City Council reviews short-term rentals

Short-term rentals (STRs) were originally heralded as a way to increase tourism dollars in a city by offering a wide variety of lodging quality and affordability, as well as a different experience from that found in a hotel. Homeowners and landlords would also benefit by earning additional income from renting out rooms and entire properties as STRs.

After more than a decade of experience, the STR impact on local economies and rental markets is highlighting problems that may outweigh the benefits. Studies have shown that, particularly in larger cities, increased tourism facilitated by STR platforms like Airbnb and VRBO negatively impacts house prices, long-term rentals, and whole communities.

A Harvard Business Review study across the U.S. found that STRs are having a detrimental impact on housing stock as owners take their properties out of the long-term rental and for-sale markets and put them into the STR market. Recent headlines indicate that some cities are banning STRs outright, or passing laws and regulations designed to limit their impact.

In Sisters, finding an affordable long-term rental has become increasingly difficult for people who work in Sisters, making it hard for business owners to hire the employees they need.

Based on community input and concerns on the part of Sisters city councilors, one of the goals for the 2023-24 fiscal year is to “evaluate Short-term Rental Code language to mitigate adverse impacts on the community.” Specifically, the Council identified concerns with the availability of housing units for long-term occupancy and nuisances created by STRs.

At last week’s Council workshop, principal planner Matthew Martin provided an overview of the STR program and a preliminary program evaluation of the STR language and possible mitigation of adverse impacts on the community. Council was asked for input and direction regarding what aspects of the STR regulations should be evaluated and considered for amendment.

Those options included:

Option 1: Expand the concentration setback from 250 feet to limit the proximity of STRs to one another and thereby the total number of STRS in the city.

Option 2: Amend exceptions. Apply the concentration setback to dwelling units within a condominium and/or commercial district. Such properties are currently not subject to the concentration setback.

Option 3: Establish a maximum number of STRs in the city. There is currently no maximum number of STRs that can operate in the city. A maximum would explicitly limit the number of units regardless of proximity to other STRs.

Option 4: Prohibit in specific areas. A prohibition on STRs areas of the city, such as future areas of annexation or particular zones, would limit impacts in those areas.

Option 5: Adjust fees. Changes to land use application and license fees can serve as an incentive or disincentive to establishing an STR and have a corresponding impact on revenue generation.

Option 6: Other changes may be identified or emerge that warrant evaluation.

The Sisters Development Code defines “short-term rentals” as: The use of a dwelling unit (or a habitable portion of a dwelling unit) by any person or group of persons entitled to occupy the dwelling unit for rent for a period of less than thirty (30) consecutive days. Short-term rental(s) also means a vacation home rental approved under the regulations in effect through December 27, 2018, and owner-occupied short-term rentals. “Short-term rental(s)” does not mean bed and breakfast inns, hotels, and/or motels.

The Sisters Development Code defines a “Dwelling Unit” as: a single unit, providing complete, independent living facilities for one or more persons, including permanent provisions for living, sleeping, eating, cooking and sanitation and that is lawfully connected to the City’s municipal water and sewage disposal systems unless exempt as provided by Sisters Municipal Code 13.40.

Based on these complimentary definitions, an STR can be operated in a variety of dwelling types including, but not limited to, single-family dwellings, accessory dwelling units, duplex, triplex, and multifamily residential subject to specific STR requirements.

The current number of active STRs (111) based on the approval period and type of approval to which they were subject includes:

Prior to February 2013 —pre-existing/nonconforming vacation rental: 20

February 2013-December 2018 — vacation rental: 57

January 2019-present —short-term rental (two new in 2023): 34

The city of Sisters contains a total of 2,005 Dwelling Units, which means approximately 5.5 percent of the existing housing stock is actively engaged in operation as an STR.

Following Martin’s presentation, city councilors weighed in individually with their thoughts regarding possible options.

Councilor Susan Cobb would like to increase the buffer to something larger than the current 250 feet. She would also like to see the overall percentage of STRs to total housing units reduced to perhaps 3 percent. If there was a way to ensure it, she would like to have locals be the first to be STR owners.

Councilor Gary Ross thinks the City should clamp down on the transfer of STR licenses when a property is sold. Other items he thinks need to change include increasing the buffer beyond 250 feet, limiting STRs in an increased Urban Growth Boundary (UGB), and no STRs in new construction or conversions.

Councilor Jennifer Letz would like to see a streamlining of the categories. She recognized that the actions taken in 2018 were a “shot in the arm” for the local economy, but suggested that a “seventh option would be to ban STRs outright.”

Mayor Michael Preedin disclosed that he owns an STR. He thinks “it’s not a horrible thing to have some STRs.” He warned that without the STRs, the City would lose $250,000 in revenue annually. He cautioned that the City not “over-regulate.” He agreed with increasing the size of the buffer, but strongly rejected the possibility of any moratorium or ban on STRs. He thought Options 1 and 2 were good but said no to Option 5 regarding fees.

There was a consensus among the councilors that any possible UGB expansion should be for the purpose of providing additional housing for residents and not allowing more STRs. Options 1 and 2 were generally agreed upon as well as the need to streamline the language and categories.

With input and direction from Council, staff will now conduct a comprehensive evaluation of the identified options. This evaluation is intended to consider examples from other communities, stakeholder input, and data analysis. Staff will return to the Council for a subsequent work session to report on the findings and seek additional direction.