CAMPUS AREA

Madison aims to regulate short-term rentals as business sets sight on football weekends

2013-08-22T09:50:00Z Madison aims to regulate short-term rentals as business sets sight on football weekendsKAREN RIVEDAL | Wisconsin State Journal | krivedal@madison.com | 608-252-6106 madison.com

A business new to the Madison area is encouraging residents to cash in on Badgers football games by renting out their homes to visitors on home-game weekends, just as city officials are looking to regulate the practice.

Partners and staff at University Football Rentals say a homeowner can make $1,500 to $2,000 or more tax-free per weekend, and the company will do most of the work involved with getting the house rented.

“Our primary focus is on (homeowners who are) junior professors, university employees, graduate students, where that kind of money really moves the needle,” said Dan Willenborg, director of business development for the company, which helps arrange short-term rentals in a few college football cities around the country through its website and a small Chicago office.

In South Bend, Ind., where the company started in 2006 and where it still does 90 percent of its business, more than 150 homeowners have earned more than $1 million over the past two years renting their homes for Notre Dame football games, according to Willenborg and company partner Mike Doyle.

A recent look at Madison Football Rentals, the company’s local website, showed the same three or four homes signed up for each of this season’s seven home games, plus next spring’s graduation.

Little more than a week before the Badgers opener Aug. 31, the closest home listed was 1.87 miles away from Camp Randall Stadium — a five-bedroom house with quarters for up to 12 people, according to the listing. The homeowner was asking $2,500 in rent for the typical weekend stay of 5 p.m. Friday to Sunday noon, and the company would get a standard 15 percent of that.

There were no actual bookings as of Wednesday, but company leaders didn’t sound worried.

“We’d like to have at least 10 homes rented in Madison,” Willenborg said. “That gives a good selection. Once we get over 20, word of mouth starts to take over.”

Count Julia Kerr, co-president of the Vilas Neighborhood Association, and Ald. Sue Ellingson, District 13, among the skeptics.

Their homes were papered with flyers about the company when Willenborg and Doyle visited a few weeks ago to canvass neighborhoods and try to drum up business.

“I would be kind of surprised to see long-term homeowners in Vilas making their houses available for this purpose,” Kerr said. “It is a bit hard to picture.”

Ellingson and five other council members are sponsoring new legislation that would regulate short-term rentals in Madison. They’re holding what they called a “listening session” on Sept. 5 to get public input.

The proposed measure would require homeowners who want to do short-term rentals to get a conditional use permit for a new zoning classification to be known as a “tourist rooming house.” Getting a permit would require a public hearing, and an approved permit could be revoked if there were problems. The proposal also would require short-term rentals to be at least 500 feet apart, which would limit their numbers.

The measure also would require short-term-rental operators to pay the city’s room tax and get a license from the public health department, just as hotels must do.

“The idea is to create a framework to ensure that people can do this legally, but also provide for some regulation around it,” said Ald. Mark Clear, 19th District and a co-sponsor of the proposal. “It’s not clear to me whether it’s legal or not now. I’d say at this point (companies facilitating short-term rentals) are in that gray region.”

The ordinance also would apply to short-term rentals through other popular websites such as Airbnb and VRBO (Vacation Rentals by Owner). Clear said council members, believing some amount of the activity already is going on, had been informally discussing the issue for months with city staff before University Football Rentals came to town.

“We wanted to find a way to make these rentals legal, but also give neighbors some say in the process,” said co-sponsor Ald. Marsha Rummel, 6th District. “Many of us have heard concerns about safety and neighborhood integrity as short-term rentals proliferate.”

Doyle said his company would work with Madison officials to get all the necessary information about any new rules to homeowners who list with them. He said the company has run into similar regulations elsewhere, including State College, Pa., home of Penn State University, where city officials required a permitting system similar to the one Madison is considering.

“We don’t want this to be a confrontational thing,” Doyle said. “It’s really just an information issue. We want to figure out what we need to do, and what we need to pass on to our homeowners, to make sure they’re doing everything the right way.”

Clear said he understands the push for a service providing short-term rentals.

“It seems like a decent idea,” he said. “Home football games are obviously a time when hotels fill up and there’s lots of opportunities. It makes sense.”

Willenborg said that need was the driving force behind the company, which was started by three Notre Dame graduates who had trouble finding good places to stay when they returned for football games in South Bend. The company now arranges about 100 rentals in South Bend on a big game weekend.

“The real over-arching focus of our company is on solving

the lodging infrastructure problem in small towns that have multiple, huge events,” Willenborg said.

Jason Salus, president of the Greater Madison Hotel and Lodging Association, said he and other local hotel operators object to short-term rentals on grounds that they are “unlicensed, untaxed and unregulated” and said he didn’t think there was a need for them.

“We’re not bursting at the seams,” he said, noting city hotels normally run at about a 60 percent occupancy. “There are a few nights when that happens, but I don’t see any guarantee that these rentals will only be open on those nights.”

