Sep. 15, 2014 Letter to City Council

On September 15, 2014, the following letter was submitted to our City Council. The PDF of this submission can be downloaded from LettertoCityCouncil-15-Sep-2014.pdf. The exhibits can be downloaded from 2014-10-13-City-Council-Full-Agenda-1361-pages-392-402.pdf. Here is the text of the letter:

September 15, 2014

City Council
City of Lincoln City
PO Box 50
Lincoln City, OR 97367

Re: “2014-09-15 City Council – Full Agenda-1353.pdf”[1] (September 12th version)

Honorable Councillors,

This letter is in reference to the September 12th version of the Agenda Packet for the September 15th, 2014 Council Meeting, named “2014-09-15 City Council – Full Agenda-1353.pdf”, which was downloaded from the City’s website. The page numbers referenced below, are those of the PDF itself.

First, let us state for the record, that it appears that the ordinances are still being heavily edited, with several options still to be decided on. In fact, the above PDF that was downloaded on September 12th is different than the one that was downloaded on September 10th. This makes it difficult to determine what, exactly, the final proposed ordinances will be. Therefore, we reserve the right to make additional comments as updates are published. Here is our feedback of the PDF that was published on September 12th:

Regarding the Council Communication memorandum

Page 2 (of the PDF), paragraph 4, states that the City will be immune from Measure 49 claims, as the accessory use limitation has been unchanged in the law for 5 years. This claim is repeated on page 4, paragraphs 4-5, and again on page 5, paragraph 1. This is not an accurate assessment. When new law is enacted that significantly changes the interpretation of previous law, then Measure 49 claims will have merit. As such, all Lincoln City homeowners may file valid Measure 49 claims, not just existing VRD owners.

Page 6, item vi., cites a 1985 LUBA decision (about a Costco, not a VRD) regarding the interpretation of the term “incidental and subordinate”. Please note that this is not the only case regarding this term, nor is it definitive. In truth, the interpretation of “incidental and subordinate” is far from settled in the law. For numerous case citings on more recent legal interpretations of “incidental and subordinate”, please see the attached Exhibit A: a letter from Oregonians in Action to the Deschutes County Board of Commissioners, dated August 24, 2012[2].

Page 6, item xiii, states:

LCMC 3.04.050 contains an exemption consistent with IRS regulations that VRD rentals less than 15 days a year are considered exempt from TRT. The IRS considers such use minor use; however, 15 or more days of rental triggers consideration of the home as principally devoted to rental use.

An IRS website shows[3], the IRS considers a vacation home to be a personal residence, unless an owner rents the home for more than 300 days a year.

Page 7, paragraph 2, states:

Council will be provided with draft findings as soon as they are available.

The City has an obligation to make these findings available to the public, and allow an appropriate amount of time to give the public an opportunity to respond to the findings,before the ordinances are enacted.

Page 7, paragraph 4, states:

… the de facto operation of commercial businesses in residential zones reduces the City’s available residential housing stock and the required available mix of housing opportunities.

LCMC 17.16.030(B) specifically allows for home-based businesses in residential zones, so denigrating vacation rentals as “de facto operation of commercial businesses” is disingenuous, and exemplifies a bias against short-term rentals.  Also, it does not appear that the City has presented any evidence to substantiate the claim that short-term rentals reduce the availability of residential housing.

Page 7, paragraph 4, also states:

Since the City has repeatedly told the Oregon Department of Land Conservation and Development that VRD use is merely an accessory use in a residential zone, the City risks enforcement action by the Department or by interested land use public interest groups and citizens to enforce the accessory use limitation.

In regards regulating vacation rentals in Lincoln City, Patrick Winguard, North Coast Field Representative, for the DLCD stated: “I don’t expect the DLCD to be participating, certainly not in any sort of enforcement way.”

If there is in action, or even a threat of an action, against the City, this information should be included in the record. Otherwise, this statement should be updated to indicate that there are no present threats, and that it is highly unlikely that there will ever be, at least from the state.

In fact, there are an estimated 9,000 short term rentals in Oregon, in a large number of communities, and the state has never raised a concern or taken a legal action against a community for having short term rentals.

Regarding the proposed Ordinance 2014-21 (New VR District)

Page 8, item A., states

The proposed amendments are in conformance with the Statewide Planning Goals and Lincoln City Comprehensive Plan goals…

In reviewing Oregon’s Statewide Planning Goals[4], none of the Goals, including Goal 10 (Housing), discourage short-term occupancies.  In fact, the only direct mention of short-term occupancies is in Goal 8 (Recreational Needs), on page 6, under Overnight Lodgings, where short-term occupancies are specifically encouraged.

