Page 93 - AAGLA-APR 2022

Member Update
Action and Reaction:
The Unseen Consequences
of Short-Term Rental Bans
TBy Pam Knudsen
he short-term rental (STR) market, already a growing market prior to 2020, took off in bold new directions during the pandemic, becoming the go-to accommodation type for travelers. And during these past few years, the duration and nature of personal travel changed considerably, with families,
individuals, friends and small groups deciding to decamp for longer periods of time in an STR, often working and vacationing in one fell swoop for weeks or months at a time. Significantly, the destinations that became most desirable during COVID-19 were remote areas, preferably accessible by car or RV.
Previously overlooked areas were beset with tourists looking, on average, not for hotels but for their own space to control and feel safe. Much like their bigger city counterparts, these towns have embarked on the path of finding balance between the positive aspects of a new tourist economy and inevitable dustups that ensue in communities with STRs and neighboring full-time residents. Work has been done to bridge differences in areas like Maui County, where leading STR marketplaces have provided assistance in helping to enforce vacation rental laws - but a true playbook or template for success in popular tourist locations is still somewhere on the horizon.
With this background in mind, we’ll take a holistic and reasoned view of STR issues that provides a much more interconnected picture. Residents of various communities across the country have complained that STRs are impacting the nature of their community and causing a shortage of affordable housing. However, this perception does not take into account the broader scope of what needs to be considered.
What Happens When STR Homes are Banned or Curtailed?
• Tourism Impacts – It’s simple math - a decrease in available lodging causes a decrease in tourism. In the absence of available accommodations that are conducive to the type of vacation a family wants to have, they simply won’t travel to the destination. While cities like Brevard, North Carolina specifically gave the green light to short-term rentals to attract more tourists, bolster attendance at local events and give a boost to retailers, many other cities are making hasty decisions to pull back without fully considering the implications of banning or severely curtailing
STRs, including all factors associated with declining tourism.
• Municipal Coffers – Fewer STRs in a community means decreased lodging tax remitted to the local government, which in turn decreases available revenue that jurisdictions need to support services they provide. This includes everything from marriage licenses to road maintenance to other infrastructure maintenance such as traffic lights, internet access, etc. This lost revenue must be made up in some way, and typically jurisdictions will seek to recoup their lost lodging tax revenue through increased sales tax, increased property taxes, hikes in the cost of city services, etc. This puts the burden of replacing lost STR tax revenue on year-round residents – suddenly it’s now more expensive to live in the community. This may exacerbate an affordable housing issue.
• Local Retailers – Reduced short-term rentals equals fewer tourists year-round, who would otherwise be frequenting local restaurants, bars, coffee shops, grocery stores, fitness centers and yoga studios, spa services, you name it. Retailers lose revenue, which leads to cost-cutting, including reducing full- and part-time clerks and other customer-facing personnel. This decreases the job market for people living in the community, potentially prompting them to move elsewhere in search of work. It’s important for cities experiencing STR skirmishes to look at the potential for a downward spiral of loss to the retail economy.
• STR-Focused Businesses - Any local business that directly serves STRs is impacted, from house cleaners and landscaping businesses to property managers, pool services, electricians, pest control services, plumbers, caterers, bicycle rental businesses, and many others. Consider especially the STR ecosystem of businesses in smaller towns with newfound booms in short-term guests, experiencing for the first time a robust micro-economy dependent on ongoing STR stays. In the event of a pullback, the ripple effect is undeniable and should be included on the “debit/ credit” list of any town looking to curtail or ban STRs.
The “Affordability Gap” is a Marquee Argument
There’s been much recent discussion of the purported
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