Springfield leaders are grappling with a new state law that might weaken the city's ability to regulate home-based businesses.
The law, which took effect on Aug. 28, could undermine the rules on Airbnb and other short-term rental properties, even allowing situations in which a renter could list a property they don’t own on a vacation platform. Springfield's city leaders aren't sure, but are also concerned that certain types of businesses, like loud manufacturing or disruptive, high-trafficked businesses, could pop up in otherwise quiet neighborhoods.
Attorneys, planners and administrators for the city aren't entirely sure of what the new law's ripple effect will be.
Springfield City Councilman Richard Ollis called the language in Missouri House Bill 1662 “a mess,” at the end of a briefing on the topic Aug. 30.
Springfield Mayor Ken McClure said the original bill, sponsored by State Rep. Craig Fishel, R-Springfield, was “a very good bill when it was introduced,” but it got packed with other loosely related legislation as the 2022 session of the Missouri General Assembly progressed.
“It had to do with removing discriminatory provisions from real estate covenants that have been on the books for years and are just not appropriate, and it was widely supported,” McClure said.
The idea of removing discriminatory language — based on a buyer's race, color, religion or national origin — from real estate covenants was so supported that it became a declared priority for the Springfield City Council.
“Sometimes good bills get harmed by bad provisions that come on, or at least unclear provisions,” McClure said.
Softening short-term rental laws
The new law allows any person who is the primary resident of a dwelling, regardless of its local zoning designation, to use the dwelling for short-term rental, including platforms like VRBO and Airbnb.
“It could be an owner or tenant that conducts the home-based business,” Springfield Director of Planning and Development Susan Istenes said. “Our analysis has shown that renting of the property meets the definition of home-based business. The city can prohibit such rentals only if the business owner fails to obtain a business license or the business violates the narrowly tailored regulations to protect public health and safety, but otherwise, we can’t prohibit the renting of property.”
Short-term rentals with resident owners would be classified by state law as home-based businesses, and would only be subject to Springfield’s health and safety regulations.
“I think our short term rental code is a little bit confusing because we have multiple types,” Istenes said.
Springfield’s codes governing short-term rentals are currently under legal review, and a bill with changes to bring Springfield into compliance with state law will likely come before the City Council for consideration sometime in December or January, Istenes said.
“Obviously, state law supersedes our ordinances, so the review will be just to make sure our ordinances are correct and comply with that as written,” Assistant City Manager Collin Quigley said. “As businesses come in, home-based businesses and they apply for a business license, we're just going to evaluate them in light of the state law so we are in compliance with it.”
Late May moves at the Missouri Capitol
Lobbyist Will Marrs of the Governmental Services group spoke with the Springfield City Council Aug. 30. Marrs’ lobbying firm represents a list of southwest Missouri clients that includes Mercy Health, Bass Pro Shops, the Greene County Commission, the city of Springfield, the Branson/Lakes Area Chamber of Commerce and the Missouri Boys and Girls Clubs Alliance.
The bill underwent heavy amending in the final days of the 2022 regular session of the Missouri General Assembly in May.
“It was designed essentially to remove some of local governments’ abilities to regulate home-based business,” Marrs said.
Marrs said an amendment was written to stop cities from restricting what a home-based business could entail, including hours of operation and occupancy limits.
Marrs said lobbyists marketed House Bill 1662 to legislators as a way to help entrepreneurs or enterprising Missourians attempting to strike out on their own in the wake of COVID-19’s impact on the job market and all pockets of industry.
“A lot of that, I think, was overlooked,” Marrs said. “Once you get more into the details of the bill, you’re seeing that this is actually pretty open-ended language, and that’s really, precisely the problem.”
Basic terms of the home business law
Istenes told the City Council that staff members of several Springfield city government departments are reviewing the bill to determine what Springfield needs to do to comply with the law.
“We are currently working together — law, planning, BDS and licensing — to kind of walk through the bill,” Istenes said. “Overall, the bill relaxes the standards for home occupations that the city may regulate, and it does this by narrowing the regulations governing home-based businesses to those associated with narrowly-tailored health and safety regulations.”
