Short Term Rentals on the Increase; State, Local Regulatory Oversight Less Certain

Are short term rentals (STRs), better known by their popular brand names such as Airbnb, good news for municipalities or asking for trouble?  A new report by the Southeastern Connecticut Council of Governments seeks to air some of the pros and cons, as some local towns grapple with issues raised by some residents even as the number of stays (and income to hosts) continue to grow rapidly.

The Southeastern Connecticut Council of Governments (SCCOG) is a public agency with representatives from twenty-two towns, cities, and boroughs, formed to provide a basis for intergovernmental cooperation in dealing with a wide range of issues.

Among the member communities is Ledyard, which recently continued to October 23 a public comment session on a proposed ordinance does not allow a residence to be used as a short-term rental for more than 21 days. It requires a permit — a person may have only one — that must be renewed every year. The draft application form shows a fee of $350 for a new application and $150 for a renewal, the New London Day reported recently.

The SCCOG report noted that “the continuing growth of this market presents distinct challenges and possibilities for municipalities within Connecticut,” noting that “at this time, the State of Connecticut has no legislation in place regulating short term rentals statewide (other than a room occupancy tax rate of 15 percent).”

Among short term rentals, Airbnb alone had nearly 6,000 hosts in Connecticut between Memorial Day and Labor Day of 2019, hosting approximately 93,300 guest stays in that period,  Citing the Hartford Business Journal, the report indicated that 20,400 were in New London County,  a significant increase since 2016, when 1,600 hosts were registered statewide.  Published reports indicated that Middlesex County led the state during the summer travel season with 23,700, followed by the counties of New Haven (21,000), New London (20,400), Fairfield (12,400), Hartford (6,900), Litchfield (6,500), Tolland and Windham (1,200).

Between Memorial Day and Labor Day in 2019, Airbnb hosts in Connecticut earned a collective $27 million, a 30.4% increase from the same timeframe in 2018, the report noted.  The SCCOG report added that “It appears that, while people of all ages utilize STRs, the accelerating popularity of such rentals is fueled by younger travelers, and millennials in particular.” 

The report points out that “Some residents and local governments become concerned that the character of residential neighborhoods will change dramatically with the spread of STRs due to an increase in traffic and parking issues. Noise concerns are also common, as neighbors can become anxious that STRs will turn into loud houses where parties are routinely held by visiting renters.”  Other concerns include safety, if large numbers of renters are in areas not otherwise suitable for such numbers, and a lesser standard of inspection, since STRs are not reviewed in the same was as motels and hotels.   

SCCOG also notes that “By permitting STRs, communities that have limited or no conventional lodging can open themselves up to tourism dollars that would not otherwise be available. Municipalities that do have conventional lodging stand to gain from visitors who are looking for a more personalized travel experience.”

The report also suggests some plusses for municipalities to consider as they evaluate whether to put regulations or limitations in place: “by hosting a short term rental, permanent residents can supplement their income and consequently be in a better financial position to maintain and improve their home.”

The SCCOG analysis advises that “It is not inconceivable that the State Legislature will introduce relevant bills in future legislative sessions, but it is currently left to individual municipalities to decide how best to regulate (or not regulate) these types of rentals.”

The report concludes that “regulation of STRs through a municipal ordinance seems to present the greatest number of benefits with the fewest drawbacks. It would allow for more effective enforcement, and also eliminates any issues of grandfathering that may arise from zoning regulations. While the Planning and/or Zoning Commission would likely not have a chance to review the site, specific site criteria could still be built in to the ordinance which would prevent people from obtaining a license to operate an STR if the site requirements are not met.”

And, the report adds, given the likely continued expansion of STRs, municipalities ought to “determine if and how to best regulate STRs locally, sooner rather than later.”