2018-05-17 / Front Page

Growth of Short-Term Rentals Remains Concern

City Fire Marshall and State to Meet
By Andy Long

Newport and Rhode Island state officials are beginning to come to grips with how to regulate short-term rentals (or STRs), but there is a long way to go and multiple issues to tackle. One issue is fire suppressing sprinklers and the state fire code. “We need [the state fire and building code officers] to take a look and tell us when [we] need fire suppression equipment and when [we] don’t,” said Mayor Harry Winthrop in a call with Newport This Week.

No local officials with whom NTW spoke felt confident in describing the state’s policy about fire sprinklers, saying that state officers weren’t certain themselves.

According to Newport Fire Chief Brian Dugan, in a phone call this week with NTW, there will be a meeting on Thursday, May 17 between the Newport Fire Marshal, Wayne Clark, and Bill Burlingame, member of the Rhode Island Fire Safety Code Board of Appeal and Review, to attempt to iron out the issue.

“STR” is the term for dwelling units rented on a daily, weekly or monthly basis, and they’re often, but not always, marketed through websites such as Airbnb or HomeAway.

Both the city and state regulations are unreflective of this expanding phenomenon, which seems to strain definitions and assumptions in existing codes.

In response to a request from local attorney Matthew Leys, the City Council has asked the city manager and city solicitor to clarify what defines a guest house in Newport. Currently, there is some ambiguity in the zoning code, which leads to confusion for property owners, who are uncertain which regulations apply to them.

State Representative Lauren Carson is a leader on this issue of short-term rentals and their impact on communities, especially regarding revenue collection. State law requires that online rental services, such as Airbnb, that market STRs on the internet, collect the hotel and sales taxes rather than being collected by the property owner.

Rhode Island law bans identify- ing to either state or local officials the owners who are renting out properties. Carson commented on this concern in a telephone interview with NTW. “Somebody has to record who these taxpayers are.”

There is a concern that Newport and Rhode Island are not collecting all the revenue they should.

At an April 15 meeting of the Special Legislative Commission on Growing Tourism in Rhode Island, which is chaired by Carson, Newport City Finance Director Laura Sitrin said that she believed that not all of the online platforms were remitting tax returns to the city. State revenue officials echoed her comments when they said that they believed that the same held true for the state.

A further complication may be coming as the online platforms consider becoming portals for reserving hotel rooms. Under current law, it would be very tricky determining who would be responsible for remitting taxes from the rental of hotel rooms, and if information on the flow of revenue would be available to state and local officials.

Another impact from the growth of STRs that concerns Carson is the effect on housing prices and the availability for year-round residents when apartments and single family homes are converted to short-term rentals.

Converting housing units into STRs could reduce opportunities to buy or rent a home. A 2016 study by the Los Angeles Alliance for a New Economy found that, in Los Angeles, a property owner garnered as much revenue in 83 days from an STR than if it had been rented yearly.

The website AirDna.co, an analytics company that tracks Airbnb activity, showed that on May 2, 416 Newport STRs were marketed on Airbnb. Of those, 274 are either an entire home or apartment, meaning that there are 274 fewer homes for year-round residents.

AirDna.co data shows the growing presence of professional hosts, with 225 of the 416 available units listed by owners of more than one property

A sign of the increasing presence in Newport of professional operators was recounted by City Councilor Kate Leonard at a council meeting in June 2017 when she shared her experiences as a realtor, saying, “There is a trend I see, and I don’t think it is a good trend for Newport. I can tell you that if a house goes on the market and it is less than $450,000, that house, if it is in decent condition, sells in three days. Not to a family but an investor. Then it is put on the rental block for Airbnb or whatever, and all of a sudden you have a business in a residential zone, knocking off balance the quality of life.”

One solution for this withdrawal of housing for year-round residents is to cap the number of days a property can be rented out as an STR. London and Paris have done so, but there are no plans yet to do it in Newport or Rhode Island.

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