TOWN OF MANCHESTER, VERMONT
PLANNING COMMISSION MINUTES
May 9, 2022
Commission Attendees: Phil Peterson, Leon Ward, Greg Boshart, Ana Rahona. Absent: Chris Glabach.
Staff Attendees: Janet Hurley (Planning & Zoning Director).
Public Attendees: Bill Drunsic, Greg Sukkienik, Carey & Matthew Kokkonen (via Zoom), Brian Benson (via Zoom), Ben Utterback (via Zoom).
Hurley initiated recording. Boshart called the meeting to order at 7:04 p.m.
1. Minutes for the 4-4-2022 meeting were approved by unanimous consent.
2. Short Term Rentals
Boshart invited Drunsic to address the commission on the matter. Drunsic argued that short term rentals need to be addressed because they are contributing to the housing shortage. He reported rapid conversion of existing housing stock to STRs. He characterized the STR model as devious, essentially lodging without having to meet permitting and code requirements. Drunsic maintained that twenty years ago, individual homeowners would rent out their primary home while on vacation, but that now the model has become a commercial venture to accommodate transient visitors. (Drunsic referred to Boshart’s comments as reported in the Manchester Journal.) Drunsic shared 109 Manchester Airbnb listings, and noted that 79 of them were offered year round. He contended that these are most like our definition of inn, but that STRs do not serve food. He urged the commission to consider including a definition of residential in the zoning bylaws. He characterized STR use as commercial and noted that it is occurring in districts where commercial uses are not allowed.
Drunsic reiterated that all other commercial uses must comply with the bylaws and that the lack of regulation of STRs means there is not a level playing field. He summarized his concerns as falling into two categories: (1) loss of housing, and (2) lack of a level playing field for businesses catering to tourists. He asked commissioners to consider whether there were areas in which STRs should be prohibited, urged them to define residential, and suggested redefining inn by removing the food service component. He noted that B&Bs must be owner occupied and concluded by saying he does not see the need to gather data and dance around the issue. He contended that we need to put a stop to the conversion of housing stock and we need to reestablish a level playing field for lodging uses. Drunsic said he understands that we are losing rentals to conversion because long term rentals come with eviction issues for problem tenants.
Peterson asked how Drunsic obtained the list he shared. Drunsic said he had a staffer compile the list over the course of two days from Airbnb listings. Ward asked Drunsic what his suggested fixes would be. Drunsic noted that Killington requires registration for STRs and perhaps Manchester should too. He reported on a problematic STR in his neighborhood. He said that STRs should abide by lodging rules, STRs should be classified as commercial uses, and they should go through the permit process. Hurley displayed the State of Vermont STR rules, Killington STR registration information, and STR information from the Stowe website on screen. There was discussion about these rules. The Killington registration process is annual, establishes capacity limits, Act 250 permit restrictions, state water/wastewater permit restrictions, required insurance coverage, designated operator available at all times, and no on-street parking. Stowe does not regulate STRs but makes people aware of state requirements.
Peterson asked if Drunsic was advocating getting existing STRs on the radar. Drunsic responded that he was because of the housing issues and the need to provide a level playing field. Ward offered that resort towns are being most impacted by the proliferation of STRs especially in Colorado. He added that in Hawaii people are leaving their homes to convert them to STRs. Ward said that Hawaii has strict controls, and the island of Oahu has banned STRs as a result of the issues posed. He likened Manchester to an island like Hawaii and argued that STRs should be limited to certain neighborhoods and that they should be restricted to a maximum number of rental days per year, and require owner occupancy. He added that year round STRs open an additional can of worms for the surrounding neighborhoods.
Peterson said he did not hear Drunsic advocating restrictions on owners like Ward is advocating. Drunsic explained that he is advocating that STR properties be required to meet the standards for commercial lodging businesses. He agreed that a homeowner renting a primary residence while on vacation should not trigger commercial use standards or permitting, but there should be a limit to the number of days rented and the rest of the time it should be an owner occupied residence. Hurley pointed out that a rental for more than 30 consecutive days, by state law, it is a long term permanent rental. Boshart posited that someone building an accessory unit to rent out on the same property that their home is on is not contributing to the housing problem. He said this homeowner could not recover the cost of construction by renting it out monthly, rather only by STR could cost of construction be met.
