Editorial: Woodstock faces balancing act as it considers regulation of short-term rentals

Published: 7/21/2019 3:57:58 PM

Is the explosion of the internet-facilitated short-term rental market a good thing or bad thing for Woodstock? The answer is easy: Both.

On the one hand, as staff writer John Lippman reported last Sunday, short-term rentals can be a valuable supplement to the income of property owners in a community where the median price of an owner-occupied home is almost $400,000. And they help support the tourism-based economy that Woodstock thrives on.

On the other, short-term rentals result in property being pulled out of the tight primary rental and ownership markets; have a negative impact on traditional bed-and-breakfasts and hotels; and can turn neighborhood life into nothing more than a series of encounters with an ever-shifting cast of strangers.

No wonder, then, that Woodstock is trying to find, and strike, the appropriate balance in regulating this fast-growing segment of the lodging business. (To gauge its dimensions, Lippman looked on Airbnb and found 86 properties available to rent in Woodstock on a recent Friday, with a median price of about $280 a night.)

Under current local ordinances, a short-term rental is defined as one of 30 days or less. Such rentals are restricted to six a year for properties within the village limits and 10 for properties in town. (Properties in the five-acre- and forest zones are exempt; and all the limits are suspended during foliage season.) Some residents told Lippman that the problem is that while the rules are in effect, they are not enforced because the village and town lack the resources to do so.

The Planning Commission is now reviewing the current rules with an eye to updating them, and the village trustees recently adopted a 90-day moratorium on issuing new short-term rental permits (although that apparently will have to be redone because of a possible defect in the warning for the public hearing that preceded it, according to the weekly Vermont Standard.)

State regulation of short-term rentals is light in Vermont, the only requirements being to collect and remit the 9% state rooms and meals taxes and the 1% local option tax in Woodstock (which can be done through online platforms such as Airbnb that have agreements with the state); and to self-certify compliance with fire and safety regulations.

Woodstock is far from the only place grappling with writing rules-of-the-road for yet another e-commerce industry that came out of nowhere and emerged rapidly into a regulatory no-man’s-land. Jersey City, N.J., recently placed an annual cap of 60 on the number of days a home can be rented if the owner does not occupy it. The state of New Jersey has imposed an 11.6% tax on all rentals of fewer than 90 days. A new law went into effect in Massachusetts on July 1 that applies a 5.7% tax to short-term rentals (in line with what is assessed on other lodging); allows cities and towns to assess another 6% surcharge; and requires short-term rentals to register with the state and carry a minimum of $1 million in insurance.

What makes it difficult to thread the regulatory needle is that the short-term rental market can differ markedly, both quantitatively and qualitatively, between properties that share many of the same characteristics. For instance, an owner-occupied property rented out for a couple of weeks a year, or for six weekends a year, might present a very different aspect from one where the owners appear on the premises rarely to never, and the only occupants are a steady stream of vacationers. The former is a member of the community in the fullest sense; the latter could be an investor seeking a profit.

Of the regulatory options, the two most appealing to our mind are a cap on the number of days a property can be rented if it is not owner-occupied; and a surtax on short-term rentals that could be devoted to the preservation and development of owner-occupied housing for middle- income people, such as the new effort by the nonprofit Woodstock Community Trust detailed last month by VtDigger. Given that nearly 60% of Woodstock homes are seasonal residences and often empty, redressing the balance by encouraging owner occupancy should be a priority.

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