Tag: short-term rentals

A glimmer of hope for housing

(Reading time: 5 minutes)

The new Staunton Housing Commission, the city’s attempt to address issues of homelessness and an inadequate supply of affordable housing, got off to a rocky start with its first meeting last week. Two of its nine members were not present, and the meeting itself—one of only four scheduled for this year—occurred two months later than initially scheduled. Moreover, much of the meeting was marked by red flags waved by city planner Rebecca Joyce, who asked commission members to trust her efforts over the next year to steer their work.  

“We have to stay in a certain lane,” Joyce cautioned, warning against scattershot thinking on the one hand and thinking there is a magic formula to fix everything on the other. “Guard rails” were mentioned repeatedly.

For all that, the 30 minutes or so of group discussion that took place during the 75-minute session were the liveliest on the subject since the commission’s progenitor, the Staunton Housing Strategy Group, started meeting 18 months ago. This was, in part, due to the addition of new voices and perspectives that were notably absent from the strategy group, including those of Robin Miller, a developer, and Hans B. Kettering, a young man searching for housing he can afford while working for Fisher Auto Parts. So perhaps there’s hope for some innovative thinking.

One hint of a possible clash of ideas and values came, interestingly enough, from city vice mayor Brad Arrowood, who was an early proponent of creating such a commission. Noting that Staunton has more cows than most cities its size because of its more than 2,000 acres (of less than 13,000 total) zoned for agricultural use, Arrowood suggested that this flat and gently rolling land could eventually be developed for housing.  That contrasted with an observation made later in the meeting by Miller, the developer, who noted that building out a road map—that is, building roads, curbs, sidewalks and utilities, including electric, water and sewer lines, plus storm drains—currently costs between $1,700 and $2,000 a linear foot.

Imagine what that means for an entire traditional subdivision. With the exception of Bell’s Lane, a narrow asphalt road, Staunton’s ag-forestal district has none of that infrastructure, so building housing there will be enormously expensive. So expensive, in fact, that there’s only two ways it can happen: either by building very large, very expensive homes, or by building lots and lots of homes within a much smaller footprint. Easier, cheaper and faster, Miller offered, would be to fill in what’s already here, building on vacant lots in the developed parts of Staunton. Indeed, he added, one of the quickest ways Staunton could generate more affordable housing would be to allow greater density overall, and to allow accessory dwelling units (ADUs) in particular.

ADUs have become exactly the kind of quick-fix housing solution that makes Joyce fret, universally offered as a sure-fire way to get more people housed by allowing property owners to build second or even third homes on their existing lots. They invariably come up in these discussions because they’ve become so widespread—elsewhere. Miller mentioned that Richmond just recently adopted an ADU ordinance, despite heavy opposition. A map I published back in November showed the stark contrast locally, with Staunton and Waynesboro as non-ADU islands surrounded by the ADU-receptive sea of Augusta County.

Although the Staunton Housing Strategy Group ostensibly embraced the ADU approach, the formal housing strategy it presented to city council last fall slow-walks the concept—and one possible reason was advanced by Arrowood, who told last week’s commission meeting that it’s fraught with possible unintended consequences. What if, he suggested, homeowners on large lots put up several ADUs, only to position them as short-term rentals, or Airbnbs?  Staunton would be helpless to prevent a transformation of quiet residential neighborhoods into beehives of transient activity, while scarcely increasing the amount of affordable housing for teachers, fire fighters and other essential workers.

The obvious response is not to obstruct ADUs but to regulate Airbnbs, as other Virginia localities already do. Albemarle County, for example, requires short-term rentals to be on a minimum of five acres with a rural zoning.  But a regulatory approach runs into another philosophical roadblock, which Arrowood also articulated and which goes a long way toward explaining why Staunton is in the spot it’s in: houses are private property. They’re not just homes, but financial assets.  Airbnbs are property owners’ entrepreneurial effort to better themselves, comparable to the boarding houses of yore, when widows would let out their spare rooms to working class stiffs who couldn’t afford their own homes. Any attempt to regulate such enterprise would be downright un-American.

