Friday, January 23, 2015

Some Key Resources on Vacation Rental Regulation

Here is a short summary of some of the best resources on the topic of vacation rental regulation.

Yogman vs Parrott

A decision by the Oregon Supreme Court that says that renting a home on a short term basis is an allowed residential use.  More specifically:

Plaintiffs assert that "[t]he acceptance of a fee in exchange for daily or weekly stays at [the home] is not a residential purpose" under the covenant. We disagree. Whether or not defendants receive a rental fee is not the determinative factor, because the "residential purpose" clause of the restrictive covenant controls the manner in which the property is used. Although the renters pay to occupy defendants' home, they are using the home for residential purposes. Plaintiffs do not assert, nor does the evidence indicate, that defendants' home, when rented, is used for any nonresidential purposes.

...defendants' practice of renting their vacation home on a short-term basis through a third party is not a commercial enterprise. Defendants' home is not open to the public for on-site rental, such as a motel, nor is it advertised as a rental by signs on the property. The maximum number of renters and vehicles allowed at any one time appears to be reasonable given the size of the home. What occurs on defendants' property is not any greater infringement on the residential character of the subdivision than would occur with a large family that regularly visited its own vacation home. The only distinction is that defendants receive a fee for the use of their home. Under the covenants involved in this case, that alone is not enough to constitute a commercial enterprise.

White Paper on Short Term Rental Housing Restrictions by the National Association of Realtors

Covers the way short term rental housing is regulated nationwide.  Some key parts of the study:

      ... some short-term rental regulations might also cause an owner to lose rental income because of suspension or revocation of a rental permit, even if the reason for suspension or revocation is beyond the owner‘s control (e.g., tenant behavior).

      ... added limitations on the use of properties that short-term rental housing restrictions impose may cause property values in the district or neighborhood to decrease.

      A widespread ban on short-term rentals that results in a substantial number of homes being sold or foreclosed upon may flood the market, causing property values to fall and remain depressed for a period of time.

      ... tourists who become aware of the new restrictions may perceive them as being motivated by, and evidence of, an ―anti-tourist
sentiment among full time residents of the community.

      ... short-term rental restrictions that negatively affect local tourism could cause sales tax revenue to decrease if restaurant and retail sales are down due to diminished tourism.

      It is well established that a land use regulation that is excessively restrictive may constitute a ―taking of property for which compensation must be paid under the state constitution and the Fifth and Fourteenth Amendments to the United States Constitution.

      Communities that have not adopted general community-wide noise regulations or the other regulations aimed at curtailing the types of behaviors and activities that would be regulated under a short-term rental ordinance, should be encouraged to adopt such general regulations rather than to single out short-term rental properties for regulation.

Successful Integration of Vacation Rentals Into Communities

A review of the history of vacation rentals world-wide, which discusses negative impacts, positive contributions, property rights and community dynamics related to short term rental activity.  Summary:

Host communities see the most benefits and the fewest negative impacts from vacation rental operations when rental owners, rental agencies, community members and legislators cooperate, respect each other and work together.

Asheville, NC Approves VRs in Residential Zones 

An article about a community that removed prohibitions on short term rental activities after finding that the 2 year old restrictions were negatively impacting the local economy, property values and opportunities for home ownership.   Its not uncommon for communities that pass severe restrictions to come back in a few years and rethink the laws due to concerns about negative impacts.  I can provide other examples.  Ashland, OR is currently going through this process….

Commissioners Chairman David Gantt noted the issue had been discussed since December, and the county Planning Board voted 5-1 last month to recommend the change.  “I think it’s really been something that’s had a lot of community input,” Gantt said.  Backers said the change would help the economy and the housing market by bringing more tourists to the area and allowing another use for houses in unincorporated areas.  “We’re seeing a lot of folks who can’t sell their properties,” said Chip Craig, owner of GreyBeard Realty in Black Mountain.

Recent Events in Lincoln City Oregon

Lincoln City, OR recently passed a series of severe restrictions on vacation rentals, including a restriction that says some home owners can’t rent for more than 30 nights per year.  Direct impacts of this action:
·         The local anti-VR mayor of the city lost his bid for a seat on the county commission.
·         A new Pro-VR mayoral candidate was voted into office.  He won 60% of the vote against an anti-VR opponent.
·         Local citizens filed for a voter referendum, pointing out that the new laws would severely impact the local economy, and asking local citizens to sign petition that would force the issue to a public vote.
·         434 signatures were required to make the referendum petition successful.  Almost twice that many people signed the petition.  As a result the laws are temporarily suspended, and local citizens will get to chance to reject the laws in a May 2015 election.

Studies Find Short Term Rentals Bring Enormous Economic Benefits….

March 2014 independent study of both small towns and big cities cites the economic benefits that short term rentals bring to communities.

In Chicago, short-term rentals generated $108 million in overall economic activity in 2013 with $70.6 million of that activity attributable to visitor spending on short-term rentals and related on food, recreation, transportation and other expenses, according to the study by TXP Inc. For every $100 a traveler spent on short-term rentals, they spent an additional $69 on food, $24 on transportation, $59 on shopping, and $48 on arts, entertainment and recreational activities.

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