Amid influx of nightly rentals, Park City grapples with a changing community | ParkRecord.com

Amid influx of nightly rentals, Park City grapples with a changing community

The rise of the short-term rental in Park City has greatly affected the housing market. Affordable housing for both buyers and long-term rentals are more difficult to find. (Tanzi Propst/Park Record)

David Lessnick, like many second-home owners in Park City, had a realization one day. He was not using his house all the time, he thought, so he may as well rent it out and earn a few extra bucks. In the early 2000s he heard about VRBO, which allowed him to place his Deer Valley townhome online and more easily manage guests. It was a "no-brainer" to join.

He appreciated that the company was aiming to disrupt the lodging and hospitality industry, giving power to both property owners and visitors.

"They made a place where the pent-up demand could easily go," he said.

And the demand was there. Since launching more than two decades ago, the nightly rental marketplace VRBO has become one of the choice sites travelers use when booking lodging reservations. Airbnb, which started in 2008, gained popularity almost immediately.

The biggest change is what it does to the complexion of the community, what it does to the people who live here and work here,” Matt Dias, assistant city manager in Park City

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Just as Lessnick predicted, the companies shook up the industry, but years later, cities and counties are finding that the repercussions have gone beyond the lodging industry. Housing markets and the fabric of communities have been altered, and Park City is grappling with the changes as much as any town.

And the upheaval is ongoing. According to data from the vacation rental management company Vacasa, the Park City inventory of short-term rentals — defined as a unit where guests stay no more than a consecutive 30 days — increased by 20 percent from 2016 to 2017. The rise of short-term rentals has impacted the long-term rental pool, making it even more difficult for seasonal workers and other Park City employees to find places to live. Meanwhile, the traditional lodging industry is facing competition that is playing by a different set of rules.

The changes have prompted city and Summit County officials to take a close look at the growing nightly rental market, measuring the costs and benefits and ultimately deciding how to best take on an issue that affects just about everyone in town.

'It changes the fabric of neighborhoods'

Everything was different five to six years ago, said Scott Loomis, executive director of the nonprofit Mountainlands Community Housing Trust, which helps people find affordable housing around Summit County. Many property owners would rent their houses or condos out to seasonal workers from November to April. Some also rented their units out for a month or two in the summer, he said.

Now, the owners are listing their units as short-term rentals on sites like Airbnb.

"We've lost probably the majority of the units that used to be available for seasonal rentals," he said.

Because of the shortage of long-term rentals, Loomis said it becomes more difficult every year to place seasonal workers in housing. Instead, they end up sleeping on the floor of a friend's apartment or cramming several people into a unit fit for two to four.

Or, they choose a different town to work in, further aggravating the workforce shortage Park City has been struggling with the last few years.

Small towns near natural amenities such as mountains, lakes and national parks are particularly vulnerable to the impacts of short-term rentals on housing, partly because of the rush of seasonal workers who flood the towns. Park City is no exception, said Danya Lee Rumore, a research assistant professor in the city and metropolitan planning department at the University of Utah.

Oftentimes, small towns do not have a large housing stock to start with, so the inventory is quickly depleted as owners convert their homes to nightly rentals.

Low supply and high demand means the long-term and permanent units that are available become more expensive over time. For that reason, Rumore said rising housing costs, such as those in Park City, are driven, in part, by the short-term rental growth.

In her hometown of Sandpoint, a lake and resort town in Idaho, for instance, the ripple effect is apparent when businesses struggle to hire and maintain employees. Sometimes, they are forced to close.

There is another side of the affordability coin, though. It is generally more lucrative for property owners to collect on nightly rates than monthly rent. Cindy Purvance, who owns and operates four vacation rentals around Park City, said housing costs and property taxes are too high for her to consider switching her units to long-term rentals. If she did change them, she said she doubts she would make a profit.

Cindy Purvance owns four short-term rental units in Park City. She says she can make a much greater profit from nightly versus long-term rentals. (Tanzi Propst/Park Record)

"We stay busy all the time with short-term rentals so, financially, it makes more sense," she said.

