Success stories: Astoria and Hood River aligned vacation rental regulations with community housing goals to encourage more homes for local residents
Astoria and Hood River have both developed creative ways to regulate short-term rentals (STRs) to maintain rental housing options for full-time residents. Astoria (pictured, photo by Dan Klimke) requires that all STRs are the primary residence of the owner, and the owner must be on-site during the rental period. Hood River has the same requirement and also requires that operators pay a Transient Lodging Tax, similar to that paid by hotels.
These policies help keep Oregon’s tourist economies from losing their unique character—including by preventing the displacement of the workers and residents that make them special in the first place.
Here are a few examples of incentives that are poorly aligned with housing needs:
- Oregon’s property tax system incentivizes landowners to maintain vacant land without developing it, even in high-value areas.
- Many cities’ system development charge (SDC) systems incentivize homebuilders to build large, luxury housing rather than smaller and more diverse housing options that are relatively more affordable.
- For some landlords, renting their houses as short-term vacation rentals is more profitable than a long-term rental to local employees or residents.
- Labor availability often makes it easier and more cost-effective for homebuilders to build in large cities instead of rural areas.
- Risk analysis often disincentivizes banks from lending to homebuilders who want to create multi-unit, affordable, rural, or otherwise “risky” development.
Many policies can be used to address these issues. Here are a few that have been successfully implemented in Oregon towns and cities:
- Tiered or deferred system development charges (SDCs) allow homebuilders to build smaller and more affordable units at a fair price. Tiered SDCs mean that builders pay a development fee that is proportional to the size of the new home. Deferred SDCs mean builders may defer payment until after the home is built. For example, the city of Albany offers an option for builders to defer SDC payments until final inspection.
- Regulating short term rentals, such as creating residency requirements, can limit the impacts of STRs on local housing markets and make more longer term housing options available.
- Lease-to-locals programs and empty homes taxes/fees can incentivize second homeowners to long-term rent or sell their homes rather than leave them vacant.
- Reform of Oregon’s property tax system has often been proposed for a variety of reasons and purposes, including to ensure that cities can fund infrastructure and homebuilding is incentivized.
Success story: Albany aligned system development charges with housing goals to promote ADU building
The city of Albany has recognized that allowing smaller home sizes and accessory dwelling units (ADUs) is a good way to create more home options for local residents, so the city updated its development code to allow larger ADUs (pictured).
However, staff noticed that even though ADUs were legal and sizes were expanded, they still weren’t getting built. Conversations with builders revealed that Albany's System Development Charges (SDCs) were set at the same level for a small home as they were for large homes, making it prohibitively expensive to build a small home.
Albany then modified its SDCs so that smaller homes and ADUs would have smaller SDCs. The city also modified its development code to allow for scaling of minimum lot sizes based on the proposed home size. Not only is this fairer, it also incentivizes builders to build more small homes. Since then, Albany has seen a wider variety of home sizes being proposed, providing compact infill homes for residents and more entry level homes in new residential developments.
Ensure diverse home choices (types, sizes, and price points) that meet the needs of all Oregon households are allowed by local laws and are buildable in all neighborhoods.
Evaluate the permitting review process for new developments and remove barriers, redundancies, and unnecessary delays.
Strengthen necessary segments of the homebuilding workforce and ensure these workers can afford to live in your area.
Establish innovative ways to fund new homes and infrastructure and/or reduce the cost of building, buying, or renting homes.
Establish policies to maintain existing affordable housing, prevent displacement, and improve accessibility.
Identify and amend financial and practical incentives to ensure they work towards community housing goals.