Orcas residents address vacation rental impacts: Is the County listening?

— by Matthew Gilbert, Orcas Issues reporter —

Nearly 200 people packed the Orcas High School cafeteria on July 17 to participate in what was titled a “Community Conversation on Vacation Rentals (VR).” The event was organized by a diverse group of citizens who have been working for several months on how to raise awareness on the impact that short-term rentals are having both on Orcas Island and the County at large.

VR Work Group Convener Yonatan Aldort got things started with a passionate statement of his belief in housing as a “basic right and need” and that something in our community is “very wrong.” Just in the last few years, he said, “I’ve had to bear witness to good people leaving as a burgeoning VR market keeps removing residences from the inventory. It’s an embarrassment and an outrage!”

While a member of the EPRC (Eastsound Planning Review Commission), Aldort proposed a 12-month moratorium on new vacation rental permits in the Eastsound Subarea. It was unanimously approved (with one abstention) and presented to the County Council as a formal resolution. As Aldort recalled, the Council quickly dismissed it because, “the impact of VRs is unclear. The evidence is lacking.” So Aldort and a group of others set out to build their case.

The first part of the workshop was just that: A summary of best efforts to compile and make sense of the available data. After Aldort handed the baton to moderator Diane Berreth, she introduced Joe Symons, long-time islander and database sleuth who synthesized public data compiled by the County to come up with some preliminary trends and observations.

“This data only addresses legally permitted VRs,” he began. “There is still insufficient data on VRs overall to make thoughtful decisions.” (And by the way, there is no restriction on the number of VR permits the County can issue.)

Nevertheless, what he came up with was eye-opening. For example:

• 505 of 3180 parcels on Orcas (about 16%) have a VR permit. Of the 1,115 VR permits in the County, almost half are on Orcas. There is no data on illegal VR accommodations.
• The County officially shows a steady decline in the issuance of VR permits and, looking ahead to 2036 (the current GMA/Comp Plan timeline), projects no increase in annual issuances.
• According to County data compiled by Symons, however, the annual number of permits issued since 2010 has tripled, from 20 in 2010 to 70 in 2017. (2010 is post-Recession and also coincides with the emergence of Airbnb as a VR property disruptor.)
• Over half of all VR permits have been issued to people who don’t live in SJC, a rate that is also going up.
• Current trends suggest that as many as 80% of all new housing starts may be issued a VR permit.
• Applicant data collected by the County during the permitting process has huge gaps, making it very difficult to understand who and what is being permitted. Some of that data is available in other databases, a point that Economic Community Development Director Erika Shook addressed at the Planning Commission meeting on the 17^th (a summary of which will be included in an upcoming article).

Symons was followed by Ryan Page, the County’s Affordable Housing Coordinator, who counted down a list of by now familiar characteristics of the county’s housing crisis:

• A $633k median home resale price.
• A $34.7k annual salary.
• 3,000 “cost-burdened” households.

He concluded by stating that the issue is not so much a shortage of housing as a shortage of available housing. Of the 13,912 housing units in the County, 7,718 (55%) are occupied and 45% are considered “vacant.” That category is further subdivided into seven other classifications such as “For rent,” “For sale only,” and so on. By far the largest classification within the vacant category is “For seasonal, recreational, or occasional use” – 85%.

At the same time, he was encouraged by the recently passed SJC “Home Fund,” a real estate excise tax (REET) that is expected to generate $1.3M in 2019.

Suzanne Olson put a human face on the VR issue as a local who’s been using Airbnb since 2012 to rent a room in her home “because we need the money to stay on the island.” She went on to say that she and her husband work multiple jobs, are very involved in the community, and “like meeting our guests. We’ve never had a problem.” Her story put an exclamation point on the difference between off-island, corporate, absentee property rental ownership and the role VRs can play when directly controlled by owner-occupied residents.

The final presenter was Jennifer Barcelos, staff attorney for Friends of the San Juans. Barcelos has been studying the experience of other communities both large and small around the world that have been affected by the VR virus and how they’ve responded. From Amsterdam and Dublin to Nashville and San Diego, local governments have enacted everything from limiting the yearly number of VR nights to limiting them in residential areas to shutting down the permitting process entirely.

Barcelos also mentioned a recent article in Harvard Business Review titled, “When Airbnb Listings in a City Increase, So Do Rent Prices.” It concluded that “the growth in home-sharing through Airbnb contributes to about one-fifth of the average annual increase in U.S. rents” and that “because of Airbnb, absentee landlords are moving their properties out of the long-term rental and for-sale markets and into the short-term rental market.” Another recent article in Wired, “Inside Airbnb’s ‘Guerilla War’ Against Local Governments,” investigated the local tax implications of the Airbnb business model.

It should also be noted that Airbnb is not the only property rental company disrupting local economies. [Though its impact is considerable – just check out the graphic in this Seattle Times article from July 13.] VRBO, Flipkey, Vacasa, and others are all at play here in the San Juans, along with absentee owners for whom obtaining a VR permit is little more than a formality – the process itself is pretty simple. One wonders if this is the case for the recently arrived 4,000-sq.-ft. structure looming over Orcas Road just south of Eastsound. Rumor has it that the house, referred to by some as “the gray whale,” is in line to be permitted as a VR. There is little to stop that from happening, but is it appropriate? Then again, standing alone on that particular stretch of Orcas Road, maybe it is. Now imagine half-a-dozen along that same stretch.

Attendees then met in facilitated small groups to talk about their personal experiences with VRs, the pros and cons, and what, if anything, should or could be done. Key takeaways reported by the groups included concerns regarding infrastructure saturation, economic speculation, and loss of rural integrity. There were also calls for more data with a focus on clarifying the difference between resident and non-resident ownership impacts.

The gathering highlighted tangible frustration among a sizeable segment of the Orcas Island community and one wonders how – or if – the County will respond. Repeated emails to Councilman Rick Hughes, who did attend the meeting, went unanswered. The topic did come up at the Planning Commission meeting mentioned above with Orcas residents and commission members Tim Blanchard and Georgette Wong reporting on their experience. That conversation will also be included in a forthcoming article on that meeting.

As for the group that organized the workshop, all of their presentations, along with a consolidated list of those small-group “pros and cons,” will be posted on a soon-to-be announced website. That group also announced a second meeting scheduled for September 25.