Dear Property Guy

Sisters is a town that means different things to different people: the (slightly larger) small town they grew up in, an opportunity to live where one plays, maybe a place to spend California retirement bucks, for many it’s where they do business, and for others it is a vacation destination.

Smashing all these different visions, wants, hopes, and dreams into one community is bound to create spots of friction. Short-Term Rentals (STRs) are one of these spots. Many Sisters residents are happily tripping through life not knowing or caring about STRs, while others are quite upset they exist at all.

An STR is a private residence that is available to rent on a daily or weekly basis. These are better known by the market leaders VRBO and Airbnb. Understanding the drama surrounding STRs requires understanding the past.

First there were dinosaurs, they walked in peace among the beautiful mountains, lakes and calderas of Central Oregon. Then people came, which may or may not have been a good thing. Things were cool among the people for hundreds of years. Eventually people from strange lands, like Portland and San Francisco, decided they wanted to see our beautiful mountains, lakes and calderas. They came, they hung out, got a latté, bought a T-shirt, and left.

These tourists stayed in campgrounds, dispersed in outlying areas, and hotels. At some point, locals figured out they could make a few bucks renting their houses. And so STRs were born. At first, these STRs lived in peace, harmony and love with the community. Then city council started receiving negative feedback about: increased traffic, noisy guests, and reduced housing for locals. It’s 2018, the rules begin, and so ends the Wild West era of STRs in Sisters.

Before we visit these rules, let’s note the source here: tourism. No tourists; no STRs. But people want to visit Sisters. Elected officials want people to visit Sisters. Local businesses want people to visit Sisters. And most locals seem to enjoy coffee shops, galleries, stores and events that the economy wouldn’t support without tourism.

Tourists like STRs — generally, a more positive experience than hotels. And Sisters just doesn’t have enough rooms to accommodate demand for events like: Rodeo, Quilt Show, Folk Fest, and now Big Ponderoo. People in charge of the whole tourism thing realize this and decided that Sisters should offer multiple lodging options (including STRs) for tourists. And while some locals aren’t happy with the whole tourism thing, these events and tourists don’t seem to be going away anytime soon.

Cities manage STRs with different tools. The most common being limiting how close they can be together or limiting total permits. Sisters currently requires STRs to be no closer than 250 feet from another. That translates into 1 to 3 potential STRs per city block. With about 110 STRs currently permitted. That’s more like 8% of total residences.

In addition to having an eligible property, running an STR requires jumping through some hoops. The owner needs to get a permit from the city, pay a bunch of fees, obtain a business license from the state, prove use at least once a year, and pay revenue taxes to the city (9 percent) and state (1.5 percent). Quick math shows that to be about $280,000 to Sisters. Not game changing, but not insignificant either.

This all leads to lots of questions, such as: What is the right number of STRs? How often are they rented? Do they affect housing prices? Do STRs lead to drunk naked tourists running through our neighborhoods at three in the morning?

These are the questions facing City Council in the coming year(s). This is the first part of an ongoing look at the subject. Next time we’ll take a deeper look at these questions, address some of the community concerns, and check out some of the City’s next steps.

Mike Zoormajian is principal at WetDog Properties in Sisters. Providing local real estate, property management and investor services.