Airbnbs, which are rented by the day, week or month to transient guests, are nothing like boarding houses, but the comparison appeals to a certain rosy nostalgia. It also highlights the tension, albeit not one that was further explored at last week’s commission meeting, between two opposing views of how we move from here. On the one hand, an assertive embrace of a higher density and infill strategy that builds on what already exists; on the other, a long-range contemplation of how a blank canvas, otherwise known as the ag-forestal district, might be shaped while avoiding upsetting the status quo.

As with many such tensions, the outcome most probably will lie somewhere between the two. But it will be interesting, in the months ahead, to see how clearly these differences are articulated by commission members and how they’re resolved. That could make for more of the animated conversation that showed briefly last week, before Joyce threw up those guard rails, and just might lead to a more durable and meaningful consensus.

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March 11 postscript/clarification: I’ve misstated Hans Kettering’s interest in local housing issues, as he wrote to let me know that he has decent housing and an amicable relationship with his landlord. As Hans further noted, “I was speaking for friends and people of the community that can’t find anything in Staunton at a reasonable price.” My apologies for my mistake.

More Airbnbs = less housing for all

(Reading time: 12 minutes)

In the ongoing effort to come up with a reasonably accurate inventory of local housing, it is customary to divide existing housing stock into the two categories of owner-occupied or rental properties. But while this is a useful sorting, it has its limitations; this paper addresses one of them, with a specific focus on Staunton but with broader implications for the larger SAW area.

The issue at hand is the conversion of housing, whether apartments or entire homes, into investment properties that are marketed online as short-term rentals to transient guests, thereby removing them from long-term rental availability.  Most are commonly reserved through Airbnb.com, and most range in size from studios to 1- and 2- bedrooms. Others can be notably larger, however, and also can be found on Homestay.com, which in addition to some overlap with Airbnb generally features larger properties of up to eight bedrooms.

Precisely how many such properties lie within Staunton’s city limits is difficult to determine, however, since there are few if any outward signs to indicate whether a building is someone’s primary residence or whether it’s a traveler’s respite. Airbnb hosts are forbidden, by city statute (this is also true of Waynesboro), from putting up signs indicating their “for rent” status. They don’t have any special parking requirements, and are barred—unlike traditional bed-and-breakfasts—from providing any food service. Indeed, the only requirement for someone to open such a venture in Staunton is to fill out a one-page “Homestay Registration” form with the city’s revenue commissioner and pay a $50 annual registration fee.

No surprise, then, that most short-term rentals (STRs) fly under the radar, both to the casual observer and, increasingly, to the city itself. The office of the Commissioner of the Revenue, for example, has an estimated 80 to 85 homestay registrations on file. But a painstaking inventory of listings on Airbnb’s website—excluding rentals that are part of a homeowner’s residence, with shared facilities—turns up 72 “complete” rentals, from apartments with kitchens, bathrooms and separate entrances to cottages to entire houses. Homestay yields an additional, unduplicated 43 listings, priced at up to $1,000 a night—not including properties like the Historic Inn at Oakdene or the Historic Berkeley Place (a former bed-and-breakfast), which each have eight suites and which fall into a grey zone somewhere between an Airbnb and an inn.

Excluding the inn-like outliers (another one that’s upcoming is Barristers Row), this adds up to a total of 115 properties that were once residential (or potentially residential—more on that later) that are now commercial enterprises. Most of those 115 properties are classified by planners as “rentals,” no different than any of the 4,000+ other housing rentals in the city, even though they’re not available for stays of more than a month. This amounts to more than 2% of the city’s overall rental housing stock, a number so small it might be dismissed as too insignificant to worry about. Yet considering that the rental vacancy rate in Staunton is less than 1.5%, an anxiety-inducing low level that has squeezed rents steadily higher, adding those short-term rentals to the “regular” housing market would more than double the city’s vacancy rate.

