Cap on Short-Term Rentals Proposed by Greenport Trustee

GREENPORT, NY - As the summer season kicks off, one Greenport Village Trustee believes it's time to take action and address the short-term rental issue.

"It’s time for us to move toward action on this issue," he wrote, in his monthly report, scheduled to be presented at Thursday's work session.

The goal, he said, is to have something drafted and in place for public discussion over the summer. Then, after rounds of public hearings, a policy could be voted upon by fall or winter, allowing all involved to make "appropriate plans for the 2017 season," he said.

To that end, Roberts is proposing a cap on short-term rentals.

"I hope this proposal begins a discussion about a compromise solution balancing the long-term year-round economic health of the village and the rights of property owners," he wrote. "Each week I read or hear yet another story, usually from a younger person, about the struggles to find a reasonable apartment to rent year-round. Landlords are caught between two economies, and in some cases blatantly tell a potential tenant something to the effect of 'I am waiting to see if I can get it booked for the summer.'"

According to Roberts, there is no way those crafting the village code before 2014 could ever have envisioned the new home-sharing economy that's transformed the real estate landscape worldwide. "The precedents for managing this phenomenon and case studies of possible long-term results don’t exist yet," he said.

Robert said there are 1,008 properties in the village, with 1,175 residential housing units, including two-story homes. The estimated number of rental units discussed in reference to rental permit law discussions a few years ago was between 250 to 350, including short- and long-term rentals, he said. Roberts said he's also heard it estimated by village staff that there could be 50 or more short term rentals in the village.

"I have first-hand knowledge — albeit anecdotal — that STR laws restricting length of stay in Southold and frequency of stays in East Hampton are being easily circumnavigated by eager landlords hoping to maximize profits. Trying to figure out how many nights a guest is staying or how many times a landlord has rented a home is a time-intensive enforcement task for just one home, let alone 50 or 100. Anything less than comprehensive and consistent enforcement will open us up — perhaps fairly — to criticism of selective enforcement. We need a policy that allows us to focus our enforcement effort," he wrote.

Southold Town Supervisor Scott Russell said he has not found Roberts' statement to be true. "I would invite Mr. Roberts to actually read the code then discuss the implementation of it with the town attorney prior to issuing uninformed opinions," he said.

A cap is the answer, Roberts believes

Roberts has proposed a cap on short term rentals. Twenty percent of a rounded number of 300 rental properties is 50 homes, he said. The village, under his proposal, would allow for 50 property owners to rent short-term. "Everybody will know who is and is not allowed to operate a STR. Our code enforcement only needs to worry about 50 properties where short-term tenants can create a nuisance. The norm will be that STR is not permitted — 50 units is four percent of all 1175 residential units, including apartments and two-family homes," he said.

Since the tide of public opinion seems to indicate a consensus that owner-occupied short-term rentals are acceptable, those would get priority in the permitting process, Roberts said.

The remaining property owners would need to enter a lottery for the right to operate a STR, he said.

"For those who argue that they should be able to 'do what they please' with their property, the zoning code in any municipality absolutely sets reasonable limits on what people can and can not do with their properties," the trustee said.

As for those with fears of businesses operating in residential neighborhoods, Roberts said there is a precedent in the village legalizing and regulating business activities in such communities.

With the "sharing economy" growing at a rapid rate worldwide, Roberts said the upside to regulating STRs, with safety standards, is that just outlawing them completely might present an enforcement challenge and result in a the "same or greater number of STRs in the village than if we cap and regulate."

Nashville, Roberts said, has a permitting process and uses a cap system based on a maximum number of STRs per census tract.

"One thing I have learned in my discussions with STR landlords is that they are willing and able to pay a hefty annual permitting fee. Business is good, and they pass the fee on to the tenants, who consider an extra few bucks a nominal increase to their vacation budget."

Roberts held a focus group last year in Greenport to discuss the issue; he said the idea of a $500 fee raised no eyebrows" with any STR landlord present; that number could possibly even go to $1,000, covering enforcement efforts and paying for any overhead in managing a permit process, he said.

Roberts and Trustee Jack Martilotta convened a group of local industry leaders, including CEOs of some of the area's largest employers. Feedback reflected a desire to reduce red tape on new projects and to increase rental housing opportunities for employees, he said.

In addtion, Roberts said, the results of a recent housing study conducted by St. Joseph’s College students are still being reviewed, "though it is safe to say the data show an overwhelming majority of respondents believe the village should do something to improve access to reasonably priced rental housing. This matches a regional trend seen in many news stories and research papers in recent months."

One way to increase the supply of reasonably priced rental housing with a minimal impact on the environment and infrastructure is to give owners of properties in the commercial zones an incentive to convert spaces above retail to apartments, Roberts said.

"Many of these spaces are currently underutilized. Our zoning code is clear that residential over retail is subject to compliance with state fire and building codes, and otherwise not subject to a lengthy process before our statutory boards," he said.

Apartments above commercial businesses

Roberts hopes to apply for community development funds to be used to provide a village property tax rebate for up to five years for each year the landlord demonstrates proof, such as a lease, that year-round housing is being provided at or below 50 percent of the village’s median take-home income.

In additon, he suggesting using community development funds to provide rebates on any building, planning, zoning fees for new construction projects for converting to legal residential above retail after the landlord shows proof of three full years of reasonably priced rental housing.

He also suggested the village "does as the code instructs and approves these residential over retail projects without requiring site plan evaluation by the planning board, assuming compliance with other applicable state and local laws during routine building inspection and permitting process."

The village should "actively market" the idea and provide an information sheet or pamphlet, he added.

Roberts estimates that a minimum of 20 apartments could be created downtown above retail establishments.

"Economics 101 tells us that when the supply increases, the demand decreases, and the price goes down. We increase the supply of rentals, rents become more affordable," he said. "Combine this with a regulatory cap on STRs, and we begin to increase availability of reasonably priced rental housing in the village. This spurs job creation and encourages employers to build businesses here. This, in turn, spurs long-term economic growth and helps us avoid becoming a village reliant entirely on tourism for five months a year where it is difficult to raise a family year round."

Roberts said he looks forward to discussing his proposal with the village board and with the entire community.

"I am tired of hearing from people that they can't find a place to live while we have houses that sit empty between October and April," he said. "It is part of a larger conversation we all need to have about the future of our local economy. I am trying to find the middle ground. Let's see if I am close. We can't do anything without a starting point."