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(15) Comments

  1. Blue Lily 100
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    Blue Lily 100 - August 25, 2013 7:05 am
    There is no need for the city to regulate the 7-8 weekends these rentals would occur. This practice in no way can be compared to the commercial hospitality business. The residents of the neighborhood voluntarily chose to life in close to a Big 10 football stadium. Homeowners take advantage of football weekends to earn much needed extra income. Many years ago a single mother I knew rented her home with parking. She went to her mother's home. She never got complaints from neighbors and used the money to pay her annual utility bills. This practice need regulation. Madison's decision makers should stay out of this issue. It appears a solution in search of a problem. GO BADGERS!
  2. bosco
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    bosco - August 24, 2013 9:17 am
    More government control. Why would anybody here be surprised. City and federal gov growth under progressives and community organizers will only get bigger with more regulations. The state trend of less gov control is a necessary change for the better.
  3. gamedayhousing
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    gamedayhousing - August 22, 2013 1:00 pm
    GamedayHousing.com remains the original and best resource for renting out your home on gamedays. With 10,000 active guest accounts, and 1000+ homes in 35 different cities we are your one stop source for football home rentals. Just have a look: GamedayHousing.com/how-it- works

  4. happydays
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    happydays - August 22, 2013 10:52 am
    This city better start raiding homes and making sure that no one but the home owners are living in homes. There are a lot of home owners who have distant relatives living with them that are paying them monthly - hmmmm - is that any different? Are they paying taxes? what about those homes that have two families in them and everyone is paying toward the mortgage that only lists one person? HMM - many poor people do that to make ends meet. this happens when they arrive from another country and have no place to go and no money to afford the rents charged in this town - I say - throw them out - throw them out on the street - we need more homeless in Madison.
  5. WHLA Rep
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    WHLA Rep - August 22, 2013 10:03 am
    It sounds like they are describing a federal Income Tax exemption, which does not apply to state and county sales tax, room tax, or any special district taxes which they ARE required to collect and remit for the public rental of lodging. For those renting out their homes, there is no exemption for "only a few nights" - this is a commercial transaction for lodging.

    They also are required to be licensed for lodging, which involves a public health inspection and a nominal licensing fee. The state has penalties for those operating without a license for lodging.

    Something else both those renting out and their customers tend not to think about is insurance. Should there be any property damage to the home or an accident occurring during the stay, most of these owners likely only have homeowners insurance instead of the business property coverage needed when paid rentals are involved. The article describes how the websites are approaching this problem, however, a lot of what can happen would not be covered adequately for the owner or the guest.

    If an owner wants income from what is really a business transaction with the public that's great, and is their business decision - assuming this is in an area zoned for such use. However, both the paying guests and the owners should be more informed of the risks, should be properly protected, and should pay the same fees and taxes as others doing business in compliance with the law.
  6. gdp
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    gdp - August 22, 2013 9:46 am
    Prudence dictates that laws should be as few as possible, deferring to existing adequacy, enabling the widest range of private judgment so that a community of good relations prevails out of like-mindedness on the subject. Let's encourage the highest and best without sacrificing good order. And that may mean relaxing without expanding government control. If anybody can do it, Madison can.
  7. Madhatter2505
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    Madhatter2505 - August 22, 2013 9:37 am
    Why just on football weekends? Our neighbor, Jenny Henderson, is renting out her home more than 14 days every month at $275 per night through VRBO. Put that in your calculator. Does it matter that our neighborhood is zoned residential? Apparently not to the City Zoning. We have complained to our Alder Matt Phair and Zoning yet nothing is done about it. So my fellow Madisonians get on the bandwagon and start raking in the coin.
    Joe Frattinger
    2209 Teal Dr
    Madison, WI
  8. Karen Rivedal Staff
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    Karen Rivedal - August 22, 2013 8:32 am
    LarsHarper:
    On the tax issue, the company says there's a federal exemption on income earned through home rentals so long as it's a primary residence and it's done no more than 14 days a year. State tax rules will vary, and of course anyone considering this should research the tax implications for themselves. Here's what the company says about taxes on their FAQ:

    'If you accumulate 14 rental days or less in a year, you do not need to declare the income earned when filing your taxes! In the Federal Tax Code there is a clause that states homeowners are not required to pay income taxes on income generated from home rentals as long as the time period of the rental is 14 days or less. This is the equivalent of 7 rentals from Friday to Sunday.

    Specific information can be found on the IRS's website: IRS Homeowner Income - Topic 415
  9. PapaLorax
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    PapaLorax - August 22, 2013 8:11 am
    What about all the parking? I don't believe those people are making adequate space available for handicap parking on their lawns!!
  10. number6
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    number6 - August 22, 2013 7:23 am
    As football worms its way deeper and deeper into our society, the sculpture at Regent & Breese Terrace is looking better and better.
  11. LarsHarper
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    LarsHarper - August 22, 2013 7:12 am
    I don't see how this income is "tax free." If you earn money, the existing laws require you to report the income on your state and federal taxes. Just because there is not a separate reporting process for income below a certain level does not mean that people are still not expected to report and pay taxes on that income.

    Just like when people say that purchases on sites like Amazon are "tax free." If you purchase something on the internet and the website does not take out sales tax--you are supposed to report that on your WI tax return and pay the sales tax at that point.

    If you don't report something and then sign the tax form saying that your statement is accurate, you are choosing to commit fraud. It does not mean that whatever you are not reporting is not taxed. Just because a lot of people do something and are not caught does not necessarily mean what they are doing is legal (take drunk driving as a more extreme example of that).
  12. toobad
    Report Abuse
    toobad - August 22, 2013 5:45 am
    The government hates commerce. It's all about power. Their power over you.
  13. happydays
    Report Abuse
    happydays - August 22, 2013 1:27 am
    Bet they would have no problem if you let the homeless stay in your home - except maybe in one of the NIBY neighborhoods - Madison will do all they can to stop people from making money. Shame on them - what are they going to do when they start parking the homeless homes in front of people's houses - bet they won't lift a finger when the complaints start coming in
  14. WI_Expat
    Report Abuse
    WI_Expat - August 22, 2013 12:09 am
    Frankly, if a homeowner can offset the inconvenience of football weekend by leasing out a house, parking, etc.... Good for them.

    Isn't it like a liberal government to target anything making some coin and say "we need to tax and regulate that!"

  15. JoeBiteme
    Report Abuse
    JoeBiteme - August 21, 2013 8:11 pm
    Give me a break. Some folks trying to make a buck. How about set up some tents on Regent Street and have a daily sing along. That would work in Madison.

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