An effort to raise additional money for affordable housing in St. Louis is on the ballot in November.
Proposition S would require people who stay in a short-term rental to pay an additional 3% per night. At least half of the revenue raised would go to the Affordable Housing Trust Fund, which helps cover the cost of building and maintaining affordable housing units in St. Louis. The remaining money would be directed toward expenses like relocation assistance or a program to provide attorneys for people facing eviction.
“As we've seen a proliferation of short-term rentals, we've also seen rents and mortgage rates also climb as a result of that,” said 4th Ward Alderman Bret Narayan, who shepherded the measure onto the November ballot. “This is kind of a drop in the bucket to try and offset some of that.”
Studies have shown a connection between growth in short-term rentals and a decrease in affordable housing. Because the city lacks a mechanism to identify how many short-term rentals are currently operating, officials have been unable to determine how big an impact they are having in St. Louis. Miriam Keller, a city planning executive, said she believes that the loss is most acute among lower-cost rental properties.
“I think landlords of those lower cost rental properties may, on balance, see greater opportunity or revenue potential with a short-term rental unit than they would with a long-term or kind of conventional rental housing unit for a resident of the city,” she said.
The lack of an accurate count of short-term rentals also means it’s impossible for officials to determine how much the new fee could generate. But any additional money for affordable housing construction is important, said Becky Reinhart, executive director of DeSales Community Development, a nonprofit that develops and manages affordable housing in the Tower Grove East, Fox Park and Benton Park West neighborhoods.
“In St. Louis, our biggest issue with affordable housing is the cost of developing it and operating it,” Reinhart said. “It requires a lot of a subsidy, it requires a lot of money to be able to economically develop and rent or sell homes at affordable rates.”
Reinhart added that regardless of how much the new tax brings in, the city needs to find a way to regularly increase its contribution to the Affordable Housing Trust Fund. Except for the fiscal 2023 budget, which was flush with federal American Rescue Plan Act funding, the budget for the trust fund has not gone much above the required minimum of $5 million.
“It’s really about increasing it every year in line with increased construction costs, increased cost of operations, increased cost of insurance,” she said. “That's really where we need to be looking rather than, set it and forget it.”
