Overwhelming industry opposition to principal residence rule prompts change, for now
The Town of Niagara-on-the-Lake wants to crack down on illegal short-term rentals and make sure ones that are operating legally take responsibility for their properties and guests.
But how it will do that will likely remain unclear until at least the next meeting of council.
During a lengthy discussion about short-term rentals at Monday's committee of the whole meeting, councillors approved an amended staff report with proposed changes to the current bylaw. However, it seemed to be understood the issue needs more discussion and it should be revisited by council.
One of the most contentious proposals, to mandate that short-term rentals be owner-occupied, was deferred for further consideration.
Among the recommendations approved were an increase in licence fees to $175 per room, to make it illegal for owners to advertise short-term rentals without a licence and that any such advertisement must include the licence number. As well, the town will hire a third-party firm to take complaints 24/7 and find rentals advertising without a licence.
As well, owners must ensure copies of the town's noise and nuisance bylaws are made available to renters, that non-owner occupied properties must provide a property manager's contact to the town and the to-be-hired third-party compliance company. In addition, the property manager must be able to visit the property within 45 minutes of a complaint.
Town clerk Peter Todd outlined some of the responses received from the public through the town's Join the Conversation page regarding the proposed changes.
Town staff's suggestion of requiring short-term rentals to only operate from principal residences was “definitely the most commented on” topic, he said.
“There was definitely an overwhelming amount of opposition to this requirement from the industry in the tourism sector,” Todd said.
While he said a “small minority” of residents favoured the principal residence option, the overwhelmingly negative response from the industry prompted a recommendation to hold off on the decision until there has been further consultation with the public and stakeholders.
Some of the comments suggested staff had not done its due diligence or research before preparing the bylaw, Todd said.
However, Coun. Clare Cameron defended staff, saying research was done and brought attention to the number of times the word “industry” was used in Todd's presentation.
“There's been lots of references to the industry, which really refers to a collection of independent people that have had the opportunity to invest in additional properties,” she said.
She asked Todd to clarify how many general residents (ie. people without “skin in the game”) were speaking in favour of the principal residence requirement.
“We did receive support for the principal residence requirement from a small minority of the comments that were from general members of the public or from operators that were bed and breakfast operators that may not be affected by the changes. So there were people speaking in support of it,” Todd said.
Councillors had a number of questions and concerns about how effective it would be to hire a third-party compliance company located out-of-town to monitor complaints.
Lord Mayor Betty Disero said the challenge is often that convictions in court need proof of a person staying overnight, not just an advertisement.
However, Todd said the town is also putting in requirements that rentals need to have a licence before advertising, which would eliminate the need for proof of someone staying overnight or a private investigator to gather such proof.
The third-party would also be able to take the offenders to court for the town, if required, though Todd said he wasn't familiar with how that process would play out.
“It's not entirely clear how that will work from a staff perspective, but at the very least they can provide us the evidence that we will need, ideally to move forward with prosecution,” Todd said.
The 10-month pilot of the third-party program would allow the town to see whether it needs to hire “more resources” to tackle illegal rentals, Todd said.
He said with the compliance company, anyone with a complaint would contact an operator who would record the complaint as well as contact the property manager to ensure the problem is addressed within 45 minutes, with a fine if they don't respond within that time frame.
However, if a manager does respond and attempts to stop the problem or the noise continues, Todd said the town would rely on the Niagara Regional Police to enforce the town's bylaws, as it does now.
Coun. Allan Bisback raised the point that police haven't been particularly helpful in resolving these issues in the past and asked what happens if police continue to have “bigger issues” to deal with.
Todd said at this point there is no intention to have staff working overtime to address complaints.
Bisback asked if the town had looked into escalating fines for multiple infractions, but Todd said he wasn't certain if the town can legally do so.
Coun. Erwin Wiens poked another hole in the issue, which is that it would be left up to property managers to determine if the complaint is legitimate.
“That's how we would decide? The property owner would come and say, 'I deem this as a frivolous complaint?' ” Wiens asked.
Todd said the property manager would have the opportunity to “provide the compliance company with more information” since they are essentially working as a mediator between the complainant and the guests.
But Wiens wondered how the town and compliance company would know if the manager was compliant or not, if there was no independent party to decide is a complaint is legitimate. For example, he said, what happens if there's a person who just complains about everything, or a property owner who ignores complaints because he decides it's not a big deal.
“It becomes anecdotal, does it not?” he said. “Because what's gonna happen is either side of it, they have their own perspective, or perception of what's acceptable.”