The bill disallows the practice of a city creating a pre-approval or licensing process for a home-based business. Istenes said Springfield is far from the only city with ordinances on the books to try to regulate commercial enterprises operating from homes. She said the most common home-based businesses in Springfield include online sales, pet grooming, contractors and construction business offices, service agents and distribution businesses.
A home-based occupation, under Springfield city code, is defined as “any activity carried out for compensation in a residential dwelling unit.” The code limits the amount of space inside a residential unit that may be dedicated to a business, it limits the amount of storage space that a home may contain, and it sets a limit that any employees who work from the same home must be of the same family.
The City Council held a closed session after the open briefing on Aug. 30, with legal matters cited as one of the reasons for closing the meeting to the public. Istenes hinted in the open session that council members could ask technical legal questions of the city’s attorneys during the closed portion of the meeting.
Learn more about the law's three new designations
The new law creates three designations: home-based work, home-based business and a no impact home-based business, each with their own sets of requirements to meet. To qualify as “home-based work,” work activity must be secondary to the home’s primary use, which is living. The work can’t interfere with the overall character of the home or the neighborhood.
Under the new law, the city of Springfield may not prohibit or restrict certain occupations, work hours and appointments, storage of equipment in a home or service by appointment. Home-based work may still be subject to deed restrictions and covenants, but Istenes pointed out that the city of Springfield does not enforce neighborhood covenants.
“Home-based business” is defined as any business that manufactures and sells goods or provides services, and is owned and operated by the owner or tenant of a dwelling. To meet the “no impact” clause, a business may not include any manufacturing and may not increase the vehicle traffic in a neighborhood. Work activities on a residential site may not be visible from the street, an issue generally solved with fences and screens.
“We do not currently require a home-based business license, we do require a business license of all businesses, but not a ‘home-based business license,’” Istenes said.
The new state law prohibits a city from requiring a person to obtain a permit or zoning variance to have a business operation at their house. Any limits the city could put on home-based businesses would need to be tailored toward laws governing the health and safety of the city’s population.
“There will have to be new city procedures for home-based businesses,” Istenes said.
What happened in Jefferson City?
Marrs described the groups behind the amending language in the waning days of the 2022 legislative session as “think tanks that wanted to undercut city government.”
“I think there’s a little bit of confusion by design on some of these bills,” Marrs said. “We had tried to work with some of the sponsors on it once we kind of caught the language and saw that it was pretty inconsistent and probably overbroad, but there were certainly some powerful groups that wanted this passed.”
When questioned on the bill on May 13, State Rep. Fishel, the original bill handler in the Missouri House of Representatives, yielded some of his explanations to Rep. Tony Lovasco, R-O'Fallon, who wrote a major amendment.
“The short version of the bill in its current form and as negotiated is if you can't see it, you can't hear it, and you can't smell it, you can probably do it,” Lovasco said.
Lovasco said lobbyists for the Missouri Municipal League had “heartburn” with some of the language found in the new law. He pledged to work with the MML in the 2023 legislative session to fix any of those issues.
“The sections regarding what municipalities are allowed to regulate — my understanding is that we're good with that,” Lovasco said. “They generally feel that they believe that people should have to ask permission to start the business to begin with, which is the actual license aspect of it, that was kind of the point of contention that they brought to my attention.”
The Missouri House voted 94-43 to pass the final version of House Bill 1662. Rep. Donna Baringer, D-St. Louis, cast one of the “No” votes.
“I do not in any way agree with overriding a local municipality's ruling on residential properties being able to turn their house into a business at any time without any input of the municipality or the neighbors,” Baringer said.
“We specifically allow political subdivisions to regulate health and sanitation issues, which would handle anything that would be chemicals that would be caustic or whatever,” Lovasco said. “There are specific provisions for violating building codes. Existing zoning ordinances are already addressed.”
Like Lovasco, Fishel also pledged a willingness to correct any wrongs with the law in 2023.
“If anything needs to be fixed next spring, or next year, we will be on top of it as much as possible,” Fishel said before the final vote in the Missouri House on May 13.
