Those who equate the concept of regulating short-term rentals (STRs) with the Tahoe/Truckee region may be surprised to learn that the tension surrounding STRs is not a unique phenomenon to our area. Finding ways to improve community relations between property owners who rent to vacationers and local neighbors and residents has been a constant struggle among mountain towns and those with tourist-based economies, especially since the boom in the STR market with sites like Airbnb and VRBO becoming mainstream.
Two years ago, Moonshine reported on six other resort towns also facing the challenge of regulating short-term rentals. The case studies provided a backdrop for the types of policies Truckee and the North Tahoe region could consider (My Life is Your Vacation … Rental in our December 2017 issue). Both Washoe and Placer counties are now crafting an STR ordinance, with Placer’s due to be presented to the public in January 2020. Placer is currently in the process reviewing other jurisdictions’ solutions. It seems a good time to check back in with those communities we covered in 2017 to see how their different approaches to mapping and tracking, taxing and regulating STRs have played out so far.
Sedona, Arizona: Limited to Treating Symptoms
Sedona banned STRs in 1995, although as Moonshine previously reported, it only began being enforced in a major way about 10 years later. Then in 2016 a statewide law passed that stipulated that cities must regulate all rentals the same way, making an STR ban unenforceable.
Cari Meyer, a Sedona senior planner, told the Ink that they have seen a large increase in inquiries about STRs over the last few years, though she isn’t sure exactly how significant the net increase is because it’s possible that under the ban “they didn’t ask because they knew they couldn’t and just did it,” she said. The city’s staff is wary of the fact that most of the purchasers of real estate during the recent market upswing have been corporations capitalizing on a new vacation rental market in a popular tourist destination.
“Unfortunately … that takes properties out of the market for people to buy,” Meyer said. It also focuses developers away from the city’s concentration on dense apartment complexes and affordable housing, she said, an issue which sounds eerily similar to an aspect of the housing crisis in the Tahoe/Truckee region.
Housing for what we dub here as the “missing middle” is also an issue of increased concern to Meyer and the rest of the planning staff, exacerbated by the flooding vacation rental market. For example, their school district got a new superintendent and it took him months to find housing; conversely, it took Sedona far longer than expected to hire an assistant city attorney when the position was vacant because multiple qualified applicants who were offered the job had to decline based on housing concerns.
“What we’ve tried to do is address some of the impacts of [STRs],” Meyer explained of the city’s strategy in the last two years after the statewide law went into effect in 2017. The increase in STRs has created issues with unpermitted construction, noise, trash, parking, and especially the issue of added bedrooms making a property not safe according to town codes. When a neighbor complains, usually based on what they deem to be likely unpermitted construction, Meyer compares images on Zillow of the home from before STRs were allowed with new postings on vacation rental sites to spot unsafe bedroom expansions. Once, the city discovered a converted bedroom advertised to sleep 12 in one room, which turned out to have triple-stacked bunk beds, all queens, which Meyer said was a major safety hazard, especially as it seemed to be marketed as a room for kids.
Sedona is working to address the “symptoms” of the boom in STRs in a number of ways, including a rewrite of the land development code in 2018, added parking requirements for all single-family residentials, and a proposed requirement to have garage space to stop so many property owners from converting garages into bedrooms and to limit the size of guesthouses. The city also began posting yellow “stop work order” notices for unpermitted construction.
Sedona’s hands are tied by the state of Arizona when it comes to directly regulating existing STRs, and treating the frequent and increasing complaints associated with them is diffi cult and takes time. But Meyer’s team has one trick up their sleeve when it comes to limiting the construction of new properties to be used as STRs. Developers will often need to rezone a property to build how they want, so Sedona has been using “conditional rezoning,” creating an exchanged commitment from a developer that they won’t subdivide units or use them for vacation rentals directly for the ability to rezone. However, a new owner of a unit could then rent it out as an STR.
Without hope of changing the statewide law, reform has been “slow because the state changed their laws overnight but you’re not going to change people’s attitudes and feelings about certain things overnight,” Meyer said.
