KANSAS CITY, Mo — Short-term rentals are gaining popularity in Kansas City, but most of them aren’t legal. That’s coming from a new city audit released Thursday that states only 11% of current short-term rentals have the necessary permits.

“Unfortunately, [short-term rentals] did start small overall, and they’ve proliferated in the last few years,” Kate Barsotti said.

She’s lived in the Columbus Park neighborhood, which is just north of downtown Kansas City, for 20 years and has seen the area change drastically in that time.

Barsotti is also the neighborhood president for the Columbus Park Community Council.

“People joke sometimes. They’re like, ‘Oh! You guys are like Sesame Street, you know? Everybody knows everybody.’ We could lose that. Easily,” she said.

She’s concerned that unlicensed short-term rentals, which are non-traditional hotels like Airbnb, will eventually turn her neighborhood into a hotel district.

“We are losing our housing stock. We’re losing our neighbors. We’re losing our community,” she said.

Since the Kansas City City Council passed an ordinance in 2018 regulating short-term rentals, thousands remain unlicensed.

The City Auditor’s Office released an audit Thursday. It showed that between August 2018 and 2022, only 276 of the nearly 4,200 short-term rentals have permits. That’s lost the city roughly $1,000,000 in revenue while bringing in just $129,000.

“One of the biggest gaps in our ordinance is the fact that it is not currently clearly prohibited to advertise your unit as a short-term rental on any of the platforms,” said Councilman Eric Bunch, who represents Kansas City’s 4th district.

Bunch also said unlicensed short-term rentals aren’t properly enforced. The city’s audit blames that on a lack of fees to pay for both the program and the staff to enforce it.

To address the problem, Bunch introduced a resolution during Thursday’s city council meeting that would change enforcement responsibilities from the Planning Department to Neighborhood Services. Mayor Quinton Lucas co-sponsored the resolution.

Bunch said the Neighborhood Services Department is more accustomed to doing enforcement out in the field, and that staff in that department can sit behind a computer and actually look up who’s not licensed.

The resolution also calls on the city manager to investigate what it would take budget-wise to change the enforcement duties to Neighborhood Services.

“It also asks the city manager to look into what a moratorium would look like,” added Bunch. He means that for a set period of time, the city would not approve any more permits. “We know that many of them are operating illegally, and we want to make sure we’re not creating a huge rush to get approved because that would overwhelm staff.”

It’s a step in the right direction for Barsotti, who hopes the issue is resolved before upcoming events like the NFL Draft and the World Cup, both of which are coming to Kansas City in 2023 and 2026, respectively.

“Outsiders are coming in. They have enough money to buy a single-family home, turn it into an Airbnb, and they may be charging up to $4,000 a night,” Barsotti said. “That’s a big incentive to come into a neighborhood like this one and tear it apart.”

Bunch also hopes to change state law regarding this issue. Missouri state statutes currently prevent Kansas City from collecting a Convention and Tourism (C&T) tax on short-term rentals.

If that tax had been in place, the audit found that Kansas City would have received more than $2,000,000 in the last year-and-a-half.

The city’s audit made the following recommendations to the City Planning and Development Director going forward:

1. The City Planning and Development Director should propose an ordinance for the City Council’s consideration that prohibits hosts from listing, offering, or advertising short-term rentals without a permit.
2. Submit an ordinance for the City Council’s consideration that addresses the role of intermediary websites facilitating transactions for unpermitted short-term rentals while providing methods for intermediaries to demonstrate reasonable attempts to comply with permit rules.
3. Establish a point of contact with all intermediaries and set up a process to communicate information related to short-term rental regulations.
4. Establish a clear record requirement for short-term rental hosts and intermediaries, and a process for the city to obtain listing, booking, and host information.
5. Evaluate their staffing needs based on anticipated permit activity and associated fee revenue to determine the necessary staffing levels to manage the short-term rental program.