Proposed ordinance removed from Sept. 15 agenda but is expected to return for future council consideration
BY MICHELLE KEY
PUBLISHER
OPELIKA — The Opelika City Council was scheduled to consider an ordinance amendment during its meeting on Tuesday night that would establish new licensing and reporting requirements for residential, commercial and short-term rental properties, as well as self-storage facilities. The proposal, however, was removed from the council’s agenda Tuesday afternoon and was not considered during the meeting.
The ordinance as presented would add two new articles to Chapter 14 of the Opelika Code of Ordinances: one covering commercial, residential and short-term rentals and another covering commercial self-service storage facilities.
Before the proposal was removed from the agenda, Opelika Mayor Eddie Smith said that he believes the city needs a clearer process for licensing and tracking rental properties.
“This proposal would establish requirements for residential, commercial, short-term and self-storage rentals,” Smith said. “It also includes building- and fire-safety requirements and inspections specifically for short-term rentals. The goal is to better understand rental activity in Opelika and support safe, responsible rental operations.”
Smith said the city does not yet know how many property owners or rental units would be affected or how much additional revenue the ordinance could generate.
“We do not yet have a confirmed total of affected properties or a reliable estimate of additional revenue,” Smith said. “The proposed licensing and reporting requirements would help provide a more complete picture of rental activity across the different categories.”
Under the city’s current business-license code, Section 14-301 defines “business” to include the lease or rental of residential or nonresidential real estate.
However, the current license schedule reviewed by The Observer does not appear to include a separate residential landlord category like the one proposed in the new ordinance.
Residential rentals
Proposed Section 14-395 would specifically apply to residential rental property, including houses, apartments, condominiums, rooms, dormitories, mobile homes, spaces for mobile dwellings, tiny homes and portions of those properties that are not short-term rentals.
Residential property owners would be required to obtain a city business license assessed at 1.5% of gross rental receipts, with a minimum fee of $100.
Before the proposal was removed from Tuesday’s agenda, City Attorney Robbie Treese responded to questions from The Observer about the ordinance’s legal basis and how it differs from the city’s previous rental ordinance.
He said the 1.5% charge is a business license tax, not a regulatory fee.
“Since the proposed ordinance is a legitimate business license tax rather than an administrative fee, the revenue flows directly into the city’s general fund and does not require the city to balance or justify against specific code-enforcement costs,” Treese said.
Treese said the legal authority for the tax is found, at least in part, in Sections 11-51-90.3 and 11-51-209 of the Alabama Code. The proposal follows an earlier Opelika rental ordinance that the city suspended in 2022 after legal questions arose over its fee structure
Treese said the previous ordinance was considered invalid because of the way its rental-unit fee was structured and because of state-law preemption under the Alabama Uniform Residential Landlord and Tenant Act.
“By shifting to a 1.5% gross receipts business license tax, the proposed ordinance strives to correct the legal vulnerabilities created by the failure of the previous ordinance to comply with state law … and with the subsequent Alabama Supreme Court ruling in 2022,” Treese said.
Under proposed Section 14-395, residential property owners or managers would also be required to provide the city with a detailed list of rental properties from which income was received.
The list would include the property owner’s name, each property address, gross receipts from each property, subtotals by owner and the amount of license tax due. The ordinance states that the payment would not be considered complete without the required property listing.
A property manager could submit the information and payment on behalf of an owner, but the property owner would remain responsible if the management company failed to report the income or remit the tax.
Treese said the minimum fee and percentage-based tax would apply to the individual or legal entity that holds the deed and acts as the lessor.
“If an owner operates through corporate structures, the city would issue the licenses per distinct business entity or structure and not per individual human owner,” Treese said.
Owners of multifamily residential property generating more than $1 million in gross receipts from a single parcel during a calendar year would be required to file and pay quarterly.
Proposed Section 14-396 would apply to commercial rental property, including stores, restaurants, offices and warehouses.
Commercial rentals
Commercial landlords would be required to obtain an annual business license and pay one-fortieth of 1% of gross revenue, with a minimum fee of $100. They would also be required to provide property-by-property reporting similar to the residential requirements.
Self-service storage facilities
TThe proposed ordinance would also establish new requirements for self-service storage facilities, including a 1.5% city rental and leasing tax on gross receipts and monthly reporting and payment requirements. It also references the city’s existing 1% occupational tax for people working within the city limits.
Short-term rentals
The proposed ordinance also includes separate requirements for short-term rentals.
Under proposed Section 14-387, a short-term rental is defined as the use of a dwelling, housing unit or portion of one for fewer than 30 consecutive days.
Proposed Section 14-388 would require a short-term rental operator to obtain a city business license before advertising or listing the property. The license number would also have to appear in the advertisement or listing.
Operators would also have to post the name, telephone number and email address of an adult contact who lives in Lee County. That person would be required to be available 24 hours a day during a rental period and respond to the property within one hour if requested by a city employee.
Under proposed Section 14-390, the short-term rental business license tax would also be 1.5% of annual gross receipts, with a minimum fee of $100. That charge would be in addition to the city’s lodging tax.
Short-term rentals would also be subject to building and fire inspections.
Single-family short-term rentals would require an initial inspection by the city’s fire official and a licensed home inspector, or another qualified individual approved by the city.
An inspection less than 24 months old would have to be on file for renewal, and the city could charge an inspection fee of up to $100.
The proposed ordinance also contains revocation language specific to short-term rentals. The Purchasing-Revenue Manager could refer a license to the City Council for revocation after a second or subsequent violation involving the same unit within a 12-month period.
Law enforcement officers would also be authorized to enforce or assist in enforcing the chapter, but does not spell out what that enforcement role would entail.
The city’s existing business-license code already contains a broader revocation process under Section 14-318.
That section allows the City Council, following notice and a public hearing, to suspend or revoke a business license for a number of reasons, including violations of city ordinances, failure to pay certain tax liabilities and violations of building, zoning, fire or safety requirements.
Before the proposal was removed from Tuesday’s agenda, Smith said the city understands concerns from property owners about the possible financial impact of the proposed tax.
“We understand the concern that additional costs have on property owners, and we take those concerns seriously,” Smith said. “The proposal includes different fee structures for different rental categories, so the financial impact would vary. Those costs deserve consideration as the council reviews the proposed requirements.”
Because the ordinance was removed from Tuesday’s agenda, the council will not take action on the proposal during the meeting. The measure is expected to return to the council for consideration at a later date. A date for its return had not been announced as of yet.
