Long-term planning on short-term rentals

Lodging options have increased significantly over the past decade. 

Online rental sites such as Airbnb and Vrbo have created a market which allows primary residences and other properties to become potential destinations for an overnight stay – or longer. 

Such rentals have become available in Monroe County, prompting discussion at both the city and county levels of government. 

As an alternative to hotels and other traditional destinations for travelers, “short-term rental” platforms such as Airbnb, Vrbo and other provide an avenue for property owners – and even rental tenants – to host paying visitors.

While sites such as Vrbo are mainly used by vacationers to rent entire houses or condominiums, the Airbnb model also allows users to access “shared” spaces with other tenants or the homeowners – sometimes a single room within a house or apartment. 

The allure of renting non-traditional quarters includes cost savings, unique property experiences and proximity to an event. 

For the hosts, the sites offer the chance for extra income for underused living spaces and uninhabited properties. 

Furthermore, the ease of online booking has revitalized the traditional “bed and breakfast” model, leading to the development of specialty properties to accommodate patrons, such as “Storybook Castle” in Alabama or a wide variety of minimalist “tiny house” options throughout the country, among others.

Developers of Off Main Gasthauses are in the process of constructing two unique properties in downtown Waterloo in hopes of attracting short-term rental clients.

Another unique style is a “grain bin” bed and breakfast, which converts a farm storage facility into a usable living space. 

Waterloo Zoning Administrator Nathan Krebel and his wife stayed at a grain bin Airbnb in Missouri last year, giving the couple the idea of establishing a similar bed and breakfast in Monroe County.

During discussion of a special use permit to establish a grain bin bed and breakfast during the Monroe County Planning Commission meeting on July 7, questions arose concerning county regulations for bed and breakfast establishments. 

According to meeting minutes, Krebel said, “Correct me if I’m wrong, I can build a house and rent it out without any permission,” referring to the Airbnb-style rental methods.

Monroe County Zoning Administrator Chris Voelker noted that the county does not have any language in place regulating Airbnbs, but clarified the Krebels’ plan would fall within traditional bed and breakfast plans as the family would eventually live on a property “contiguous” to the proposed site.

The planning commission voted 6-4 to deny recommendation of such a permit to the Monroe County Zoning Board of Appeals. 

Board member Dan Davis said he felt it was “too soon” to issue the special use, as neither the grain bin nor the Krebels’ permanent resident on the property were ready for use. 

Krebel argued that if the request were denied after establishing the grain bin on the property, he would not be allowed to build another residence on the property as the grain bin would be considered a single-family home. 

The zoning board of appeals granted the Krebels’ special use permit at its Aug. 10 meeting.  

While Monroe County and its municipalities have language on the books for traditional bed and breakfast businesses, the recent special use request and a related discussion during a Columbia City Council meeting have highlighted the issues Airbnb and Vrbo models have created for local governments which do not have a mechanism in place for the fairly new phenomenon.

There are currently locations throughout Monroe County listed on various rental sites, but there is no way to ensure adherence to county or municipal codes regarding bed and breakfast business requirements, occupancy permits, licensing fees, taxes and other concerns.

Krebel told the Republic-Times he expects Waterloo to have “something in the books” regarding short-term rentals by springtime, which will give him time to explore the nuances of online short-term rental services.

He said the process is “very premature” currently, but added “safety is the big thing.”

Krebel explained a major competent of potential regulations will include property inspection protocols.   

Voelker said Monroe County State’s Attorney Lucas Liefer is currently reviewing the situation to explore options for the county to establish rules for non-standard property rental practices.

The Village of Valmeyer does not currently have an ordinance for traditional bed and breakfast businesses, although village officials said they anticipate a revision of village code in the near future, which may include consideration of Airbnb-style rentals.

Columbia Community Development Director Scott Dunakey said the issue will be addressed when the city updates its entire zoning code following completion of its comprehensive plan in early 2023.

Columbia “doesn’t have adequate controls” over such rentals, Dunakey said, adding the booking of properties is “harder to track.”

Properties listed on sites such as Vrbo and Airbnb typically do not show site-specific addresses unless a site is booked or a request is sent to the renter, making potential ordinance compliance more difficult.

Another problem which will need to be addressed is the ability of homeowners to rent a premise without having a responsible party nearby.

While Monroe County, Waterloo and Columbia ordinances require operators of bed and breakfast establishments to be on-premise or live on an adjacent property, online rental services encourage rental of homes while the main occupants are on vacation elsewhere.

Also, sites have avenues for rental tenants to “host” for part or all of a unit. While the sites have disclaimers about the need to follow applicable lease agreements and local ordinances, tracking any unsanctioned rental arrangements may prove difficult.  

On a national level, research published in a 2020 issue of the Harvard Business Review across the U.S. found that Airbnb “has encouraged landlords to move their properties out of the long-term rental and for-sale markets and into the short-term rental market,” thus creating a shortage of available properties for people seeking more permanent residence in an area. 

A separate Harvard Business Review article published in 2021 suggests Airbnbs may actually stimulate housing growth. Authors of the study found “people invest more in developing residential properties when demand for Airbnbs increases, and that restricting Airbnbs directly leads to less residential development (and) less growth in home prices.”

Whether the short-term rental industry will encourage or restrict development remains to be seen. 

What is evident in the near future, as anticipated by local government bodies, is that short-term rentals are here to stay. 

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Scott Woodsmall

HTC web