A Stillwater STR operator said the 20 percent density cap could be used to block competition rather than protect neighborhoods — the council agreed it needed more work
A Stillwater short-term rental operator warned the Stillwater City Council at its May 18 meeting that a density cap in a proposed short-term rental ordinance could be gamed — and his arguments were persuasive enough that the council tabled the ordinance on second reading rather than adopt it.
Steve Trost, director of the Institute for the Study of Free Enterprise at Oklahoma State University's Spears School of Business, introduced himself to the council as a Stillwater resident and entrepreneur who has operated a full-time short-term rental in Stillwater with his wife for four years. He disclosed his personal stake in the outcome upfront.
"The density cap, as written, would directly benefit us by limiting future competition on our block," Trost said. "I'm here arguing against my own financial interest because I believe the cap has problems that outweigh that benefit."
Ordinance 3604 would require all short-term rentals citywide to obtain an annual license through the Development Services Department. The city has 167 active short-term rental licenses, according to Development Services Director David Barth.
The overhaul is designed to address several structural problems with the city's seven-year-old approval framework. Under existing rules, any objection to a short-term rental application — filed by anyone, regardless of where they live — automatically triggers a Planning Commission public hearing. Barth said those hearings have repeatedly been convened over objections filed by people in other parts of Stillwater or from other cities entirely, many of whom did not attend. The proposed ordinance would eliminate that process entirely, replacing public hearings with administrative review by Development Services.
Under the new framework, neighbors within 300 feet would no longer be notified of a license application and would have no role in the front-end approval process. Their only recourse would be to file a complaint with Code Enforcement after a license has already been issued and a violation has occurred. If the Development Services director denies or revokes a license based on such a complaint, the affected applicant — not the neighbor — holds the appeal rights, with a path running from the city manager to Planning Commission to City Council. Neighbors named as complaining parties would receive notice of those hearings but could not initiate the appeal themselves.
Barth described the density cap as aimed at preserving neighborhood character and addressing workforce housing concerns.
"If your neighborhood's predominantly short-term rentals, it's difficult to establish relationships, to have kids that play with your kids," Barth said at first reading. "We're just trying to balance that neighborhood character preservation along with allowing people to operate a business."
Spring projects don't wait. Whether you're building a deck, fence, or addition, now's the time to price out your lumber needs. Stillwater Building Center carries what you need — with free delivery available. 📞 405-372-5959
He also noted that housing well-suited for families relocating for jobs is sometimes taken off the market to operate as a short-term rental used only a handful of weekends a year.
The cap itself limits short-term rental licenses to no more than 20 percent of dwelling units on any block in the Small Lot Single-Family (RSS) or Large Lot Single-Family (RSL) zoning districts. On a 20-unit block, that means four licenses.
Three blocks in Stillwater currently exceed that threshold. Those properties would be grandfathered under existing licenses but could not be replaced if a license lapses, is revoked, or is surrendered — the count would need to fall below the cap before new licenses could be issued on those blocks.
Trost identified three ways he said the cap could be manipulated, which he described as exactly the kind of unintended consequences he teaches his students to look out for.
The first he called defensive licensing — a homeowner who opposes short-term rentals could obtain one of the available licenses, pay the fee, never rent a single night, and permanently block a legitimate operator from entering the market.
The second involved incumbent operators using the same mechanism to eliminate competition.
"An existing operator who wants to eliminate competition can pay a friendly neighbor to hold the license," Trost said. "The neighbor collects the payment, never operates, and the competition is locked out. You've given incumbents a tool to buy exclusivity not through better service but through quota manipulation."
The third concern was what Trost described as a land rush — property owners who might not be ready to operate a short-term rental would have an incentive to file immediately once the ordinance takes effect, simply to secure a slot before their block fills up.
Trost also asked the council to consider distinguishing between owner-occupied short-term rentals — where the owner lives on the property and rents occasionally — and full-time investor-operated properties.
"A homeowner renting their spare bedroom on a football weekend is not creating the same neighborhood impact as an out-of-state investor running a year-round commercial operation," Trost said. "They shouldn't consume the same quota."
The comments appeared to catch several council members off guard. Councilor Kevin Clark said the concept of cap manipulation was new to him and asked whether staff had considered it during the drafting process.
"I guess I'm not devious enough," Clark said.
Mayor Will Joyce said he had not been thinking along those lines either.
Clark raised the possibility of creating two separate license categories — one for full-time operators, one for owner-occupants — that could be monitored and tracked differently based on how they applied. Joyce said he agreed the use cases were fundamentally different but was uncertain how the city could enforce the distinction.
