BY MICHELLE KEY
PUBLISHER
OPELIKA — A revised ordinance that would establish new business-license requirements for residential, commercial and short-term rental properties, as well as self-storage facilities, will return to the Opelika City Council for a first reading Tuesday, Oct. 20.
Two of the most significant changes from the prepared version for the council’s Sept. 15 meeting is a reduction in the proposed business-license tax on residential and short-term rentals and the removal of the previously proposed inspection requirement for residential rental properties.
The earlier proposal called for a tax equal to 1.5% of gross rental receipts, with a minimum annual fee of $100. The revised ordinance lowers that rate to 1%, while retaining the $100 minimum.
The Sept. 15 proposal was removed from the agenda before the meeting and was never considered by the council.
According to a fact sheet released by the city Oct. 15, the stated goal of the ordinance is to create a clearer process for licensing and tracking rental properties while supporting safe and responsible rental operations. The city said it does not yet have a confirmed number of properties that would be affected or a reliable estimate of the additional revenue the proposal would generate.
Short-term rentals
The ordinance generally defines a short-term rental as a dwelling, or part of a dwelling, rented for fewer than 30 consecutive days.
Operators would be required to obtain a city business license and pay an annual business-license tax equal to 1% of gross receipts, excluding lodging taxes collected from guests, with a minimum of $100 per owner or business entity. Applicable lodging taxes would continue to be charged separately.
Gross receipts would include rental payments, cleaning fees, mandatory service fees and other non-refundable charges. Refundable deposits and lodging taxes would not be included in the calculation.
Each short-term rental operator would also be required to include the city business-license number on advertisements or listings on hosting platforms.
The ordinance requires each short-term rental to have a designated adult contact who lives in Lee County. The contact must be available 24 hours a day, seven days a week during each rental period, and the contact information must be posted inside the rental unit.
If requested by a city employee, the designated contact would be required to respond to the property within one hour. Failure to respond would constitute a separate violation.
Short-term rentals would also be required to comply with applicable city rules governing zoning, noise, parking, garbage and trash, as well as applicable fire, housing and building safety codes.
Monthly lodging-tax reports and payments would remain due by the 20th day of the following month. Use of an online booking platform to collect lodging taxes would not eliminate the owner or operator’s responsibility for proper reporting and payment.
Residential rentals
Owners of residential rental property that is not considered short-term would be required to obtain a city business license and pay an annual tax equal to 1% of gross rental receipts.
The minimum would be $100 per property owner or business entity, rather than per individual rental unit. The ordinance does not provide a general exemption for someone who rents only one home.
Owners or managers would be required to submit a detailed listing with each business-license application or renewal identifying the owner, each rental property address and the gross receipts received from each property during the preceding calendar year.
Multifamily residential rental property generating more than $1 million in annual gross receipts from a single parcel would be required to report and remit the tax quarterly.
Property managers could submit required information and payments on behalf of property owners, but doing so would not remove the owner’s responsibility for reporting and payment or eliminate the manager’s own licensing requirements.
Revenue from the residential rental business-license tax would be deposited into the city’s general fund and would not be restricted specifically to rental inspections or code enforcement.
Commercial rentals
Owners who rent or lease property for commercial purposes — including stores, restaurants, offices and similar business uses — would also be required to obtain an annual city business license.
The proposed business-license tax would equal one-fortieth of 1% of gross receipts, or 0.025%, with a minimum annual fee of $100 per owner or legal business entity.
For example, according to the city’s fact sheet, a commercial property producing $1 million in annual gross rent would generate a $250 annual business-license tax. If the property produced $200,000 in gross receipts, the percentage calculation would equal $50, meaning the $100 minimum would apply.
Commercial rental owners or managers would also be required to provide a detailed annual listing of rental properties and the gross receipts received from each property.
When a property manager submits licenses or renewals for multiple clients, the ordinance requires a separate application for each distinct owner or legal business entity, with the $100 minimum applying separately to each.
Self-storage facilities
Self-service storage facilities would be subject to a different fee structure.
Each facility would be required to obtain a city business license and pay a flat annual fee of $1,000 per facility, regardless of the amount of gross receipts.
The license would have to be renewed annually and could not be transferred.
The city’s fact sheet gives the examples of $1,000 annually for one facility, $2,000 for two facilities and $3,000 for three facilities.
Additional fees
The ordinance also provides for a separate municipal issuance fee on each license transaction. The fee would be set at the maximum amount authorized by the Alabama Department of Revenue, although the proposed ordinance does not state a specific dollar amount.
Existing license rules could affect unrelated businesses
The proposed rental licenses would fall under the same chapter of the Opelika city code governing other business licenses, including existing provisions related to suspension, revocation and future license applications.
The city’s Oct. 15 fact sheet specifically states that Section 14-318(h) can require City Council approval of future business-license applications after a license or licensing privilege has been suspended or revoked.
“That can affect unrelated businesses and businesses in which the affected person has an ownership interest,” the fact sheet states.
That means consequences tied to a rental business license are not necessarily limited to the rental business itself.
The Observer had previously asked City Attorney Robbie Treese whether an individual holding both a residential rental license and an unrelated Opelika business license could have renewal of the unrelated license affected if the rental license were revoked.
“It could if your name is attached to both licenses,” Treese said.
Questions remain
The revised proposal provides more clarity than the earlier version about the $100 minimum, making clear that the minimum for residential rentals applies per owner or business entity rather than per individual rental property.
Some enforcement questions, however, remain less clear.
For an owner with multiple residential rental properties listed under one business license, the ordinance does not expressly state whether suspension or revocation of that license would affect every property listed under it or whether enforcement could be limited to an individual property.
The interaction with the city’s existing business-license code also leaves questions about how provisions referring to violations or criminal activity occurring on licensed “premises” would apply when a landlord’s license covers multiple residential properties.
It also remains unclear from the proposed ordinance under what circumstances conducted by a tenant at a rental property could result in consequences for the property owner’s business license.
The city has also said it does not yet know how many rental properties or owners would be subject to the ordinance or how much additional revenue the new taxes and fees would generate.
The ordinance’s proposed effective date is Feb. 1, 2027.
The city’s fact sheet states that existing short-term rental operators would have 30 days from that date to obtain the required short-term rental license without being considered in violation. The fact sheet specifically notes that this grace period applies to short-term rentals rather than all rental categories.
The Opelika City Council meets at 6 p.m. Tuesday at 300 Martin Luther King Blvd.