Boshart added an example of a house on Cape Cod owned by his in-laws family for several decades for which the taxes can only be covered if the family rents the house out when they are not using it. He said that is the only way that some people can afford their homes in Manchester. Boshart posited someone owning a house that uses it two weekends a year, and rents it out the other 50 weekends. Drunsic characterized that scenario as not being a residence. Boshart asked if someone had a house here and only uses it on the weekends, is that a residence, or is it different people using it on the weekends that makes it not a residence. Boshart said it is a challenging grey area. Drunsic characterized it as a second home and reiterated that the bylaws should have a definition for residential. Boshart said it means people eat, sleep, and watch TV there whereas an inn has people employed on site to manage it. Drunsic countered that STRs have people who come clean and manage too. Boshart said so do many residences.
M. Kokkonen characterized the debate as having three issues with minor overlap: (1) housing crisis, (2) zoning definition of residence, (3) standard of living. He offered that he had not heard anything in the discussion so far that would address the housing crisis. He said if you prevent people with a second home from renting their home out, you will just have an empty home, and less need for maintenance services that employ local people. He said if people are concerned about party houses the Killington registration or suggested regulations really don’t address this issue either. He reported that he has rented his home out and only ever had a problem with one renter not abiding by the capacity limit. Enforcement would be impossible due to the short term nature of the rental. He added that the cost of these second homes are priced above the type of homes needed to address the housing crisis.
Peterson offered that economic impact on the town economy is a fourth consideration and that all of these issues are interrelated. He continued by saying that there is no way to address one without having impact on the others. He would like to get the necessary economic data before proposing regulation. He said he sees a big leap between requiring registration of a property and imposing limits like colocation and rental days per year. He expressed concern about unintended consequences and explained that is why the commission is being deliberate and cautious.
Drunsic noted that there has been little new housing stock built in the affordable range in the last 20 years and when housing stock is removed from the residential market into the commercial rental market, housing stock is depleted. He posits the question as whether to provide more housing for people who work in the community or to cater to a few dozen more tourists. Boshart countered that second home ownership has the same effect of removing houses from the housing stock, but suggested we would not ban second home ownership. Ward added that the STR model is causing an increase in use of stock for second homes because it enables more people to be able to afford a second home.
Drunsic noted that traditionally here second home owners occupy their homes for a substantial part of the year, but now people are buying these as an investment. Boshart noted that Drunsic is making this assumption and that he does not know how many on Drunsic’s Airbnb list have been owned for many years versus newly owned for new opportunity. He said those numbers are important and will influence how our decisions on the matter are made. Boshart said he is a strong advocate for housing that community members can afford while making a living here, and we have worked hard to change the zoning to make this happen. He posited that this demand for STRs may be a good thing because it could lead to building more housing, only some of which would end up as STR.
Benson asked whether any surrounding towns have taken any action. Hurley noted no surrounding towns have acted and she reviewed the few in the state that have (Killington, Woodstock). Benson characterized regulation of STRs as a slippery slope because of economic impacts and property rights. He asked if it was defined as commercial use whether it could only then occur in commercial zones. Hurley explained that every zoning district allowed some commercial uses. Benson agreed with M. Kokkonen that enforcement would be a challenge.
M. Kokkonen offered that historically low interest rates has probably contributed to growth in STRs, but he distinguished family buyers from corporate buyers of multiple properties. He says his family spends all summer in their home here in addition to other shorter stays in between STR rentals. He added that in addition to the big players (Airbnb, Vrbo) there are many others, and he sees that would result in an unequitable enforcement of laws that might push people of the main websites to others that are more difficult to monitor. He concluded that enforcement would be a major challenge. He said the real problem is the housing crisis and the starting point is what is affordable. Instead of trying to gerry rig other approaches to deal with the housing crisis he suggested addressing it head on like Boulder CO did, build protected affordable housing. He urged commissioners not to look at nickel and diming STR owners but to directly address the housing crisis.
Peterson suggested the commission continue to discuss the issue but to separate out true costs with real data rather than anecdotal evidence; separate out the costs associated with the status quo and proposed regulation. Hurley noted that she spoke with Doug Kennedy who conducted the housing market study for the town about having Kennedy present a cost estimate for an economic analysis of the STR issues. She said the Town Manager or Selectboard could then engage Kennedy to conduct a study.
Boshart noted that safety issues are a concern for him. Rentals, he said, need to meet building safety code and he is on board with assuring safety standards are met. He said he does believe that STRs are negatively impacting the housing crisis and he hopes to find a way that can be used to address housing shortages while addressing STRs. He added that we likely cannot reduce housing construction prices and subsidized housing will not resolve the housing issue. He said a huge step in the right direction is that the zoning allows for more density, but we need to dive into the numbers. He agreed that an MPG is not the appropriate funding source right now. He did say that he supports the idea of registration and accountability for STRs, as he is sure that many of these listings do not meet required safety codes.
