Friday, October 7, 2011

Concepts & Guidelines for writing Vacation Rental Ordinances

Here are some points that should be considered when writing new laws to control vacation rentals, or evaluating an existing ordinance that needs to be updated or fixed.

Elements of a Good Law
  1. It recognizes that vacation rentals are the desired 1st choice alternative for many traveling families, and that in most communities a shortage of vacation rentals means tourists will stay elsewhere.
  2. It recognizes the economic, social and environmental benefits that vacation rentals bring to their communities, and is structured to support the community's tourism and economic development goals. 
  3. It recognizes that using a residential home as a vacation rental does not change the function of the home any more than using a residential home as a yearly rental does, and therefore such usage does not require exceptions to zoning laws or other special qualifications.
  4. It recognizes the role of vacation rentals as a valid and legal form of lodging.
  5. It protects the property values and property rights of everyone in the community.
  6. If there is an association of vacation rental owners and managers in the area, it supports the association’s efforts to establish standards, build dialog with the community, self-regulate and actively participate in managing the role of vacation rentals in the area. If there isn't an association yet, it is designed to support the formation of one.
  7. The problems that it attempts to address have been independently documented and the restrictions that it places on vacation home owners have been shown to directly address such problems.  Such restrictions are not based on complaints or hearsay or innuendo or misinformation about vacation rentals.
  8. It attempts to be consistent with other laws that have been successful around the country.
  9. It doesn't restate or duplicate laws that already exist in the community concerning parking, trash, noise or other issues.
  10. Its recognizes that the loss of the right to rent a home is a major penalty to the home owner, which can reduce the value of a property, and can lead to foreclosure or bankruptcy.  It applies this penalty judiciously and doesn't compound the problem by also including fines and jail time.

Signs of a Bad Law

A bad law may:
  1. Include legal sanctions based primarily on neighbor complaints and stories that have been passed around the community.  Neighbor and community concerns have a place in the discussion about regulation of vacation rentals, but should never be the primarily influence on the design of legislation in any democratic government.
  2. Include provisions designed to limit or reduce the number of vacation rentals in the area, designed to decrease occupancy rates in rentals, or design to make management and ownership of vacation rentals more difficult and inconvenient.   
  3. Include provisions that work against tourism goals, economic goals and community development goals that the area has adopted.
  4. Include provisions that decrease property values for vacation rental owners AND other property owners in the area.
  5. Include provisions that treat all vacation rentals alike, don't recognize differences between full time rental homes and homes that are rented only on an occassional basis.
  6. Include provisions that treat vacation rentals like they are business, failing to recognize that vacation rentals rarely turn a profit or operate like businesses.
  7. Include provisions that result in loss of sales and support for area businesses that regularly provide goods and services to rental owners and their guests.
  8. Include provisions that unfairly impact the property rights of owners.
  9. Include provisions that favor the interests of hotel owners and other lodging venues and attempt to put vacation rental lodging operations at a competitive disadvantage.
  10. Include provisions that single out vacation rental homes for special restrictions that other home or rental owners do not have to comply with, without legitimate justification.
  11. Include provisions that threaten large fines and/or jail time.
  12. Include provisions that penalized rental owners for actions of guests that they have no control over.

Discriminatory Practices

You can tell that a provision discriminates against VRDs if you ask yourself these questions:
  1. For provisions that negatively impact the value of the vacation rental owner’s property as an investment – would other types of investors have to operate under the same rules or face the same types of penalties? 
  2. For provisions that concern conditions of the physical property and the lot – does a full time resident living next door to the vacation rental have to live under the same rules or face the same penalties? 
  3. For provisions that concern the operation of the vacation rental as a lodging facility – do resorts, hotels, motels and bed & breakfasts have to live under the same rules or face the same penalties?   And do people who rent their homes on a monthly or yearly basis face such rules and penalties?
  4. For provisions that affect the ability of the vacation rental to operate in a business-like manner – would other types of businesses be able to survive under similar rules?

What's At Stake?

If a community's vacation rental laws are overly restrictive:
  1. Certain types of tourists will go elsewhere to vacation.
  2. Businesses that provide goods and services to rental owners and their guests will lose revenues.
  3. Property values will decline because the supply of homes on the market will increase.
  4. Property tax revenues will drop as property values decline.
  5. Lodging tax revenues and permit fee revenues will decline as rental owners discontinue operations.
  6. Some rental owners will go into foreclosure on investment properties, and some owners will go into bankruptcy.
  7. Some rental owners will lose homes that have been in their family for generations.
  8. Vacation rental owners lose property rights even though they have done nothing wrong.
  9. Some owner-managed short term rentals will have to start using rental agencies.
  10. A significant percentage of owner-managed short term rentals to go underground, decreasing regulatory control over them, and decreasing tax collections.
  11. Legal and administrative costs associated with managing vacation rental homes in the area will increase.
  12. Owners and rental agencies may bring costly lawsuits against the community.

Everyone gains if we are cautious and thoughtful about how we regulate vacation rentals.

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