"Are you going to go watch their house the other weekends and make sure they're actually living there?" Joyce said. "I agree that that is a totally different use case than when someone is an investor and they're just buying a property and it's vacant, you know, 90% of the year. But I don't know how we would possibly write something and enforce something that actually would treat those things differently."
Joyce also framed the underlying concern clearly.
"If it's an owner-occupied short-term rental, that is not creating the problem that we're seeing of investor-owned properties that are being taken off the market and used as short-term rentals and therefore aren't available for people to buy or people to rent long-term," he said. "And so we have a shortage of that housing."
Councilor Tim Hardin noted that license applications are submitted under penalties of perjury, suggesting that mechanism could support enforcement of an owner-occupied distinction. Joyce acknowledged the point but said it would likely require neighbors to monitor and report on each other.
Barth said staff had considered the owner-occupied distinction but concluded enforcement would be impractical. Most communities that define owner-occupied require the property owner to reside there a minimum number of days per year — typically 275 to 290 — but verifying compliance poses significant challenges, he said.
"No matter what we do or how we change this, people are going to find ways to do something else maybe," Barth said. "I'm certainly happy to go back and look at other options if you would like us to."
ATTN Employers: If you're recruiting top talent, getting candidates here is half the battle. The Community Marketing Grant helps Stillwater employers offset travel costs for prospective hires flying in through Stillwater Regional Airport.
Bring them to town, show them what Stillwater has to offer, and let the community close the deal. 🤠
Oklahoma City's approach offers one model. OKC's home-sharing rules, first adopted in 2019 and updated in December 2024, require hosts whose property is not their primary residence to obtain a special exception permit from the city's Board of Adjustment — a more burdensome process than the standard annual license available to owner-occupants. To qualify for the standard license, applicants must submit a notarized Primary Residence Affidavit sworn under penalty of perjury affirming the property is their primary residence. On annual renewal, hosts must initial a sworn statement reaffirming primary residency. OKC's cap on non-owner-occupied short-term rentals requiring special exception permits is 10 percent of homes on any given block — half of Stillwater's proposed 20 percent. Whether a similar affidavit-based approach would satisfy the council's concerns is among the questions staff will examine before the ordinance returns.
Councilor Christie Hawkins said the enforcement difficulty made her reluctant to codify any provision the city couldn't meaningfully uphold.
"If it comes down to we don't know how we would enforce that, I just think it makes it problematic to put anything in a policy or a code that we don't know how we'd enforce," Hawkins said.
City Manager Brady Moore said staff could return with research on how other cities treat owner-occupied and investor-operated short-term rentals differently, including whether owner-occupied properties might be exempt from or separately counted under the density cap. City Attorney Kimberly Carnley said staff would examine whether an exemption from the density cap could apply specifically to owner-occupied properties.
"Potentially, yeah," Joyce said when Carnley raised that possibility.
The council also directed staff to examine whether the ordinance should include language requiring a license to be actively used — or allowing it to lapse if the property is never advertised or rented. Carnley said she had seen examples in other cities where a listing had to be advertised but not necessarily rented, and acknowledged that approach could also be abused.
Barth said the third-party enforcement software the city is considering could help detect dormant licenses.
"The same company can help us identify addresses with licenses they've never advertised on any sites," Barth said. "So we could know pretty easily if somebody's trying to game the system."
The council also revised the ordinance's insurance requirement during the May 18 session. The version presented for second reading required proof of property insurance with a $100,000 coverage amount. After further staff review, the dollar amount was removed in favor of simply requiring proof of valid property insurance. But Joyce raised a further concern: property insurance covers the structure, not liability for injuries on the premises. He said the ordinance should require liability coverage so that guests injured at a short-term rental would have a path to compensation.
"I think what we want them to have is liability coverage so that just like we require liability coverage for an automobile, if you hurt somebody with what you're doing, that you've got insurance coverage that will help make that right," Joyce said.
Carnley amended the language on the spot to require proof of current valid property insurance including liability coverage. She also said staff would confirm with insurance professionals that the requirement as written is something operators can actually obtain and provide before the ordinance returns for second reading.
Vice Mayor Amy Dzialowski, who was not present for first reading, said the density cap was critical for preserving neighborhood character and housing availability in a college town, but supported taking more time to get the language right.
The council voted 5-0 to table the ordinance to June 15.
📺 Watch the presentation to City Council