Carmel expects its short-term rental ordinance to be grandfathered in to potential state law


The Indiana State Legislature has passed a bill to prevent municipalities from banning short-term rentals such as Airbnb. The bill, which was awaiting the governor’s signature as of March 12, allows limited regulation of these types of rentals.

The Carmel City Council passed an ordinance Jan. 8 to regulate the use of short-term rentals. Carmel’s law is stricter than the state’s version. Carmel Mayor Jim Brainard said Carmel has been told by its attorneys that the city is grandfathered in, and therefore exempt from the state’s new law, if it’s signed.

The bill grandfathered in city ordinances passed before Jan. 1. Carmel passed its ordinance about a week later, but attorney John Molitor, who advises the city on zoning matters, said Carmel is exempt from the bill. He added that Carmel has had stricter regulations in effect for many years.

Carmel’s ordinance allows short-term rentals such as Airbnb to operate in the city as long as certain requirements are met. The ordinance creates an exemption that allows homeowners wanting to list a rental on Airbnb to pay a $100 application fee and undergo a review from a Board of Zoning Appeals hearing officer. There is a $50 annual fee for renewals. Carmel’s law only applies to permanent residents of a home to prevent someone from buying a house for it to be solely used as a short-term rental.

The city council also amended the law to allow for use of short-term rentals on select occasions, such as the Indianapolis 500, NCAA Final Four, PGA golf tournaments or major conventions. A detailed list was passed.

If Carmel’s ordinance is not grandfathered in, some regulations, such as the renewal fee and ban on renting secondary homes, would not be allowed.