We Are Not Alone
Our story is being repeated in cities and communities all over the US. Coastal towns and inland communities are experiencing challenges with oversized houses, many of them being built on spec by developers or by investors who use them as rentals. Most communities that address short-term rentals through regulations and zoning are, in fact, resort towns with tourist-dependent economies.
The "Florida Story"
Florida, where tourism generates over $70B in revenue and the state is the nation's top market for short-term rentals, serves as a good test case of what happens when the short-term rental industry goes unregulated. In 2011, the state passed a law prohibiting local towns from regulating vacation rentals at all! This action was taken not only to derive economic benefit, but to help the many homeowners who had been adversely affected in the foreclosure crisis. The goal was to enable them to rent their homes in order to keep their homes. But that is not what happened. Instead, investors swooped in, buying up houses, and transforming them into short-term rentals to accommodate as many guests as possible, throughout the state but largely in coastal areas. After just a couple of years, adverse effects were so great that towns pressured the state to overturn the law.
As a result, in 2014, a new law was passed, allowing local communities to adopt ordinances regulating vacation rentals, except that they could not prohibit them altogether or regulate the duration/frequency (i.e. can’t limit owners to rent only 3 months of the year, or minimum stay of 30 days). What has happened since 2014 is that nearly every coastal community has adopted an ordinance that includes occupancy requirements!
The Florida story is a great "test case" of the impact of rapid growth of unregulated short-term rentals in residential communities, and demonstrates how quickly Florida towns started adopting ordinances as soon as they were allowed to do so. To read more about other facets of this case, see the Florida League of Cities' Legislative Brief.
A realtor in the Ft. Lauderdale area analyzes the law’s impact on investment opportunities there and concludes that regulations would make profit margins “a very thin 3%.” He goes on to advise: “Thankfully, Fort Lauderdale does have a lot of love for tourists as they really drive a large portion of our economic engine. Locally I can’t see ordinances being so tight that no vacation renting is allowed, but I would imagine minimum stay restrictions would be adopted. Whether that’s 3 days, 7 days, or more, would have to be worked out. . .In the end I think this really works for . . . the owner that wants to spend a few weeks a year in Fort Lauderdale, and wants to offset the cost of owning a vacation home here.”
Sounds like our decades-old tradition in Rehoboth Beach!
Read what is happening right now in other parts of the country with issues related to short-term vacation rentals in popular vacation destinations. Each example below links to the full article.
In Hollywood, FL: Cracking down on "party houses."
Park City, Utah struggles with vacation rentals, prohibits nightly rentals in certain areas.
Mammoth Lakes, CA “with an economy based almost entirely on tourism, . . . Yet residents, including many working in the tourism industry, rebelled strongly against [nightly rentals in residential neighborhoods.]
Santa Barbara, CA: “Our history of very strict zoning has helped create this very desirable place.”
Michigan: Tourism is the bread and butter of this Lake Michigan community’s economy, but residents are concerned that many are "multi-bedroom, multi-bathroom, essentially hotels."
Capitola, CA has dealt with the increase in short-term rentals by creating a Transient Occupancy Overlay District.
San Diego area: Read how one woman who had had good experiences with short-term rentals changed her mind when she learned about their impact on communities.
And the good news is ----
Vacation rental ordinances hold up to legal challenge.