She said she bought the properties as investments, and she wants to maximize her profits. Three of the four units were already short-term rentals when she purchased them a few years ago. The fourth was owned by a part-time resident.

Then there is the obvious benefit of being able to access the units when they are not in use, both to make sure the maintenance is up to date and to stay in them herself, if she wants.

As the housing inventory converts from long-term housing to short-term rentals, the makeup of the community is also changing. Park City residents are used to the seasonal changes and the realities of living in a resort community, but the influx of nightly rentals is accompanied by a new set of challenges.

"The biggest change is what it does to the complexion of the community, what it does to the people who live here and work here," said Matt Dias, assistant city manager in Park City.

Many residents no longer have permanent neighbors, for example. And Rumore said most people living in a residential area did not plan on having short-term renters occupying properties beside them.

"If you live on a block and all of a sudden a number of the houses are short-term rentals … it is still different than having your neighbors next door," she said.

She said people like to know that those living beside them are the same ones they will see the next day. That consistency makes people feel secure and better about where they live, and it gives them a sense of being rooted.

"That changes the dynamic of the community," Rumore said. "It changes the fabric of neighborhoods in ways that are challenging."

There are other consequences of living next to a nightly rental unit, as well. Garbage and recycling collection is affected, Dias said, as almost invariably, more short-term rentals means more waste.

Phil Kirk, a captain in the Park City Police Department, said complaints for parking or noise violations after hours are more frequent in neighborhoods with short-term rentals. And he said those type of complaints seem to be on the rise.

"People who are vacationing tend not to have as much concern for neighborhood disturbances as somebody who is a permanent resident," he said.

Ron Neville, president of the Park City Area Lodging Association, said there are some benefits to the online platforms, however.

A big one for the lodging industry is being able to market inventory to guests in a different way. Jim Bizily, owner and CEO of Park City Rental Properties, said all of the company's properties are listed on Airbnb and VRBO.

The nightly rentals do not necessarily pull guests away from traditional hotels or condos, either, Neville said. If anything, it allows people with a smaller budget to visit Park City. More people can visit the town, thus boosting the tourism economy.

"I think it's a great thing, too, to allow more of a diverse population to come experience Park City," Neville said.

Neville said that flexible inventory can be beneficial to Park City. He doesn't see a need to build more lodging that would only be used during peak times throughout the year.

Dias said local municipalities reap some benefits, too. If short-term rentals are licensed and paying the appropriate taxes, they provide the municipalities with more revenue. And more visitation — regardless of where guests are staying — drives other economic growth.

"There are great financial and tourism and economic benefits to the nightly rental economy," he said. "It has been huge for us. We have beautiful parks and playgrounds and we repave streets sooner and clean our sidewalks and sweep and put flowers and banners, and it is because of the resort economy."

Wading into new waters

All of the changes from short-term rentals have forced municipalities to adapt.

Recently city officials, along with Summit County and the Park City Chamber/Bureau, contracted a researcher in overnight accommodations, Brumby McLeod, to take stock of the local housing inventory in order to measure growth over time and plan ahead. McLeod teaches hospitality and tourism management at the College of Charleston's School of Business.

The goal, Dias said, was to observe the current state of short-term rentals in the area, and make data-driven decisions for the future.

With the data, planners will know where to zone and how to zone buildings, for example. The transit and public safety departments can make informed decisions about where they should have bus routes or place more police officers. Waste and recycling services will know where to put more bins.

In his research, McLeod mapped primary and secondary houses, as well as short-term and long-term rentals. He discovered that there were 4,249 listings on Airbnb and HomeAway in Summit County in December of last year.

The majority of them — 3,209 — were located in Park City's 84060 zip code. Another 947 units were in the 84098 zip code in the Snyderville Basin.

Nightly rentals typically spike during busy times like the Sundance Film Festival. According to Jasmine Mora, a spokesperson for Airbnb, there were more than 7,000 Airbnb guest arrivals in Park City from Jan. 18 through Jan. 28 this year during the festival. There were a total of about 4,000 on Jan. 20 alone, which was the highest number of people staying in an Airbnb in Park City ever.

Dias said it's not unusual for many property owners to only list their units for a few weeks a year during peak times. The rest of the year, their properties are empty or sparsely used.