Goal 8 also says “Meet recreational needs requirements while providing the maximum conservation of energy both in the transportation of persons to the facility or area and in the recreational use itself”, “Are available to the public at nominal cost”, and “Meet needs of visitors to the state.

Studies have shown that visiting families staying in regular homes consume 63% less energy, 12% less water, produce 61% less greenhouse gases, and 32% less waste,  than if they had stayed in a hotel/motel[5]. In addition, homestays cost 50% less than hotels[6], and visitor’s needs are better met[7].

Goal 9 (Economic Development) is achieved[8] by allowing visiting families to stay in regular homes. Goal 13 (Energy Conservation) is also achieved, as shown above.

In regards Lincoln City’s Comprehensive Plan’s goals, allowing visiting families to stay in regular homes, achieves our Economic goal (page 28):

To support the tourist industry and achieve a degree of diversity in the community which will allow a balanced economy that will, in turn, support an adequate level of services for all members of the area.

Allowing visiting families to stay in homes provides the very diversity mentioned, while supporting our tourist industry, which is Lincoln City’s primary industry (according to theComprehensive Plan).

Our Energy goal (page 36) to “conserve energy”, is also achieved, as shown above.

Page 8, item A., also states “as addressed in the Detailed Findings attached as Exhibit A”.

Neither the September 10th, nor the September 12th version of the PDF, appear to contain a document labeled Exhibit A. Please advise where this Exhibit can be found, or when it will be made available.

17.18.010(A) (page 10, line 37) states: The VR zone “… has sufficiently sized public facilities and services to accommodate the intensity of vacation rental use ….”

As shown in the study cited above, a vacation rental is actually much less intensive than a hotel occupancy. It is also less intensive that a full-time occupant in the same accommodation.

17.18.010(A) also states:

While the VR zone permits residential use, it is intended for use in discrete geographic areas devoted to vacation rentals or as a transition between commercial zones and purely residential zones, and therefore facilitates the protection and stability of established neighborhoods.

Yet on page 9, item G. it states “Council next directed the creation of a new mixed use [VR] zone, based on the YES and VROZ overlays proposed….” which disagrees with the statement found in 17.18.010(A) above.

Most of the YES and VROZ overlay zones contain “established neighborhoods”, so the clause “and therefore facilitates the protection and stability of established neighborhoods” should be removed from the ordinance. Also, it does not appear the City has shown that short-term occupancies destabilize established neighborhoods.

17.18.010(B) (page 11, line 5) states:

This [VR] zone would be appropriate for discrete geographic areas where tourist accommodations would not disrupt established residential neighborhoods.

It does not appear the City has shown that short-term occupancies disrupt established residential neighborhoods.

17.18.010(B) (page 11, line 5) also states:

Owing to the increased intensity of use,

It does not appear the City has shown that short-term occupancies are more intensive than longer-term occupancies.

17.18.010(B) (page 11, line 5) also states:

VR areas must be in close proximity to the community’s attractions and recreation uses;  further such areas must be served with the full complement of public facilities and services, including specifically sewer. This zone is appropriate in proximity to commercial zones, existing multi-family residential development, as well as a transition between commercial  zones and established single family residential zones.

Again, the text above directly contradicts the statement that “Council next directed the creation of a new mixed use [VR] zone, based on the YES and VROZ overlays”. Most of YES and VROZ overlays do not share the characteristics described above.

Regarding the proposed Ordinance 2014-22 (Accessory Use & Existing VRD Allowance)

Page 19, SECTION 1, states:

“Vacation rental dwelling” (VRD) means a dwelling unit that is used, rented or occupied on a daily or weekly basis, or is available for use, rent, or occupancy on a daily or weekly basis, or is advertised, or listed by an agent, as available for use, rent, or occupancy on a daily or weekly basis.

This definition is clear, and unambiguous. If a home is not occupied on a full-time basis by an owner, or tenant, then the home is a VRD. The home does not need to be rented, or even advertised, but must simply be “available for use … on a daily or weekly basis”. This broad definition means all second homes are VRDs. The city attorney, Mr. Appicello concurred with this interpretation in the August 25th Council meeting, when he said “with or without compensation”.

Given that, the definition is in direct contradiction with itself, as how can a dwelling be a “rental dwelling”, if no rent is involved? Does this mean that owners cannot allow family members and friends to stay in their home for more than 30 days a year, and must register for the right to do so? If so, it violates our civil rights to freedom of association as granted us in the First Amendment. As such, this definition must be rewritten so that a “Vacation rental dwelling” actually requires “rent”, and not just “use”. Otherwise, using the word “rent” throughout the ordinances is misleading, and disingenuous.