“I'm quite cautious when we have independent people that aren't even in our area code investigating,” Wiens said.
Coun. Gary Burroughs said the threat is not about bigger fines, but more about losing the operating licence if there are too many complaints.
“If you get legitimate warnings, and you get two or three, then you're no longer in business. That is an incentive to do it right,” he said.
Another staff suggestion owners took issue with according to Todd's report was having mandatory signs outside their rentals, which some said was not safe and could negatively impact the aesthetic of a neighbourhood.
Seven town residents, all involved in the short-term rental industry, spoke out against the proposed bylaw changes during the meeting, with most of them outlining similar concerns as noted in Todd's presentation, especially the principal residence rule.
All of the seven speakers said the proposed changes would not solve the current issues, with most hitting similar talking points, such as how making short-term rentals operate from principal residences only would hurt owners of those rental businesses.
They also suggested noise complaints are few and far between, that a principal residence rule would not lead to more long-term rentals, only a flood of houses on the market.
However, no speakers provided evidence as to why those houses wouldn't be purchased as a long-term residence. In fact, current Bed and Breakfast Association president John Foreman suggested the housing market wouldn't be affected in the long-term, because people would still want to move here.
There was general consensus that the town does need more enforcement to tackle illegal rentals.
The presenters suggested NOTL neighbourhoods are not being hollowed out by short-term rentals.
Mike Matyjewicz, who owns a short-term rental in Chautauqua, said he thinks short-term rentals “enliven” the community rather than hollow it out, that limiting short-term rentals won't lead to more long-term housing.
“And, of course, it brings in many visitor dollars,” said Matyjewicz. “I hope this underscores an important point. We're not absentee landowners. We're not a soulless, nameless corporation. We're two individuals who love this community and made a major investment here.”
Foreman said requiring short-term rentals to be owner-occupied would mean that many cottage rentals and villas would be forced to close.
“This would cause serious financial hardship for the owners,” he said, adding it could affect tourism — though he did not provide any evidence to suggest short-term rentals provide any more local business than a permanent resident.
Councillors didn't seem to feel the same as the short-term rental owners and generally agreed there is an issue with hollowing out of town.
Disero pointed out the town has lost many practical businesses over the years, adding that on some streets in town there are people who literally have no neighbours due to short-term rentals on either side.
Both Cameron and Bisback responded to presentations suggesting the town had not followed “proper governance” in bringing the bylaws forward. They said staff had prepared the report in a normal fashion and looked into the issues while also considering the sheer volume of complaints they receive about short-term rentals.
Bisback said from May to October it's the most frequent call he gets.
Cameron emphasized it is not council's role to ensure short-term rental owners can make as much money possible, but to act in the best interests of residents and the future of the community.
Other councillors agreed with Cameron and voiced strong concerns not only about noise — which most rental owners focused on — but the real hollowing out of communities that is shown to come along with short-term rentals.
Staff report outlines concerns of 'hollowing out' communities
“It is believed that the surge in non-owner-occupied rentals such as Cottage rentals can be attributed to the emergence of internet-aided short-term renting on plat forms such as AirBnB, Homeaway, Expedia, Booking.com etc. One of the biggest areas of concern that has followed has been the affects on the availability and affordability of long-term housing units. In October 2020, Brock University produced a report that explicitly identified that the housing crisis as being a 'wicked problem'. The report, which is included as Appendix VII, states that several factors contribute to the housing crisis such as the preference of landlords to offer rental stock on the short term market rather than long-term rental market. Landlords are realizing that rental properties have the potential to generate more income as room rentals for short-term vacation properties (especially in tourist areas) than long term rental units. This process also inherently which can deplete available stock of long-term rentals and raise market rents. This phenomenon has also been observed in many major cities and high profile tourism destinations such as Berlin, Paris, London, Barcelona, Madrid, Lisbon, Venice, Sydney, Los Angeles, San Francisco, New York and Toronto. Many tourism-centric Towns are concerned with the ‘hollowing-out’ of their neighbourhoods. There are of course many economic benefits of attracting tourists to the area. However year-round residents provide many under recognized benefits as well such as support for services like day-care and schools. Studies also show that by requiring operators are principal residents, it inherently builds in a tremendous amount of accountability to the operation of STRs. When an STR is not just a piece of property but hosts’ actual home, in their own neighbourhood, they are likely to be attentive to noise, trash, and parking concerns. There is a degree of personal investment that is believed to provide a higher level of compliance.”