much as $125,000.
Though the city isn't yet handing out Livability Court dates (the fine for an STR violation is a maximum of $1,087), they are handing out warnings. Riccio urges residents to be mindful of the fact that just because they submitted an application, that doesn't mean they're ready to go.
And yes, they'll still stake out your house if they suspect any funny business.
"Before a summons is issued, the information we receive from STR Helper — that basically builds the case for us," Riccio says. "We're going to corroborate everything within the case file that they submit to us, responding to the residence with photos."
Spuhler says his software does sort through social media profiles, reaching into information that some might consider personal and
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Responding to questions about the unusual practice of showing up to houses with cameras, Spuhler says he's staying out of it.
"We built our product to enable cities' ordinances," he says. "It's not our business, nor I believe it should be,
"We think at the end of the day, you end up with a better community. You create more harmony, less confusion, more fairness."