Muscle Shoals passes budget, short-term rental policy

MUSCLE SHOALS — City council members on Monday unanimously approved the city's 2025-26 fiscal year budget and adopted a new ordinance regulating short-term residential rentals.

After making a few tweaks to reflect recent departmental reviews, the council finalized and signed off on the budget.

Finance Officer Jazmin Castro said the city will see an increase in health insurance premiums, which will cost $2.9 million. Castro said the city typically separates life and dental insurance from health coverage, which checks in at an additional amount of approximately $200,000, bringing the total cost of health-related insurance premiums to $3.1 million for the municipality.

The budget also added a new fire grant account and increased projected ad valorem revenue by $33,000 to cover storm-related repairs funded by an insurance payment that cannot carry over into the new budget year.

Mayor Billy Hudson said the changes aim to save money without directly affecting residents.

"There were some things we had to cut out," he said, noting reductions such as eliminating extra vehicles in certain departments. Separating health insurance from life and dental coverage, Hudson said, will help the city track costs and manage expenses more efficiently.

Overall, the city is anticipating $32.7 million in revenue for the upcoming fiscal year. City employees are also slated to receive a 3% cost of living raise as well.

Hudson has previously stated the municipality has an estimated $28 million in its reserves.

The new short-term rental ordinance establishes licensing and registration requirements for homes or portions of homes rented for fewer than 30 days, including Airbnb's.

The rules are designed to protect public safety, preserve neighborhood character, and allow homeowners to participate in the sharing economy.

Hotels, motels, inns, and long-term rentals are not affected.

Only certain districts may operate short-term rentals, some requiring conditional use approval from the Planning Commission and city council.

Qualifying properties include single-family homes, attached units such as condominiums, up to 10% of multifamily units, mobile homes in designated parks, and additional dwelling units such as carriage houses or converted garages.

Owners must designate a local contact available 24/7 and maintain annual permits, certificates of occupancy, business licenses, insurance, and guest records for three years.

Rentals cannot host special events, display signage, or make exterior alterations indicating a rental.

Occupancy is limited by the number of bedrooms, with stricter building or fire code rules prevailing, and food preparation is limited to beverages.

Council President Donnie Linley said the rules follow ordinances in surrounding cities.

"Now they'll have to come get a business license and register so we'll know where they are," she said.

Hudson said the impact will vary by location but added: "Some rules are better than no rules."

The ordinance passed unanimously.

Other actions taken included designating the city's financial institutions; authorizing the sale of surplus equipment through an online auction platform; and setting a public hearing for a rezoning request at Puritan Avenue and Glendale Avenue for planned residential development.

The council also discussed the Avalon overpass elevators, out of service since May 2024, and the cancellation of an emergency phone line, which is expected to save the city about $24,000 annually.

The council's next meeting is scheduled for Dec. 1.