Durango, Colorado: Creative Control
Next we move from warmer climes, where a local government is struggling to control a booming newly legal STR industry, to a place with the most-regulated-but-not-banned STR markets in the west: Durango. Of course, in Colorado, many towns are familiar with the weekend population swells and crowded lift lines associated with world-class mountains, and so Durango has been a pioneer in experimenting with vacation rental policy.
A town with a population of 18,465 (as per the 2017 census) with roughly 8,000 housing units, Durango has regulated what their code designates as “Tourist Homes” in some form since 1989. The town’s approach casts a wide net to stop potential STRs in their tracks by limiting which neighborhoods are suitable for vacation rentals, keeping strict track of all the STRs on the books, and putting a cap on how many homes can be rented out short term within some specific areas. Of the “zones” that limit the allowable number of STRs, two have caps calculated by rental property-per-block, both of which currently hold the maximum allowed (17 and 22).
A total of 97 STRs are currently registered in Durango, with the majority of them being packed into the uncapped zones, and a waitlist currently has 21 hopefuls that will only be able to rent out their properties as vacation rentals if caps increase, zones move, or a property loses its permit or voluntarily lapses it. Interestingly, there were 13 homes listed on the wait list in 2017 when Moonshine last checked in on Durango’s STR regulations, so the strict policies seem to be keeping interest fairly consistent.
Denver, Colorado: Second-Home STRs Are a No-Go
Colorado’s capital is home to over 600,000 residents, and as the central hub to hit the Rockies, it has been a big part of the national conversation about vacation rental regulation for years. The “mile-high city” joined Truckee and Placer County as one of the first clients of Host Compliance, the STR data collection company that formed in 2017 to help local governments discover STRs not following codes and bring them into compliance (See Short Term Rentals Can’t Hide in Moonshine’s May 2017 issue).
Denver also conducted a two-year study on the feasibility of different regulations and in 2017 passed an ordinance spelling out safety regulations and creating a tracking and licensing system; a fairly routine set of policies. The boldest and most unprecedented aspect of that legislation was the inclusion of the STR ban for second homeowners: “It shall be unlawful to operate a short-term rental in any location that is not the applicant’s primary residence,” the ordinance states.
While this has caused much debate (the unique approach earned Denver along with Durango a spot at the top of the “worst” of regulations on STRs by libertarian magazine Reason), the policy takes a stab at Sedona’s concern with properties purchased by corporations to be rented out as vacation homes full-time with only remote property management.
Jackson, Wyoming: High Costs, Low Compliance
In 2016, Jackson tightened the belt on STR regulations, with the highest licensing fee on our list at $100 (Truckee provides free STR registration; Denver charges $25) and STRs banned in all but two zones of the city. Another Host Compliance client, Jackson provides a hotline for neighbors with an STR-related complaint, similar to the new one serving Placer County. The city has a softer version of Denver’s primary residence clause: Though you may rent out a second home as a vacation rental, you must provide proof of residence in Teton county.
In the three years since licensing began under the new policy, Jackson has approved and is tracking over 600 vacation rentals in the limited zones where they are now permitted, with the total number of applicants likely hundreds more. VRBO, however, lists over 1,000 vacation rental properties and Airbnb lists over 300, so it doesn’t always follow that stricter regulation equals high compliance rates.
Telluride, Colorado: Regulatory Roots
One small town in the Centennial State has been regulating, but not fully restricting, vacation rentals for longer than any other in our roundup: Telluride. Home to the renowned ski resort of the same name and many other outdoor recreation opportunities, the town has regulated STRs since 1980, far before the market boomed and became dominated by convenient sites like Airbnb.
Most STR regulatory models focus primarily on restriction of location, safety requirements, limiting the totals, licensing and tracking, or code and construction permitting compliance. Yet the target consequences of oversaturation of vacation rentals are not limited to permitting or total numbers; the usage is what often generates issues like noise complaints, parking limitations, or trash is management. Telluride’s approach addresses overall usage by restricting each licensed vacation rental property to three rental occurrences per year, at a maximum of 29 days at a time. (Restrictions on dates are common in STR regulation; in comparison, Truckee’s definition states a unit is considered an STR if rented for a period of up to 31 days).