For example, the very next sentence is “Subject to site design standards, a VRD is a permitted commercial use”. If the definition of a VRD does not include the actual taking of rent, then how can any occupancy, where no compensation is involved, possibly be seen as a “commercial use”? As a result, the ordinances become inconsistent, and contradictory, as the word “rent” is used throughout the ordinances.

If this is not corrected, the ordinance would allow the City to fine an owner $1,100 dollars a day when friends and family use the owner’s home, after the 30-day limit is up.

Please note that in the August 25, 2014 Council meeting, Councillor Ryan asked if the new ordinance would apply to “multiple members of families or church” who “contribute to the care” of a home, but he was not able to finish asking his question, and his question remains unanswered.

Page 19, SECTION 1, goes on to state:

Subject to site design standards, a VRD is a permitted commercial use, and like other commercial uses, is expressly prohibited in residential zones …

As noted below, the Oregon Supreme Court ruled in 1997[9] that vacations rentals are a residential, and not a commercial, use.

Regarding the proposed Ordinance 2014-23 (VRD Standards)

Page 34, line 11, states

WHEREAS, all persons were provided an opportunity to present written or oral testimony on the proposed ordinance(s).

Since the latest version of ordinances appear to have only been made public on September 12th, the City must leave the record open for at least 30 days from that date, for Lincoln City voters to review the revised version, and to provide adequate time to receive written responses. Since this is a legislative issue, the City is under no timeline to reach a decision. While additional oral testimony may not need to be required, certainly written testimony should be allowed. Three days is certainly not enough time to do a proper legal review of the 69 page PDF, and to provide a proper response.

Also, given that the above referenced PDF contains numerous references to an “Exhibit A”, but that the exhibit does not appear to have been included in the PDF, or made available on the City’s website, the City should provide this exhibit, and then leave the record open for at least 30 days after its publication, to provide the public an opportunity to respond accordingly.

Page 41, line 16, states:

The Special License for VRDs located in Roads End recognizes that City land use limitations do not currently apply to the Roads End area as defined in Ordinance 2012-10.

This statement discriminates against all owners who own homes in areas other than Roads End.

Page 45, line 3, states:

Lawfully established VRDs in Roads End (as defined in Ordinance 2012-10) existing and lawfully operating as of July 1, 2013, shall not be counted as more than one VRD ownership when applying the VRD ownership limitation of this Chapter.

This statement discriminates against all owners who own homes in areas other than Roads End.

Page 49, line 38, states:

When the VRD is in a residential zone and operated as an accessory or conditional use, the owner shall maintain a detailed record for each tenancy of the vacation rental, including a log of all vacation rental dwelling occupancy nights. The record shall include the name, address, and telephone number of the tenants and the dates of the rental period and associated rental charges. The detailed record shall also detail the owners personal use and occupancy of the vacation rental dwelling. The record shall be maintained as confidential records by the owner/manager. The record shall be available for city inspection upon request and the record shall be submitted to the City with an application to renew a license.

This statement is discriminatory for two reasons: 1) it does not apply to all VRDs, and 2) it does not apply to all other forms of tenancies, such as hotel/motel, bed-and-breakfast, and month-to-month tenancies, timeshares, camping, etc. We could find no legal precedent for the requirement that records be kept of non-renters, and requiring this information will be found to unconstitutional, as it violates the unreasonable search and seizure clause of the Fourth Amendment, as well as the due process clause of the Fourteenth Amendment. As such, this clause must be removed from the ordinance. By including this clause in the ordinance, the City indicates that it does not wish to treat all its citizens with equal respect and consideration.

Page 65, line 31, states a VRD owner will be fined $660.00 and have his license revoked if:

4. The tenants of the vacation rental dwelling created noise, disturbance, or a nuisance in violation of the standards established in the Lincoln City Municipal Code; 5. The tenants of the vacation rental dwelling violated state law pertaining to the consumption of alcohol or the use of illegal drugs.

It is discriminatory to penalize a homeowner for the actions of the home’s occupants, for the same reason as given above: it does not apply to all other forms of tenancies, such as hotel/motel, bed-and-breakfast, and month-to-month tenancies, timeshares, camping, etc.. It also may violate the due process clause of the 14th Amendment.

The Oregon Supreme Court has ruled vacation rentals are a residential use

In 1997, the Oregon Supreme Court upheld[10] a lower court decision which stated that:

a)  rental of a vacation home by a family to other people did not violate restrictive covenants that required that the home be used for “residential” purposes, and

b)  the practice of renting a vacation home does not constitute a “commercial” activity.

