Short-term rental law unlikely to curb Vegas party houses
Hosts stay one step ahead of regulators
Image of back yard at “The Enchanted Elegant Mansion” in Las Vegas as advertised online by TotalMax Homes.
A contentious bill passed by state lawmakers on the final day of the Legislature forces Clark County to regulate short-term rentals, which are currently banned in unincorporated areas of the valley. But it’s unlikely to put an end to the most troublesome variety — the party houses — whose owners are finding creative ways to skirt the law.
“Total Max Homes is a unique company dedicated to providing the best Luxury Vacation Rental Mansions at Las Vegas…” says a website offering vacation stays at a handful of properties with names such as the Dreams and Desires Mansion, and the Elegant Enchantment Mansion. The homes are mostly clustered in upscale neighborhoods near Sahara and Rainbow.
“All rentals will need to be 31+ days to meet Clark County current ordinance,” the website says.
By requiring a lease of 31 days or more, Total Max Homes circumvents the county’s current ban on STRs and avoids the payment of transient lodging tax, a 13 percent levy applied to lodging of 30 days or less.
Gary Wu, the CEO of Total Max Homes, according to his LinkedIn page, did not respond to numerous requests for comment.
Neighbors say the homes attract throngs of visitors, vehicles and the vices of a Vegas vacation.
“We bought our homes with the understanding we’d be entitled to peaceful, quiet enjoyment,” says real estate agent and area resident Lisa Skurow. She says some neighbors suspect the properties have at times operated as mini brothels.
“People are leasing these places to do what they can’t do on the Strip — have a busload of escorts show up in the middle of the night,” says Skurow. “I’ve had to explain to my young daughter on two different occasions who these scantily clad women are, with no shoes or coats, standing on the corner in the winter.”
Party houses make up a fraction of the valley’s short-term rentals, estimated at between 8,000 and 18,000 by Assemblywoman Rochelle Nguyen. But they enflame the most passion among opponents.
Nguyen, who sponsored Assembly Bill 363, which requires Clark County to lift its ban on STRs, regulate them and capture millions of dollars in lost tax revenue, included a provision requiring a two-night minimum stay at properties not occupied by the owner — an effort, she said, to prevent rentals from being used as party houses. But the law applies only to properties rented for 30 days or less.
Nguyen did not respond to requests for comment on the effort by some party house landlords to skirt current regulations.
“We’ve been fighting this for five years,” says Skurow, who says neighbors finally met last month with Commissioner Justin Jones and Las Vegas Metro Police at the home of retired Federal Judge Linda Riegle. “The police can come out for nuisance or criminal acts.”
Jones, who represents the district, attempted to give county code enforcement some teeth with a proposal to add to the tax rolls assessments levied against chronic nuisances. Property owners who failed to pay would have ultimately had their homes taken by Clark County. Senate Bill 57, which would have given the county authority to do so, died when banks and mortgage brokers objected and threatened it would restrict lending in Nevada.
The measure that did pass, AB 363, “is really going to change the landscape of Las Vegas,” says Skurow. “We’re going to lose neighborhoods to people who think they are hoteliers.”
“How is somebody turning a blind eye to what’s happening with these homes?” asks Skurow, who says the properties are being renovated to accommodate more guests. “The first thing that goes up is the walls, so you can’t see in.”
Code-enforcement documents indicate extensive unpermitted work on the properties. The County Assessor’s website, which is used to determine property tax value, lists square footages for the properties that are thousands of feet less than those indicated on real estate websites such as Trulia and Zillow.
“They are running gas lines, electrical lines — who knows what’s behind those walls because they’re not being inspected. They’re not using licensed contractors for this work,” Skurow says. “It’s only a matter of time before it takes out a block, a house, a bachelor party or a porn video shoot.”
The internet is brimming with suggestions on how vacation rental owners can avoid regulation and taxes. Violating the laws governing STRs is a cottage industry itself. Owners who desire to skirt designation as a short-term rental are instructed to include a provision in a long-term lease allowing termination for a nominal fee.
“Based on my research, a landlord can’t enter into a contract for the purpose of circumventing the current law regarding short term rentals by entering into an agreement that is over 30 days on its face when the landlord and the tenant do not intend to abide by such a contract,” says Las Vegas attorney Sagar Raich. “The Supreme Court of Nevada has held for over 100 years that ‘Agreements contravening the ends and objects of the enactments of the legislature, or as it is most commonly expressed, the policy of those enactments, are void.’”
But challenging the operations will take resources that Clark County says it lacks, with the estimated cost of implementing the provisions in the new law at $3.5 million a year over the next biennium.
“We have been pursuing the worst of the worst violators for several years now and have taken them to court,” says Jones. “Unfortunately, in two of the cases the judge ruled the County’s fines were arbitrary and capricious.”
Wu appealed more than $100,000 in County fines assessed against four properties. Two of four cases are pending.
In April, according to court minutes, Judge Timothy Williams ruled the County “was arbitrary and capricious respecting enforcement of penalties,” and had “no ordinance as basis for the penalty.”
Williams ordered the County to “rescind any and all administrative citations including fines and liens” assessed against the owner, W&W Holdings LLC-Series A. Jennifer Wu and Gary Wu are listed by the state as managing members.
The attorney representing Wu did not respond to requests for comment.
The county has a three-pronged plan, according to Jones.
“We are going to revise our ordinance to clarify it so we don’t have that issue of whether it’s Title 11 or 30,” Jones said of the code differentiating short and long-term rentals. “We’re going to be pursuing injunctive relief under the concept of a chronic nuisance.”
“Beyond that, with the passage of AB 363, which does have some mechanisms in it, we’re going to have to look at what’s going to be legal in the County.”
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