Short-term rentals face regs out of fairness

Even though complaints about short-term rentals on Bainbridge Island are few, the City Council decided May 16 at its meeting that it wants to regulate them in some way.

City manager Blair King said noise complaints are nil, but there have been complaints about trash pickup and the perception from neighbors that short-term rentals hurt property values. The best argument for regulations is fairness, he said, as only about 100 of what could be 340 short-term rentals pay the $71 business license fee; $3,000 is the minimum income to be required to have the license. King recommended BI require registration so all pay that fee. But many on the council wanted to do much more.

“They’re making money off their homes, but not contributing to the economy,” Councilmember Leslie Schneider said. She wondered if the city could require that owners of short-time rentals live on BI, so they would be more responsive to complaints. “That’s what feels so gross,” she said, assuming that many of the owners live elsewhere. “What about the rights of the neighbors if it becomes a party house?”

Councilmember Clarence Moriwaki said the council should be careful about making assumptions because, “We still don’t have appropriate data.” He added that regulations don’t have to mean limitations, but are just a way to clarify situations. He also took a dig at the city itself. “Finally after five years, we’re talking about it.” He was referring to a request in 2018 by the BI affordable housing task force to limit short-term rentals on the island.

Councilmember Kirsten Hytopoulos also cautioned against making assumptions. She said the council needs better data and expertise in helping to make the decision.

Councilmember Joe Deets mentioned that for some people having a short-term rental might be the only way they can afford to stay on the island. On the other hand, he said it doesn’t look good if people own housing on BI just for profit. Those people are just taking housing off the market that is much-needed for folks who want to live here. “This might be an opportunity to recover some housing,” he said.

Mayor Brenda Fantroy-Johnson said restricting short-term rentals so that owners might want to sell won’t help BI in getting any more affordable housing.

Councilmember Michael Pollock agreed. “Is the problem so severe we need to step in and regulate?” he asked, urging a light touch rather than a heavy hand. “I urge caution moving forward.”

The mayor said she could support a regulation that would limit ownership of a short-term rental to one. She said she is turning 65 soon, and she could see the need to live in an apartment above her garage and rent out her home. It could be the only way she could “keep the house and pay the mortgage.”

Prior to the discussion, King showed a Powerpoint that explained how regulating short-term rentals could bring many benefits to BI.

Those include: prevent loss of rental housing stock; preserve neighborhoods; capture tax revenue; provide economic gain for residents; support tourism in a balanced way; ensure health and safety of guests and residents; prevent competition with traditional lodging establishments, such as hotels, motels, inns and bed and breakfasts; balance the needs and rights of property owners; and to slow and prevent the proliferation of short-term rentals.

Short-term rentals are for 30 days or less. A community survey in 2021 says 65% of residents favor regulating no-host-occupied rentals. The city says it is missing out on lodging tax revenue that can support downtown, encourage tourism and repay bonds.

Changes could require: A state business license for $12,000; a city business license for $3,000; Business and Occupation tax returns for both the state and city; a monthly lodging tax; $1 million in liability insurance; and collection of sales taxes. Estimates for such vacation rentals range from 180 to 340, with most in Winslow, Fletcher Bay and along the Elliott Bay shoreline. Average cost is $282 a night.

King said the city collects $350,000 a year in lodging tax, but could make more if more sites are discovered through registration. He added that regulations would show the city supports the hospitality industry, as some think short-term rentals undercut them.

The city manager said restricting home ownership can be difficult, and that’s why he wants to start with a simple registration process. But he said this is a good problem to have. “The more attractive you become as a desirable destination” to visit is good news, he said.