"It's so lucrative to just do Christmas, New Year's, Sundance and maybe Presidents Day weekend, and the rest of the time they don't want anyone at the property," Dias said. "That fulfills the property taxes and HOA fees by just renting out during those two or three weeks a year."

Mora said an Airbnb host will earn, on average, about $2,700 during Sundance.

Currently, Park City is relatively permissive of short-term rentals compared to other mountain towns, according to Dias. As of now, there are only three areas in Park City where nightly rentals are not allowed: parts of Park Meadows, Thaynes Canyon and a small area near Prospector.

Park City is currently soliciting proposals from companies that would build on Brumby's work as the city and county decide what tweaks are needed to regulate short-term rentals going forward.

One of the challenges municipalities face is the prevalence of unlicensed nightly rentals.

McLeod's research examined the number of nightly rentals that have business licenses versus those that do not. In Park City, 2,099 of the 3,209 listings in December were licensed. McLeod told the City Council in a meeting in January that he believes the percentage of unlicensed units in the city is greater than those numbers show, however. The number of unlicensed units tends to spike during peak times when some property owners hop on the chance to make extra money.

(Patrick Schultz/Park Record)

"They temporarily move in, capitalize on the opportunity and move out," he said.

The amount of unlicensed properties is the biggest gripe the Park City lodging industry has with sites like Airbnb and HomeAway. The phrase "level playing field" comes up often when lodging companies discuss the negative effects of online hospitality services that let anyone list a property for rent.

"If anyone wants to run it on their own, that's great, but they should be paying the same taxes, they should be following the same regulations, their units should be safe and inspected," Neville said.

A new Utah law makes it even more difficult for municipalities to ensure short-term rentals are compliant, though. Last year, the Utah Legislature passed legislation stating municipalities could not prohibit individuals from listing or offering short-term rentals on a short-term rental website. Officials are also not able to fine, charge, prosecute or punish someone for listing their short-term rentals online, making it difficult for officials to check sites like VRBO for listings and compare them to business licenses.

Neville said his biggest concern regarding unlicensed properties is safety. Some people might not be compliant with maintaining the locks, fire safety or other security measures. Plus, if visitors have a poor experience staying in a rental, they might leave Park City with a bad taste in their mouth.

There are some counties and cities across the country confronting the issue with an outright ban on short-term rentals. In Washington, D.C., for example, officials are expected to vote on a bill that would forbid property owners from listing second homes as short-term rentals. If passed, it would be one of the most restrictive regulations in the country.

Others are beckoning nightly rentals with open arms.

Utah is a good example of the "middle of the road" approach, McLeod said.

But the vast majority of cities are just now starting to adopt ordinances and regulations, despite the fact that Airbnb was founded and embraced by tourists a decade ago.

McLeod said municipalities need a collaborative approach to tackle the problem because it affects so many sectors. The cities, counties and states could be missing out on tax dollars. Property owners are dealing with an unequal playing field. Residents might be dissatisfied living next to people who are constantly coming and going.

Working together is also what Rumore suggests for areas grappling with the issue. Cities and counties are striving to figure out how to protect the quality of life for residents while balancing a tourism economy.

"I think short-term rentals are a great example of instead of everyone retreating to their corners, we need to come together and say, 'What kind of community are we trying to have here?'" she said.

Dias said the city has not taken a side on whether to have an aggressive or loose approach on short-term rentals. As the city looks at McLeod's research and gathers more information, it plans to make regulations accordingly.

Rumore said there is an assortment of solutions, including limiting the number of short-term rentals a person can own, which is beneficial for small communities with a small housing stock. Or, municipalities might allow a certain number of rentals per block or within a certain distance of each other.

"I really don't think there is a one-size-fits-all. I think that we're going to have to see how it works in your community and see what you are trying to preserve," she said.

McLeod said cities around the world are facing these challenges simultaneously. He was working on a similar project mapping short-term rentals in Iceland after finishing his research in Park City. As people look at the varying effects — both good and bad — from the online platforms, most can agree on one thing: The rentals are not going anywhere. The only variable is how communities choose to react to the change.