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Debate over short-term rentals comes to ‘Washington’s playground’ as Chelan County considers limits on Airbnbs

UPDATED: Wed., Dec. 23, 2020

By Heidi Groover Seattle Times

As post-pandemic vacationing returns in coming years, tourists may find it harder to book an Airbnb near Leavenworth, Lake Chelan and other coveted areas in Chelan County.

County commissioners are considering new limits on short-term rentals and could approve restrictions as soon as next week. Though final details are still being debated, the rules could create a new permitting scheme and limit the number of short-term rentals starting in three years.

The debate has raged on town Facebook pages and in community councils that usually would be busy planning events like the annual Santa Breakfast (canceled this year because of the pandemic). Similar fights have played out in cities around the globe, as platforms like Airbnb draw travelers away from traditional hotels toward apartments, houses and condos.

Locals pushing for the new rules say the explosion of Airbnb, VRBO and other rental sites is transforming their residential neighborhoods and squeezing the local housing market. A consultant hired by the county estimated at least 1,200 rentals operate in unincorporated areas of Chelan County, up from just 76 in 2014.

Rental owners counter that their properties help fuel the region’s tourism-dependent economy and create jobs. An analysis by a Central Washington realtors group estimated that people staying in short-term rentals spent about $560 per party daily on food, recreation and shopping.

The proposed rules would affect only unincorporated areas of the county, bypassing cities like Leavenworth that already have their own limits. Many rentals are listed outside city limits, like those nestled along Lake Chelan and the Chumstick Highway.

When Seattle faced concerns that short-term rentals could deplete the city’s housing stock, the city passed new limits in 2017, though the rollout has been glitchy. San Juan County tightened its rules in 2018, when an estimated 7% of county housing stock was made up of vacation rentals. In Oregon, the popular town of Bend allows rentals in residential areas but requires them to be at least 250 feet apart.

In Chelan, a three-hour virtual public hearing Tuesday night drew more than 300 people as speakers debated property rights, nuisances caused by out-of-town renters and whether the regulations would kill jobs and amount to “wealth redistribution.”

A few miles outside Leavenworth in Peshastin, Stan Winters watched as the owners of two homes on his street transformed them into short-term rentals. Guests cycle in and out, causing parking irritations and a loss of “any sense of community,” Winters said.

“These houses just sit empty unless paying guests come,” said Winters. “A community of people who live here and work here, that’s what we want.”

Rental owners say frequent turnover is to be expected, and the short-term visitor housing is crucial for creating jobs.

Zelda Holgate manages six rental properties near the Wenatchee River. The cabins were some of the first vacation rentals in the area in the late 1980s, she said.

“Our economy is based on tourism,” Holgate said. “We advertise ourselves as ‘Washington’s playground.’ ”

Countywide, short-term rentals make up about 7% of the housing stock, with especially high shares in heavily visited areas. In the ZIP code including Leavenworth, short-term rentals make up nearly 16% of the housing stock.

The proposed rental rules are in flux, as Chelan’s Board of County Commissioners considers major changes like whether to allow any existing rentals to be grandfathered in.

The latest draft would limit rentals based on zoning, whether the owner lives on-site and how much property surrounds the home. Rentals where the owner lives on-site, like a backyard cottage, would be allowed in most areas, with no more than eight guests. Rentals where the owner does not live on-site would be more limited.

The county would restrict those rentals in certain residential and waterfront areas. Rentals where the owner does not live on-site would not be allowed to make up more than 5% of an area’s total housing stock, effectively capping the number allowed.

Other proposed rules would limit the number of guests and require registration, parking spaces, quick response to noise complaints, signs stating the property is a rental and on-site phones for emergency response.

Existing rentals would not be grandfathered in. Owners would need to meet the new regulations or shut down after a three-year period. Some owners who don’t live on-site would compete in a lottery system to be allowed to continue operating.

Commissioners Tuesday were mulling changes to the proposal, like whether to grandfather in any existing rentals that wouldn’t conform to the new rules and whether to allow rentals to make up more than 5% of the housing stock. They could vote on the proposal next week.

Holgate, who manages six cabins owned by six different owners, worries the “draconian” rules will shut her down. If the regulations pass, short-term owners will consider a lawsuit, she said.

Rental owners “hire window cleaners, carpet cleaners, chimney sweeps, contractors to work on the outside of houses, electricians – we keep a lot of people employed,” she said.

Supporters of the new rules say they hope homes tied up as short-term tourist getaways could be returned to the rental or homeowner market.

“The residential areas are for the residents,” said Bruce Williams, a board member for a neighborhood group organizing to support the regulations. “That means both quantity – enough structures for employees, employers, families – and the quality of the residential areas.”

Housing costs have spiked in Chelan County, squeezing service industry workers and others looking to rent or buy. The median home price last month was $559,000, up from $407,000 at this time last year, according to the Northwest Multiple Listing Service.

But it’s unclear just how many listings on sites like Airbnb would ever return to the housing market.

In the Leavenworth area, the share of housing occupied by short-term rentals is significant enough that it could limit housing supply, said Pike Oliver, an affiliate instructor at the University of Washington Runstad Department of Real Estate. Yet in remote areas, rentals are often vacation homes owners are reluctant to sell or rent full time.

“When you look at what goes into short-term rentals, it’s typically not housing that would serve lower wage workers in that community anyway because it rents for several hundred dollars a day,” Oliver said.

Lower-cost rentals may be more likely to return to the market, Oliver said. Across the county, whole homes rented on Airbnb and VRBO go for an average of $278 a night with lower rates in areas farther from Leavenworth and Chelan.

Raminta Hanzelka, who lives in Kenmore and rents out a chalet in the Chiwawa River Pines area north of Leavenworth, said she expects vacation homes in her area will sit empty most of the year if not used for rentals.

The homes – some with water views – “are not affordable for the community who lives here and never will be,” she said.

As commissioners debated the proposal Tuesday, Commissioner Doug England said the board had received more than 1,000 written comments.

“If it was an easy issue,” he said, “we would have already done it.”

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