Ward expressed concern about a proliferation of wheelchair ramps in front of STRs. Boshart said that ramps are not required, but it is more about fire code. Ward contended that a proliferation of STRs leads to higher rental and housing costs. Boshart countered that regulating STRs will not necessarily lead to development of more housing stock, including multifamily. He noted that the downtown development being contemplated could be made available only for permanent rental. Drunsic expressed support for limitations on STRs for affordable and workforce housing incentives and said he is doing that for the PRD he is developing on Main Street and has been told it lowers the value of each unit by $100,000.
There was a discussion of energy code as contributing to housing costs with very significant timeframe for payback on reduced energy costs once occupied. Boshart expressed appreciation for Drunsic’s input because Drunsic is on the front lines of trying to address the housing issue and his opinion consequently carries weight. Drunsic expressed support for a registration process as a way to start and to capture lost 1% options tax (i.e., the 70% of the 1% options tax). Hurley reported that she and Gordon Black had both been contacted by companies seeking to sell STR management services to municipalities. There was discussion about whether Airbnb and Vrba are remitting the full 10% rooms tax, including the 1% options tax. Peterson had heard that they are only providing the 9% to the state. Hurley thought that the state must be collecting the 10%. Others suggested finding out whether the 1% is being collected from Airbnb and Vrbo.
Boshart brought up the issue of adverse neighborhood impacts as not a primary concern, but contributing concern nonetheless. He said he is looking for a creative way to manage the issues and collect more data. He said he suspects that it is best to have a broad range of STRs sprinkled throughout the community and that they are important to supporting the local economy. If the STR registration can help subsidize new housing development, it would be a win-win. Hurley reported a February analysis identified 214 unique rental units in Manchester at an average of $309 per night, which at full occupancy brings $660 into the town coffers in a night. At 20% yearly occupancy Boshart estimated that would cover the cost of a mortgage yearly. Hurley noted that the February data indicated 84% of the listings were single family homes (others were condos perhaps), and 93% were entire units, so there may be a small number of partial units being offered.
Drunsic suggested that registration at the very least will allow collection of data including location. Ward noted that homeowners are already subject to limits on their properties and that STR limits would not be out of scope. Hurley clarified that a registration process would be the purview of the Selectboard. Utterback noted that he is an STR owner and tuning in from Canton, Ohio. Boshart explained that he is not in favor of prohibiting a property owner from offering STR and in favor of finding a way to leverage STR regulation to contribute to housing development. Benson added that the numbers calculated earlier are only the rental income, but that these renters contribute to the economy more generally. Boshart agreed.
Benson noted that even if the STR stock were removed from the STR market, they would not solve the housing problem, as they are priced too high. M. Kokkonen noted that businesses look at market demand and competition in the markets they operate in, and he wondered whether increasing the town’s option tax to 2% would not undercut the market. Hurley indicated that municipalities do not have the authority to collect any more than the 1% options tax. Kokkonen wondered if the town takes on the responsibility of safety, will the town take on liability, and maybe it should be left to the state level. Others noted that it is the state Division of Fire Safety that takes this on. Drunsic noted that the town only gets 70% of the 1% options tax. Hurley clarified that the state does not break down the data on the portion of the options tax that comes to the town beyond rooms, meals and alcohol.
Boshart reaffirmed that this is an important discussion and he appreciated the members of the community that participated in the discussion. Hurley noted that this is not on the Selectboard agenda for tomorrow.
3. Other Business.
Hurley suggested that the zoning revisions item be tabled. Ward commended Peterson on a well-conceived outline for town plan work. Peterson suggested the town plan committee would set guidelines for subcommittees to do their work. Hurley suggested sharing the outline with the whole commission to be discussed at the next commission meeting. She noted there would not be a June meeting due to her need to take some vacation time.
Ward relayed that someone complained to him about noticeable white homes on ridgelines. Hurley explained that even in design review districts paint color is not of great concern, but ridgeline development limits are and ridgeline development is limited. Boshart recognized that town officials bear the brunt of complaints and can be called names or be pointed at as the cause of problems – it goes with the job – but he expressed that it is a pleasure to work with these volunteers and staffers. Drunsic agreed with this notion.
Hurley reminded those present that the Selectboard would be discussing the idea of town hall returning to the downtown and encouraged participation in that discussion. Boshart noted that he would be there and would express the support of the planning commission for the idea of moving town hall to the downtown. Drunsic suggested that we need some hard numbers on costs. Boshart posited the question as what cost would be justifiable to move town hall downtown. Ward asked about square footage needs. Hurley noted that it is clear that we don’t need the amount of space that we now have.
Ward motioned to adjourn the meeting. Peterson seconded the motion. The motion carried 4-0-0 at 8:45 p.m.
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For the Planning Commission Date