How do you regulate and enforce vacation rentals? In part two of our series on vacation rentals, we take a look at what other communities are doing to tackle the issue. Click here for part one.
Last November, I found myself in San Francisco on the eve of their municipal elections. One of the things residents were voting on was a ballot measure that sought to put a limit on short-term rentals. The city had legalized short-term rentals the previous February, with restrictions, but the measure sought to put further limits on them.
It was dubbed the AirBnB Initiative and would have limited short-term rentals to 75 days per year, with the goal of squashing a rapidly growing sector that many felt was driving up housing prices in one of the most expensive cities in the world.
AirBnB, which is based in San Franciso, fought hard against the initiative, spending almost $8 million to oppose it. They were successful and the initiative was defeated.
Addressing short-term rentals is an issue governments across the world are dealing with. AirBnB wasn't the first site to allow people to advertise short-term rentals, but it is now the biggest. It has allowed people to advertise or seek out rentals far more easily than before and forced communities to play catch up. A quick Google search reveals dozens of articles about different communities that are dealing with the issue. They range from small tourism communities to major metropolises like San Francisco and New York City.
The City of Revelstoke didn't really start exploring vacation rentals until 2012. An article in the Review reported there was 13 illegal vacation rentals in February of that year. In April 2013, former city planner John Guenther unveiled a proposal that would have allowed vacation rentals in parts of downtown, all along Fourth Street East through Southside, and parts of Arrow Heights. The plan went nowhere and when council finally adopted a vacation rental bylaw in July 2014, they decided to allow them anywhere in the city. Each application would come forward individually, a public hearing would be held and council would vote.
"The reason I set this up this way and asked council to adopt it in this format is at any point council can stop," Dean Strachan, the city's manager of development services, told me. "They're under no legal obligation to continue it."
Last January, council adopted a policy to go after illegal rentals on a complaints-only basis. That approach was adopted because it was deemed too expensive to actively pursue illegal rentals. Strachan said that once active enforcement starts, some people will comply right away, but it's the ones that don't that become a headache for the city. "The avenues of choice are not very wide for local government," he said. "You can end up in court, and that's very expensive."
The Islands Trust story
Revelstoke's approach is one of several taken by communities in B.C. One of the first jurisdictions in British Columbia to tackle vacation rentals head on was the Islands Trust, the governing body for the many island communities in the Salish Sea. The Trust took up the issue when complaints started to come in about illegal vacation rentals on the various islands.
"In the gulf islands, people would rent out their houses or cabins by word of mouth, to friends of friends or relatives," said Miles Drew, the bylaw enforcement manager for the Trust.
That wasn't a concern, but as more and more people began to advertise their homes online, illegal rentals became a problem, said Drew.
"On most islands there was a high-level of concern about it changing the character of the neighbourhoods," he said. "I pretty quickly became aware that we couldn't deal with the issue one-by one."
There were also housing issues and instances where families were forced to leave their rentals in the summer so that the homes could be rented out at a much higher rate, he said.
The Trust took different tacts for different islands, depending on the desire of the residents. On Hornby Island, vacation rentals were embraced by the community and were made lawful, with conditions similar to the ones in place in Revelstoke. Other islands permitted them on a case-by-case basis by allowing temporary use permits.
"Other islands just insisted they didn't want them, and we proactively enforced and we had a couple of court cases that said they were unlawful," said Drew. "We reduced the number of (short-term vacation rentals) to a hardcore number of people who refused to admit they were unlawful."
They found that unless there was pro-active enforcement, there was no uptake on legalizing vacation rentals. "You really have to establish that the risks about not doing it are dire," he said. "You basically have to take some legal action against some people."
Enforcement wasn't easy. First, they would have to find out exactly where the rental was located, then they would have to take out a bylaw enforcement notice against the property owner. If the threat of a fine wasn't enough to get the home owner to comply, they would seek out an injunction in court against the property owner.
In one case, on Salt Spring Island, the Island Trust unsuccessfully sought to get an injunction against the property management company Westcoast Vacations, arguing it was in violation of bylaws by operating illegal rentals.
