Rise of short-term rentals prompts debate, action

Community leaders concerned about housing market, safety

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Draya Koschmann is a single mother who rents out an accessory, “mother-in-law” apartment in her house on the northside of Ithaca.

“Renting out part of my house on Airbnb has allowed me to work at home and be with my toddler,” she said.

As short-term rentals are on the rise in the county, officials and others connected to the issue are working to protect homeowners like Koschmann while mitigating the negative effects of short-term rentals, especially housing units that are permanently rented out short-term. But navigating through this controversial and complicated issue is no easy task.

Why the rise?

According to Host Compliance reports from April to June 2019, there are an estimated 450 to 512 unique short-term rental (STR) units in the city of Ithaca, with a 27% annual growth in listings between 2017 and 2018. Approximately a third of those are available full time.

“It’s something where you can go online and find your place to stay,” said Mark Dorr, president of the New York State Hospitality and Tourism Association.

That convenience, combined with the growth of the internet, has helped the short-term rental business to thrive, especially on its biggest site, Airbnb, where 90% of Ithaca city listings are located. With that growth has come an increased number of full-time short-term rentals – properties that are bought up and sold out just for STRs. The reason, said Linda Woodard, mayor of the village of Cayuga Heights, is simple.

“You can get a lot more money doing it short-term than you can long-term,” she said.

Effects

Most sources interviewed said the effects of STRs are far-reaching and mixed depending on the type – part-time or full-time. When it comes to the former, the biggest effect is increased revenue for the homeowners who rent out all or a portion of their home.

“They can benefit from occasional added income because they clean up their house and they move out on graduation weekend and another family lives there,” said Chair of the Tompkins County Legislature Martha Roberston.

For Koschmann, her short-term rental income represents a large portion of her overall income. In addition, she occasionally hires local women to clean her STR, a job for which she has consistently paid at least $25/hour.

When it comes to long-term STRs, the biggest effect is a detriment to the housing market, Robertson said, with household units being taken off the market that could be used for families and instead are used for visitors.

“We see housing units pulled out of the market for short-term rentals, and there’s no accountability and no recognition of its effects,” she said.

City of Ithaca Deputy Director for Economic Development Thomas Knipe said that adds to the challenges facing the housing market, making the county’s affordable housing shortage even worse.

“Units in full-time use as short-term rentals basically remove the property for use for a long-term tenant, thereby exacerbating our housing affordability and supply issues,” Knipe said.

Unlike with housing, sources differed on how STRs have impacted the tourism industry.

Robertson said the availability of STRs has likely encouraged a different sort of traveler by offering a different type of experience from hotels. Koschmann echoed that sentiment, saying that most of her guests likely wouldn’t stay in Ithaca at all if it weren’t for the cheap rent STRs like hers offer.

“Many, maybe even most of my guests, come to Ithaca because they are able to access beautiful places to stay for $68 a night,” she said. “If Airbnb wasn’t allowed here, they wouldn’t be staying in an Ithaca hotel; they would be going to a different town.”

On the other hand, Nick Helmholdt, Tompkins County tourism director, argued STRs aren’t increasing tourism but instead shifting where the tourists are staying.

“The reasons that people travel don’t have necessarily to do with the existence or lack of short-term rentals,” he said.

That’s as good a transition as any into the effects on the hospitality industry. Knipe said the rise of short-term rentals and the relatively cheaper stays they offer (median nightly rate $115-$138) can compete heavily with hotels.

“The rates that hotels have been able to charge on an average daily basis have remained flat for the past few years at a time when we’ve seen year-over-year growth in short-term rental activity,” Knipe said.

Dorr said a similar effect can be seen across the state.

“[Hotels want] a level playing field, having these people that are hosting multiple room nights in a month having to pay some bit of sales tax, some occupancy taxes and having some safety and security,” Dorr said.

Lack of regulations on STRs creates a double-edged sword for people staying in them, sources said. Dorr called the short-term rental market a “Wild West” where renters don’t have to pay insurance or employees, creating lower prices for customers.

“If you don’t have any regulations or any overhead and you’re not under a business law within New York state, you can drop your prices,” Dorr said.

But that creates a risky situation for the tenants, Woodard said.

“There’s no way of knowing whether they have adequate fire protection and alarms, carbon monoxide, whether there’s egress in case of a fire,” she said. “[Visitors] could be walking into an unsafe situation that they are not aware of.”

And it’s not just the tenants that could suffer, sources said. As STRs increase – especially long-term units – whole neighborhoods are experiencing a culture shift.

“It could slowly transform walks of neighborhoods into communities of transience, where the community fabric of residential neighborhoods begin to fray,” Knipe said.

Renters can’t know or control whether tenants will have wild parties, destroy property or trash the environment, which take tax-payer services to clean up, Woodard said.

“It puts more burdens on services, police services, fire services and collecting garbage,” she said. “If somebody’s coming in every weekend, they don’t care if they trash it up.”

Challenges and controversy

Addressing the STR issue requires tackling and solving several challenges, including a lack of data, corporate stonewalling, municipality requirements and public backlash.

Knipe said current data on STRs is a triangulation of third-party STR enforcement platform Host Compliance and online investment software Air DNA, but that data has several missing pieces to it.

Helmholdt said that, thanks to registration, hotel industry data is rather accurate, but the same cannot be said for STRs.

“It’s hard to know the dimensions of this market right now,” he said. “It’s the ‘you don’t know what you don’t know’ problem.”

Woodard said getting accurate data proves even more difficult when big companies like Airbnb refuse to publically report any listing data.