And then there’s this: the conversion of housing from residential use to a commercial one is a dynamic process that is accelerating, and in only one direction. Once a property becomes an STR, it rarely reverts to regular long-term housing. It’s no longer a home; it’s a “passive income stream” of a sort that’s becoming increasingly popular among investors. From the perspective of someone searching for a place to live, those STRs might as well have been crushed by a wrecking ball. When it comes to housing, they simply don’t exist.

IT’S SOBERING TO REALIZE that the Airbnb phenomenon in Staunton is scarcely a decade old. Seven years ago, when Staunton adopted the Homestay provision in the city code, the city was responding to an Airbnb Inc. lobbying initiative in Richmond to enact legislation that would have given it carte blanche in Virginia. As revenue commissioner Maggie Ragon told the planning commission at the time, Airbnb wanted a prohibition on localities being able “to control the zoning aspects, the land use aspects,” of Airbnb rentals, as well as a ban on legal jurisdictions requiring conditional use permits. Staunton by then already had 35 “homestay operators,” up from just three in 2015, Ragon said, “with the numbers continually increasing.”

Airbnb’s legislative initiative eventually fizzled, with the state adopting new rules in 2017 that enable localities to create homestay registries, to require STRs to meet zoning requirements and to impose general safety requirements. Staunton’s follow-up later that year, however, was minimalist: a bare-bones addition to the city code that limits “homestay” guests to stays of no more than 30 days, with no more than two adult guests per bedroom, but without limits on how often an STR can be rented. Most tellingly, the city opted not to impose requirements that STR owners live at the property—the original premise behind Airbnb, in which homeowners could rent out otherwise vacant rooms to transient guests

That oversight—there’s no indication in city records that there was any discussion about the desirability of having such limitations—opened the door to a phenomenon now exemplified by Jamie Stark Inlow, a JMU grad who lives in Charlottesville. Starting in 2020 with a neighbor’s barn loft, which she converted and then managed as an Airbnb, Inlow has grown her management portfolio to approximately 140 STRs across central Virginia, including more than two-dozen in Staunton alone. Her pitch to potential clients, through a partnership called Carriage House STR, is an assertion that “passive income through short-term rentals is becoming more and more appealing” to people looking for good investments.

Among Inlow’s clients, for example, are a Swoope couple who own half-a-dozen accommodations in Staunton, including a former church on West Beverley that has been converted into two Airbnb accommodations, one with three bedrooms and two baths in the former sanctuary, one on the ground level with two bedrooms and two baths. This particular conversion did not remove living units from previously existing housing stock, and indeed, salvaged a property that might otherwise have fallen into disrepair. On the other hand, that former church—as is true of the relatively small number of commercial properties that also have been refurbished as SRTs, such as the former Gibson’s Warehouse in downtown—could as easily have been made over into regular apartments, as was done with the former Staunton Steam Laundry. From a housing standpoint, therefore, that may be seen as a lost opportunity to increase the city’s housing stock.

Most of Inlow’s managed properties, however, were once someone’s homes but now are assigned endearing names, like “Little Yellow House” and “The Nest,” and get rented out by the night or week. That’s also the case with the vast majority of the city’s other STRs, with a growing number of STR owners acquiring second and third properties to create more modest versions of the Inlow portfolio. Each such acquisition and conversion, of course, means one more housing unit withdrawn from an already insufficient stockpile.

If Staunton seems disproportionately rich in STRs (and it is), there are at least two reasons for that. The first is that it shares the attributes, if on a more modest scale, of towns elsewhere that have become hotbeds of investor-owned vacation rentals: nearby mountains and other natural attractions, plus a strong tourist orientation emphasizing cultural events and venues, an arts scene and numerous festivals. Staunton doesn’t have the scenic grandeur of an Aspen or Jackson Hole, nor the cultural critical mass of an Asheville or Taos, but it punches above its weight for its size and economic demographics. The downside, of course, is that the tourist trade leans heavily on minimum-wage employees, who need low-cost shelter—and for them, every home converted into a $130-a-night STR means one less housing option. As that trend continues, the inevitable result will be a workforce increasingly pushed outward in search of affordable housing.