Mammoth Lakes, California: Following Community Input
Bringing it back to the homes state, Mammoth Lakes is a giant in the way of STRs with a relatively tiny population of just over 8,000. With over 4,000 active vacation rentals, there are over half as many homes used as STRs in Mammoth Lakes as there are people living there.
They have a Transient Occupancy Tax (TOT) at 13% (up from the original 6% passed in 1986 and similar to the percentage collected by the Town of Truckee, Placer County, and Washoe County) and restrict the usage of properties for STRs to “Commercial, Residential Multi-Family 2, Resort, and Specific Plan” zones, though the planning commission heard arguments in 2009 and 2012 about expanding the allowable regions. In 2015, Mammoth Lakes adopted STR regulation as a priority, and held several workshops that year resulting in their current set of policies.
Mammoth Lakes’ primarily zone-based set of regulations makes no attempt like Durango to limit the number of vacation rentals per specific area, nor does it take another unique approach to discouraging owners from renting as an STR like the ban on second-home vacation rentals in Denver or the restriction on number of instances of short-term rental like Jackson. Perhaps the zoning mitigation approach as opposed to any attempt to cut down on totals for Mammoth Lakes is partially derived from the fact that roughly 60% of the town’s general fund comes from their TOT taxes.
Tahoe/Truckee, California: An STR Staycation
Let’s journey back home for a quick check-in. Around here, local governments have been slowly sewing together a patchwork quilt of diverse policies and regulations, and the debate surrounding STR regulation is only heating up as the weather cools down and we enter “the season.” Visitors are poised to do two things en masse: flock to the slopes and rent out vacation properties.
Placer County, which currently hosts roughly 4,600 vacation rentals, held a community input workshop this summer which drew many concerned residents, both those who have advocated for specific STR policies because they’ve had trouble as neighbors and those who rent out their homes.
“We are very concerned that we get this right, that we proceed with an ordinance that we start and do well and don’t backtrack or create issues or unintended consequences,” Cindy Gustafson, District 5 supervisor, said at the meeting. “[Tourism’s] what we’re about. It’s what we’ve always been about, and it’s been a huge impact to all of our lives, both pros and cons.”
And unintended consequences seemed to be the elephant in the room for most people. Those on the side of heavy regulation acknowledge that property owners don’t want noisy or rowdy guests (the two most common concerns at the workshop), while STR property owners complained a mostly respectful industry gets scapegoated due to “a few bad apples in the bunch,” said Rebecca Tolby, who runs her home as an Airbnb.
Washoe County also hosted three public workshops this summer, along with a series of stakeholder meetings and an online survey open through September, in order to update their existing STR policies. One of the Washoe workshops, on Aug. 26 in Incline Village, was heavily attended by roughly 200 community members. Participants sat themselves based on issues they were most interested in discussing such as parking, trash, and noise.
The workshop encouraged positive thinking by asking for sticky note contributions to a brainstorm on the positives of STRs. They “create options for people to visit and enjoy the area while supporting the local economy,” one community member’s sticky note read. On a list of issues people had where participants were asked to vote for their biggest concern, the workshop members overwhelmingly said that licensing issues were heaviest on their minds. In a Nov. 12 meeting, the county’s board of commissioners approved a staff-curated list of policy recommendations, including detailed proposed regulation on noise, trash issues, permitting, parking, property management proximity requirements, occupancy limits, and safety.
Meanwhile, the Town of Truckee remains proud of the success of their TOT revenue (see November’s You Asked. They Answered for a breakdown of where TOT dollars are spent for local counties and Truckee) and having brought Host Compliance in to mine data from STR sites to find properties in non-compliance. Truckee’s 2016 reboot of its STR policies include the requirement to register your property, pay all TOT taxes (10%) in addition to 2% on top of that for TTBID, and maintain an active licensing number with the town.
Tension between state regulation and local control and the validity of arguments on both sides of the vacation property owner/concerned neighbor debate provide the backdrop for the ever-evolving bevy of solutions to small mountain towns playing host to large transient populations on vacation. The hope, as Sedona’s Meyer so aptly put it, is to find a way to create policy that is “tailored … so that grandma can rent out her spare room but a corporation can’t come in and buy up half of a neighborhood and turn them into hotel rooms,” she said.