“Airbnb and the other rental places absolutely refuse to tell us who is doing it in our community, and they hide behind privacy,” Woodard said.

Registration is a form of regulation that could address this challenge, but then comes the added challenge of enforcement, Robertson said.

Most regulations that could be put in place have to be handled piecemeal at a municipality level, which can mean there are large swaths of the county with fewer regulations than smaller pockets, said Bill Goodman, town of Ithaca supervisor.

“The county doesn’t really control land use, and so, it’s the local levels throughout the states that have been figuring out how to deal with the issue of short-term rentals,” he said.

And any regulations put in place have to navigate through waves of public backlash, as Woodard can say from experience.

Homeowners and other community members in Cayuga Heights argued STRs are a crucial source of income for many in the county, and a person should get to decide what happens in their own home. The other side, Woodard described, argued STRs are a business and therefore shouldn’t be allowed in residential neighborhoods.

“Short-term rentals are a good thing for the host, and they’re a good thing for the person renting it out, and they’re a bad thing for communities,” she said.

Solutions and strategies

Solving the problems created by short-term rental increases will take approaches from multiple angles, sources agreed. Koschmann said she considers herself an example of what STRs are meant for and what a good host should be, and the benefits to hosts like her should be protected.

Speaking for the hotel industry in the state, Dorr said short-term rentals and hotels are two very different animals and thus shouldn’t be held to the same regulations and standards, but there should be some regulations to help level the playing field.

Dorr proposed requiring STRs to register and a maintaining of safety standards to protect customers. He said the regulations could decrease the number of STRs in neighborhoods, but it would likely weed out long-term STRs.

“The people who are doing it for the right reasons will still be doing it,” he said.

Knipe said that any regulations on city and county levels require more research first. The city of Ithaca planning department, as part of the phase II Comprehensive Plan on housing, is currently conducting research and seeking community input regarding three policy objectives: ensuring that properties aren’t permanently converted to STRs, minimizing public safety risks and noise, trash and parking problems, and giving residents the opportunities to earn more income by renting out their home.

“From there, if there’s a consensus around policy objectives, then we would look to craft proposed regulation that would take a balanced approach to the issue,” he said.

No matter the strategy, all sources agreed that a complete ban is not the proper solution.

Recent measures

The most referenced recent progress to address STRs was the recent requirement of STRs to pay an occupancy tax.

According to the county’s Strategic Tourism Plan of 2021, the occupancy tax is a tax paid by visitors to Tompkins County who stay in hotels, motels, and bed and breakfast establishments.

Helmholdt said this tax generates about $2.5 million for the county every year to be used for various tourism programs. In 2016, Tompkins County became the first in the state to enter into a voluntary payment agreement with Airbnb, he said. Airbnb agreed to remit the required occupancy tax on behalf of its hosts, so now, Airbnb is paying occupancy taxes for its units within the county.

Cayuga Heights recently established regulations for STRs as well, referenced by many interviewed as influential in scope and purpose.

Woodward said that Cayuga Heights is a primarily residential neighborhood, so regulations were crafted to suit the needs of residents.

“When you buy a house in Cayuga Heights, you are buying into a residential community, and you do not expect to have a business next door,” she said.

These considerations prompted new regulations to go in place in Cayuga Heights in 2017. Zoning changes required that, if a renter is not present, they can rent their home for up to 14 days in a calendar year. That limit is extended to 29 days if the homeowner is present.

Cayuga Heights also imposed a permit for $125/year to be renewed annually, and renters need to keep a log of when they rented and to how many people. This model makes it impossible for people to run permanent STRs.

Look to the future

At the state level, a bill in the New York State Assembly proposes several regulations for STRs. Dorr simplified it by saying the bill is asking that STRs – regardless of the platform on which they’re listed – pay sales and occupancy taxes and have a smoke and carbon monoxide detector.

Dorr said the regulations the state is proposing allow STRs to continue providing benefits to homeowners.

“All we’re asking for is a couple little minor things to make it so that it comes up to some standard in New York state,” he said.

At the county level, the Strategic Tourism Plan outlines several proposed regulations. In addition to plan elements already outlined, it proposes requiring all STRs to pay an occupancy tax, just as Airbnb listings have to do now.

Localities are taking action as well. Knipe said that once more community views and data are collected, the city of Ithaca can start to move forward with next steps within the next year.

Goodman said there is a drafted law for the town of Ithaca with several proposed STR regulations.

Goodman stressed first that all proposed regulations would not apply to the lakeshore residential zone. The law would require people within the remaining residential zones to get a permit to sell STRs unhosted.

“We assume that if the owner of the property is present on the property, then they’ll take care of problems that arise,” Goodman said.

The law would also create STR operating permits, which all STR renters would have to obtain and which subjects all STRs to routine inspection.

Last, the law would put a limit of 29 days per year for unhosted STRs to discourage long-term STRs. Goodman said the town is nearing completion of a final draft.

Conclusion

The rise of short-term rentals in the county has created a complex issue mirroring problems seen state- and nationwide. STRs run by homeowners trying to supplement their income are largely seen as a benefit to be protected by those interviewed, with most regulations both on the books and being proposed attempting to cut down on the long-term STRs that take units off the housing market.

As all proposed regulations are in need of more data and community input, sources encourage concerned citizens on any side of this issue to reach out to local and state officials with your thoughts. Knipe especially urged Ithacans to contact the city of Ithaca planning and development department and engage with Common Council as the city continues to explore this issue.

Ultimately, short-term rentals are here to stay, sources agreed, so next steps are all about integrating this recent phenomenon into a structure that’s fair for everyone involved.

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