Yachats council reaches consensus on six vacation rental issues – and not changing much in current ordinance

By QUINTON SMITH/YachatsNews.com

The Yachats City Council is not inclined to change much of the city’s current regulations on vacation rentals, reaching consensus Wednesday on six issues and postponing discussion on a seventh.

In a workshop session, the council reached a consensus – but not taking a final vote – to:

• Continuing to prohibit transfer of a license to either heirs or buyers of a vacation rental property. The consensus was 4-1, with Councilor James Kerti wanting to allow transfer to heirs.
• Similar to the transfer issue, unanimously agreed to not allow a buyer of a vacation rental property to apply for and immediately get a city license.
• Allow the 10-12 people holding but not using their vacation rental licenses to continue not using them. The consensus was 4-1, with Kerti opposed.
• Continue to exempt five vacation rental properties from a four-bedroom rental limit established in previous ordinances. The consensus was 4-1, with Councilor Leslie Vaaler opposed.
• Require applications for new vacation rental licenses for homes in residential zones to go through a conditional-use approval process with the Planning Commission.
• Raise fees to $150 for the first vacation rental inspection and to $100 for any subsequent re-inspection and require those every two years.
• Postpone discussion until September on whether to create a waiting list for vacation rental licenses.

The council has been debating for four months what to change – if anything – in its two-year-old pilot program that regulates vacation rentals in the city. The current ordinance expires Oct. 1, but could be extended until the council finishes its work.

The city has been regulating vacation rentals for years, but only two years ago instituted a temporary cap of 125 licenses – there are currently 137 licenses – and became one of the only Oregon cities with such a limit. Because city ordinances do not allow licenses to be transferred, the cap effectively stopped owners from transferring their license to buyers of their property or to family members.

Vacation rental of private homes is currently one of the hottest issues in most every Oregon and West Coast tourist town. Cities rely on lodging taxes to prop up budgets and owners use them as investment property, for income or to help pay the mortgage. But some neighborhoods have been taken over by rentals, which can degrade livability with the constant coming-and-going of visitors.

The livability issue came up several times during Wednesday’s discussion.

“We need to go back to the basic reason we put in the regulations in the first place … and that’s the livability of the city,” said Max Glenn, the only multi-term member of the council. “We’re not in the vacation rental business and we’re not doing it to put money in the budget.”

That said, $337,000 — or 32 percent — of the $1.06 million in lodging taxes collected by the city of Yachats in fiscal 2018-19 were from individual vacation rentals

While the council reached consensus on six issues, it still has 6-7 issues remaining to discuss at its September workshop meeting, including the waiting list issue and whether to keep the 125-license limit or modify it.

“Rest assured we have received considerable comment on these issues,” Mayor John Moore said at the start of Wednesday’s workshop. “Now it is the time for us to do what you elected us to do.”

Details of the council’s discussion.

Transfer of licenses to heirs: All but one councilor immediately expressed opposition Wednesday to any kind of transfer. Vaaler said she was opposed to granting special privileges to current license holders. Glenn and Moore likened a vacation rental license to a liquor or other business license – it goes to the individual, not the property.

“Other city licenses are not transferrable, and it seems to me that should apply to vacation rentals as well,” said Moore. He said heirs or new homebuyers could apply for a license when one becomes available.

Kerti argued in support of allowing the transfer of licenses to heirs, saying the council had heard the most comments on this topic and should consider it a fairness issue. Kerti said property owners had been living within the city’s rules until September 2017, when the council instituted new rules that prevented transfers.

“We have to recognize that the city gave priority to certain properties when it put in the cap,” he said. Kerti argued against comparing vocational rental licenses to city business licenses because there is not a cap on other licenses.

“Given that there is a cap, we’ve already restricted the market,” he said.

Creating ‘mini-motels’: Glenn had floated the idea of creating a separate “mini-motel” category for two large vacation rentals that would be exempt from the city’s four-bedroom limit and giving their owners the ability to transfer licenses to heirs. Glenn said the two properties he was referring to – an eight-bedroom house and a six-bedroom house with an elevator — are “community assets.” Vaaler pointed out that there are five such properties and instead argued unsuccessfully to limit all vacation rentals to no more than 10 guests regardless of the number of bedrooms. The council eventually rejected the idea of a “mini-motel” category and said larger units could go through the city’s conditional use process if they wanted to be treated differently.

Licenses with no activity: When the previous council adopted the two-year pilot program on vacation rentals in September 2017, it gave people 90 days to apply and get a license. As a result, there are an estimated 10-12 licenses that have no rental activity. The council is wondering if it should require a certain amount of activity or lose them to free up licenses for others to use.

There was an extended discussion on what amount of use – 30 days was the most popular – to justify keeping a license. Moore argued that a minimum 30 days’ use – like Newport just required – “would be appropriate for Yachats.”

In the end, the council reached a consensus to not change anything, with Kerti opposing.

Exemptions to the four-bedroom limit: The current ordinance – with exemptions for five properties – restricts vacation rentals to no more than four bedrooms with a maximum occupancy of 10 people. Vaaler argued to drop the bedroom restriction and limit all rentals to 10 people regardless of the size of the house to help conserve water and to maintain neighborhood livability. Moore, Glenn and Councilor Jim Tooke all opposed trying to enforce an occupancy number.

Conditional use process for new licenses: The council quickly and unanimously agreed that all new vacation rental license applications in residential zones go through the conditional-use process with the Planning Commission because the owner is seeking to operate a business in a residential zone. It would also give neighbors a chance to comment on the license, which they currently do not have the ability to do.

Inspection fee and frequency: It currently costs all new vacation rentals $100 to get an inspection for various city requirements and to be re-inspected every five years. But the city is not staffed properly to handle the repeat inspections and the fees do not cover their cost. The council unanimously agreed to increase the fee for the first inspection to $150 and by $50 to $100 for any subsequent re-inspection. It also unanimously agreed that routine inspections should occur every two years. There was some general talk about finding a licensed inspector to contract with the city to do this work.

License waiting list: After a long discussion, no consensus was reached on whether to establish a waiting list for new licenses and moved the discussion to September. Councilors seemed to agree that creating one seemed appropriate but struggled to define how it might work. “I wish the council would have created one two years ago,” Vaaler said. “We do need to address an equitable way to prioritize licenses and come up with a procedure.”