The home in the decision is located in Lincoln County, Oregon

Maps of the new VR Zone should be provided

The City has stated that the new VR zone, will be based on the YES, and VROZ overlays zones. But without maps, how can we be sure that this will, in fact, be the case? When the new VR zone was first proposed, a couple of draft maps were provided. Why not include these again? Without maps, the public has no way of knowing what the City is thinking about these zones, so the concept of a VR zone is meaningless.

Regarding “accessory use”

  • There is no commonly accepted legal definition of “accessory use” that dictates a restriction on the number of days an activity can take place.  “Accessory use” is interpreted a variety of ways, using the following criteria, for example:
    §  The portion of the property that is used differently.
    §  The importance of the usage, where the accessory use of renting allows that owner to continue the primary use of holding on to a property that has been in the family for generations.
    §  Accessory uses can be continuous uses.   A parking garage in an office building may be designated an accessory use, but it would be silly to say it could only be used one month out of the year.
  • It is true that other cities have accessory use restrictions, but strict limitations on the number of days a short term rental can be rented are the exception, not the rule.
  • The city has never enforced existing accessory use restrictions, and there is no evidence that this lack of enforcement has harmed the city or its citizens.
  • People have invested in properties based on past interpretations by the city of the existing regulations for short term rentals.   Suddenly implementing a new and more restrictive interpretation of accessory use financially harms city taxpayers.

For reference, please see “Treatment of Accessory Uses in Land-Based Classification Standards” on the American Planning Association’s website[11].

In zoning, identifying accessory uses allows communities to selectively permit (or to prohibit) uses associated with the principal use of the land.

Vermont’s statutes state that “no regulation may infringe upon the right of any resident to use a minor portion of a dwelling for an occupation that is customary in residential areas and which does not change the character thereof.

Whether a use is accessory or not is determined by its relationship to the principal use, and this relationship depends on criteria beyond those applied to differentiate, categorize, and tabulate land-use maps, inventories, and designations in plans. In short, what constitutes accessory is entirely dependent on local circumstances and standardizing an accessory uses list would be ineffectual because any specific list of accessory uses is going to be either too limited to encompass all permutations and combinations or too exhaustive and perhaps even rival the entire land-based classification system in the number of uses.

For reference, please see Chapter 17 of Albemarle County’s Land Use Law Handbook “Classifying Primary and Accessory Uses” on Albemarle County’s website[12].

Let’s address some of the assertions that have been made

It has been repeatedly asserted that accessory use clauses are the norm in the regulation of VRDs. The fact is that this is not a common approach to VRD regulation in Oregon or nationally.

It has also been repeatedly asserted that accessory use can only be interpreted in terms of the number of days a place is rented, when there is no legal definition that backs that up and there is significant documentation that there is no single legal definition and that accessory use is interpreted in a variety of different ways.

It has been asserted that the Consensus Group declared that VRDs are commercial businesses when no such declaration was made.

It has been asserted that defining VRDs as commercial businesses is the norm in regulation of VRDs when in fact, although there is considerable confusion on the topic, most jurisdictions do not formally define VRDs as full-fledged businesses, and court cases have held that the number of days that someone resides in a dwelling does not by itself make a short term rental a business.

It has been asserted that the city will get Measure 49 claims if they don’t change the law, when there have been no such claims so far, and when the provisions of the proposed laws will almost certainly generate valid Measure 49 claims.

It has been asserted that the laws need to be changed in order to generally comply with state laws and protect the city from actions by the state, when, with an estimated 8,000 to 10,000 VRDs in the state, there are no known cases where the state took action against a jurisdiction as a result of insufficient regulation of VRD activity.

For transparency, let’s include everything in the record

To be as impartial and transparent as possible, the City is required to include the following into the record of these proceedings:

  • All previous drafts of the ordinances
  • All staff findings
  • All proposed maps
  • All written testimony
  • All oral testimony
  • All internal documents, including those from city staff, city officials, public agencies, citizens and taxpayers
  • Records of the reasons for hiring a consensus group consultant
  • Records of the consensus group meeting proceedings and results

Only minor recommendations of the Consensus Group are being implemented

While the VRD Consensus Group received the Mayor’s Award, and the Mayor’s website[13], states

This [Consensus] group of individuals has pioneered, what I believe to be, the way in which communities and its citizens should resolve issues

the proposed ordinances implement only three minor recommendations (Maximum Occupancy and Landscaping, and Trash) of the Group’s 20 recommendations (see the attached Exhibit B). Is it in the City’s best interests to have spent $50,000.00, only to completely ignore the important results of this award winning hard work, involving hundreds of hours of volunteer effort?