The second reason for Staunton’s growing share of STRs can be gleaned from the Carriage House STR website, which helpfully rates the 10 jurisdictions in which it does business—and Staunton, no surprise, gets a “rental friendly” thumbs-up because of its lack of restrictions. Augusta County, by way of contrast, is rated “restrictive” because it requires rentals to be the owner’s primary residence, and because anyone interested in starting an Airbnb in the county must first contact a commissioner “to begin the process”—an invitation that hints at hurdles ahead.

Other jurisdictions have much more stringent requirements. Fluvanna County, rated by Carriage House STR as “restrictive,” mandates that no more than 25% of a home—in other words, one bedroom in a four-bedroom home—can be used as a short-term rental. Charlottesville, also meriting a “restrictive” rating, requires STRs to be the permanent residence of the owner, who must inhabit the premises for at least 180 days a year; may accommodate no more than six guests at a time; must provide off-street parking; and must obtain a provisional use permit annually. Albemarle County goes a step further, requiring STRs to be on a minimum of five acres with a rural zoning—enough to win a “prohibitively restrictive” thumbs-down from Carriage House.

Staunton, by comparison, is a walk in the park.

WHAT DOES ALL THIS MEAN for the larger housing picture?

Keeping in mind that the pursuit of more affordable housing is a battle of inches, not miles, even marginal gains and losses have a way of adding up. A loss of 100 homes to investors may not seem significant, even if that’s 2% of available rental housing, or 1% of all of Staunton’s housing stock. Yet flip that on its head and it’s a big deal: an announcement of 50 or 60 new homes being built—never mind twice that many—would be greeted with applause, and rightly so.

(Parenthetically, it should be noted that the great majority of Airbnb rentals are of a size that housing planners have been saying are in shortest supply locally, i.e. one- and two-bedroom units. The 72 “complete” rental units in Staunton identified on the Airbnb website account for a total of 152 bedrooms, even though 22 of those units have three or more bedrooms.)

But it also must be recognized that this clock can’t be turned back. Those lost homes are gone, and few, if any, will return to the housing pool. The question now should be one of how Staunton should put the brakes on this conversion trend so the city doesn’t end up in an even deeper hole.  The consequences of failing to do so have been demonstrated time and again in tourist-oriented municipalities across the country, many of which never saw how the housing landscape was changing right before their eyes until it was too late.

Getting a grip on the STR phenomenon doesn’t require reinventing the wheel; other Virginia jurisdictions already have provided some examples of what can be done. Waynesboro, for example, even though Carriage House STR also gives it a “rental friendly” rating, draws a distinction between “homestays”—defined as accommodations within a homeowner’s primary residence—and “short-term rentals,” which constitute the vast majority of Airbnbs. Although it’s not clear whether Waynesboro’s distinction makes any difference in how it regulates the two kinds of entities, the terms have greatly different connotations, affecting how each is perceived. Staunton’s conflation of all such rentals under a warm and fuzzy “homestay” umbrella, on the other hand, sugar-coats a stark commercial reality, one that might otherwise be more susceptible to appropriate regulation. No one wants to come down on an aging widower rattling around in a big house who wants to rent an unused bedroom to tourists, but an entirely different perspective is evoked by someone buying up homes for an investment portfolio.

(Waynesboro’s homestay and STR regulations, incidentally, also require that such accommodations have working smoke and carbon monoxide detectors and fire extinguishers available to guests at all times; Staunton’s homestay rules are inexplicably silent on the subject.)

Beyond calling things by their proper names, there are several permissible zoning rules that could stem the bleeding, some of which already have been mentioned: require the property owner to live on the premises; limit the amount of floor space that can be given over to non-residential (i.e. STR) use; permit STRs only within certain zoning classifications; limit lengths of stay even more sharply, as well as the number of guests; and so on.

The point is not to make life more difficult for someone who wants to get into the Airbnb business, but to recognize that a community’s housing stock is a community asset, in addition to being the personal assets of its owners. Failure to conserve and nourish that asset—as housing—ultimately results in a hollowing-out of that community, as its essential workforce gets displaced by a vicious cycle of insufficient housing and spiraling rents and real estate prices. If that happens, it can’t readily be undone.