Breaking down Sioux Falls’ proposed rental ordinance

SIOUX FALLS, S.D. (Dakota News Now) - The Sioux Falls City Council has already passed the first reading of an ordinance that would change the accountability structure for long and short-term rental properties in the city, including the likes of Airbnb’s and Vrbo’s. If passed, the city will be looking to catch up to already existing state laws on long-term rentals, and using similar language for short-term rentals.

Sioux Falls has had its current laws for long-term residential rental properties since 2003, and it has been amended a couple of times. This new ordinance would require property owners and managers to attend two hours of landlord training unless the property is managed by any individual licensed already with the South Dakota Real Estate Commission. A one-time $50 application fee will be charged per property starting on July 1, 2024, and the fee will be waived for any new construction property that received a permit before tenant occupancy.

The city will also be required to provide each permittee access to information that details any code violations or corrections. The ordinance would take effect on January 1, 2024, to allow city Planning & Development Services ample time to prepare for the influx of applicants.

For short-term rentals, the city is also looking to update its definition to reflect state law. Any short-term rental applicant will be required to provide proof of a state sales tax license unless the applicant provides documentation that proves their sales tax will be remitted on behalf of the applicant by a third party. Any applicant must provide proof of a state health department lodging license and any other state license required by law.

Daniel Brunz is a local realtor who also owns an Airbnb. He said this ordinance, while meaning there would be more hoops to jump through, would also mean a more uniform system across the city for property owners and city administration.

“This is the city playing catch-up, and trying to lay a platform to manage it accordingly, and provide the structure for them to hold property owners accountable to basic ordinances that are already in place,” Brunz said. “Why I don’t mind this regulation, is that it holds accountable people that are not doing as good of a job keeping their properties secure, safe, for a good reputation for the rest of us.”

If a property receives two citations for noise, nuisance, or health issues in a one-year period, the permit can be suspended.

“If there’s issues happening, we want to get in front of it right away for the sake of that neighborhood. This is not two complaints, this is two violations. This is not neighbors calling in to complain. There actually has to be a citation issued,” At-large Councilmember Rich Merkouris said during the city council’s November 7 meeting.

Brunz said he and other short-term rental owners try to get out ahead of any issues by communicating with their neighbors, keeping an eye on the property conditions, and using noise level monitors. He said that trust with neighbors goes a long way in making sure the neighborhood still feels complete while allowing them and others to still run their businesses.

“For the short-term, we just tell our neighbors to let us know right away so that we can kick them out, no questions. Airbnb doesn’t allow parties, they don’t allow illegal activity,” Brunz said.

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