City to issue new short-term rental licenses

Moratorium ends with adoption of overhauled regulations;

patience urged as procedures are put in place

COVINGTON, Ky. – The moratorium is over.

The City of Covington is set to begin processing applications for new short-term rental licenses with the adoption Wednesday evening of amended regulations that protect the residential character of historic neighborhoods while giving property owners the opportunity to create businesses and make money.

The new regulations emerged from months of research and debate and intensive public input, including over 250 written comments and testimony from almost 50 people during two public hearings.

The new regulations – which can be read at Chapter 127, Short-Term Rentals – were approved by a 4-1 vote during a special-called meeting of the Covington Board of Commissioners. Also helpful to understanding the regulations is this Historic Districts map.

Mayor Joe Meyer called the regulations “a balancing act” and City Commissioners Tim Downing, Shannon Smith, and Ron Washington thanked the hundreds of people who helped the City craft the changes with feedback, suggestions, and concerns. Among them were rental operators, property owners, neighborhood leaders, and neighbors of the so-called vacation rentals.

“I don’t believe that there is a perfect solution, but we’re as close right now as we’re going to get,” City Commissioner Shannon Smith said. Like the mayor and her two colleagues on the Commission, she said the City would continue “to listen, learn, and adapt” relative to the short-term rental issue.

The fifth member of the Commission, Commissioner Nolan Nicaise, voted “no.”

The new Chapter 127:

  • Requires a license for every unit before that unit can be advertised or rented.
  • Requires licenses to be renewed annually.
  • Limits the number of units to two per structure.
  • Separates short-term rentals into host-occupied and non-host-occupied units.
  • Caps the number of non-host-occupied licenses at 150 for the whole city with specific caps in historic districts.
  • Does not cap the number of host-occupied licenses either citywide or in specific historic districts.
  • Limits the number of non-host-occupied licenses that a person can obtain to four.
  • Sets penalties for operating without a license, including a one-year ban on applying for a license and increased application fees.
  • Requires out-of-town operators to employ a local agent to increase responsiveness to concerns.
  • Sets a “three-strike rule” for code violations.
  • Creates a Rental License Appeal Board to hear appeals of violations and denial of licenses.

As part of the overhaul, the City will soon begin the process of amending its Neighborhood Development Code – a la “zoning” – to change short-term rentals from a “conditional use” to a “limited use,” greatly streamlining what’s required to obtain a license. That process will take months, given that it requires the approval of the Kenton County Planning Commission, but during that transition period the City will continue to process applications with the requirement that a conditional use permit be obtained through the City’s Economic Development Department, via zoning application.

First, however, applicants should apply for an occupational (business) license and a rental license.

License applications will be processed on a first-come, first-served basis with these caveats:

  • The 43 property owners who secured licenses before the moratorium can continue to operate, although they will eventually need to renew their licenses.
  • Applicants who had started the process of winning zoning approval and securing a rental license under the old application process (pre-June 22, 2023) need to reapply within 30 days to maintain their place in line.

“We urge applicants to be patient,” Covington Neighborhood Services Director Brandon Holmes said. “We intend to process the applications as fast as the law and resources allow, but this isn’t an overnight process.”

Overwhelming numbers

Covington joined cities across the country in 2020 in regulating short-term rentals by requiring a rental license and zoning approval, in addition to an occupational (business) license. But software the City began using showed that hundreds of property owners were ignoring the requirements and renting their units illegally and under the radar, operating businesses without being licensed, without undergoing required inspections that protect renters, and without paying taxes.

With the sheer number of those rentals threatening to turn some neighborhoods in de facto hotel districts, and after receiving complaints from neighbors about late-hour noise, trash, and parking, the Board of Commissioners declared a moratorium on the issuance of new licenses in December 2022 to give it time to study the issue and rewrite regulations.

Not alone

Covington is one of untold cities in the nation and in Kentucky tackling the issue.

For example, the Lexington-Fayette Urban Council voted this week to put new regulations on its July agenda.

In Louisville, which has regulated short-term rentals since 2015, City leaders have received ongoing complaints about international home rental companies buying up property and affecting the affordability of availability of housing across numerous neighborhoods. 

And cities from Georgetown to Bowling Green added regulations over the last few years.



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