Drew said 20 per cent of the Trust's bylaw enforcement files are related to vacation rentals. "There's lots of staff time and planning taken up because each of our gulf islands has been in debate about it," he said.
In Drew's opinion, the best tactic to dealing with vacation rentals is to allow them only in certain neighbourhoods, "and adopt hard-nosed, pro-active enforcement in areas that can't, otherwise they'll just proliferate."
Elsewhere in B.C. & the USA
In Whistler, they first started exploring vacation rentals in the late-90s, said Mayor Nancy Wilhelm-Morden, who was a councillor at the time. They looked at re-zoning properties throughout the community to allow short-term rentals.
"The neighbourhoods rose up and said they didn't want this commercial activity in our neighbourhoods, so we put a moratorium on any further re-zoning applications, and took the opposite approach and started enforcement proceedings," she said. "There was active bylaw enforcement for several years."
Eventually, the resort switched to a complaints-based policy. In 2014, they received 66 complaints, said Wihelm-Morden. Forty-five people complied with regulations and the files were closed; the other 21 are still being pursued. No one has been taken to court, yet.
The resort adopted regulations that vacation rentals aren't allowed in existing neighbourhoods, but new developments can be zoned to allow them — that way people buying in can know what to expect when they buy into an area.
Last year, the Colorado Association of Ski Towns published a report looking at how 10 different U.S. mountain towns were handling vacation rentals. The report looked at all aspects of vacation rentals, from the size of the industry, to the impact on housing, and impact on the hotel industry. Some have embraced them fully while others have greatly restricted them. In Crested Butte, more than half the housing in the community is listed as a vacation rental. In Durango, where much stricter regulations are in place, that number is only one per cent.
The biggest concerns were the loss of long-term rental housing, the lack of collection of a hotel tax, and the impact on community and neighbourhood character. The report includes a lengthy list of best practices such as requiring licenses and inspections, tracking and publishing maps of rentals, hiring staff to ensure compliance, and having a local manager and emergency contact.
It also recommends putting a restriction on the number of vacation rentals allowed in a neighbourhood.
Dan Wilson, a community planning specialist with the Whistler Centre for Sustainability, said all tourism communities should permit vacation rentals. How they go about doing it depends on the community. He noted that in Tofino, the regulations require that a caretaker live on site. In Sechelt, vacation rentals are allowed everywhere, but owners are required to make a refundable $1,000 deposit with the municipality to cover any fines that result from bylaw enforcement.
"The communities that come up with the best ways are the ones that engage more people," said Wilson.
What's next for Revelstoke?
Dean Strachan said there were three complaints received about vacation rentals over the Christmas holidays — one was about a legal rental, another was an illegal one, and the third wasn't a rental, but was over some unruly house guests. He will be presenting a report to council in May that will look at vacation rental activity over the winter.
"(Council is) going to have to make decisions on whether they wish to change over from passive enforcement – complaints-only – or a pursuit type of enforcement where you actually begin to hunt," said Strachan.
They might also choose to look at regulations. During the last vote to permit a vacation rental, councillor Aaron Orlando suggested the city should restrict them to certain neighbourhoods. Councillor Scott Duke, who does not take part in debates about vacation rentals, but owns and manages several through his company Revelstoke Property Services, said in an interview he thinks there should be an upper limit on how many are allowed.
Dean Strachan said there were issues about putting in strict limits on the number of rentals allowed. Do you look at the city as a whole, or a neighbourhood, or do you go street-by-street? How close can they be to each other? "How do you establish that threshold?" he said. "Is it first to bar gets to have that use and nobody else gets to have that opportunity? Those are all significant pitfalls.
"Getting the community to establish a number is almost impossible," he added.
There are also challenges with setting limits on which neighbourhoods they're permitted in. Is it fair – to both home owners and their neighbours – to allow them in one place but not another? "We're trying to work away towards a solution that's going to work for the community in the long run," said Strachan.
Stay tuned for part three, which will look at the financial issues around vacation rentals. Look for more Development Matter stories in the Review, Current & Mountaineer. Here's what's been published so far:
Revelstoke Review — The vacation rental story, part one
Revelstoke Current — An overview of what’s happening
Revelstoke Mountaineer — Mountain town RV living, bliss or miss?