Home-based businesses should also be restricted to 30 days a year

LCMC 17.16.030(B) allows for home-based businesses, gardens, and animals, as accessory uses, in residential zones. If the proposed ordinances define “accessory use” as “used only 30 days per year”, then this restriction must be applied to all accessory uses, including permanent structures such as guest houses, solar systems, and windmills. The City will need to require these to only be used for 30 days per year. Otherwise, claims of discrimination and negative bias will be raised.

Will Villages at Cascade Head be zoned VR?

Villages at Cascade Head was originally envisioned to allow for vacation rentals, but due to the restrictions of the proposed LCMC 17.18.010(B), it will not be allowed to be zoned VR. Does the City want to constrain itself by limiting the saleability of homesites in Villages at Cascade Head by not allowing it to be zoned VR? If the City ignores LCMC 17.18.010(B) and instead zones Villages at Cascade Head as VR, what message does that send to homeowners who cannot get VR zoning due to LCMC 17.18.010(B)’s restrictions? That the City puts its own interests ahead of its taxpayers?

A balanced overview on short-term rental restrictions

In 2011, the National Association of Realtors asked Robinson & Cole, LLP to write a White Paper[14] about Vacation Rental Restrictions. The author was Brian W. Blaesser. This is one of the best and most balanced overviews to be found about the regulatory issues vacation rental owners face. Here are some excerpts:

… some short-term rental regulations might also cause an owner to lose rental income because of suspension or revocation of a rental permit, even if the reason for suspension or revocation is beyond the owner‘s control (e.g., tenant behavior).

… added limitations on the use of properties that short-term rental housing restrictions impose may cause property values in the district or neighborhood to decrease.

A widespread ban on short-term rentals that results in a substantial number of homes being sold or foreclosed upon may flood the market, causing property values to fall and remain depressed for a period of time.

… tourists who become aware of the new restrictions may perceive them as being motivated by, and evidence of, an anti-tourist sentiment among full time residents of the community.

… short-term rental restrictions that negatively affect local tourism could cause tax revenues to decrease if restaurant and retail sales are down due to diminished tourism.

It is well established that a land use regulation that is excessively restrictive may constitute a ?taking of property for which compensation must be paid under the state constitution and the Fifth and Fourteenth Amendments to the United States Constitution.

Communities that have not adopted general community-wide noise regulations or the other regulations aimed at curtailing the types of behaviors and activities that would be regulated under a short-term rental ordinance, should be encouraged to adopt such general regulations rather than to single out short-term rental properties for regulation.

Other thoughts

Courts have found that the length of tenancy does not make short term rentals substantially different than longer term rentals.

Most jurisdictions are able to regulate short term rentals appropriately without defining them as commercial operations.

Currently all short term rentals in residential areas are not subject to the same restrictions.  The city has not shown a valid reason why some short term rentals should have restrictions that other short term rentals in the same jurisdiction and zoning do not have.

The city proposes that short term rentals in residential zones should have restrictions that short term rentals in commercial zones do not, without justification.

The zone that a property is in does not in and of itself determine how the property should be governed. For example, an owner occupied home that is on commercially zoned lot, would never be regulated like it was a commercial business. Similarly, an apartment building that was rented month to month and is in a commercial zone is not subject to different regulations than it would be if it was located in other zones.

In summary

Based on the above analysis, it is clear that these ordinances, if enacted as is, will cost the City significant time and money, to defend in Court. In addition, all homeowners will be able to file Measure 49 claims, as well. Owners could even file a class action lawsuit. As written, the ordinances will be struck down by the Court, or by a future City Council, due to the numerous constitutional issues that have been noted.

It has already been brought to the Council’s attention the inevitable loss of jobs, home values, foreclosures, tourism loss, and severe economic impact that these ordinances will cause all of us, not just VRD owners, so we will not belabor those points. But please consider that Ashland, Austin, New York, Paris, Portland, San Francisco, and many other major cities, are now implementing best practices to allow owners to responsibly share their homes with visiting families. Do we really want to be seen as going against the tide of public opinion on this issue, and telling visitors to go somewhere else, as they are not welcome here?

With the right to draft new ordinance, comes the obligation and duty to ensure that new law is just, unbiased, and applies equally to all. Unfortunately, the draft ordinances put before you, do not meet these requirements, and should be corrected, or they will be found unconstitutional.

[7] Ibid.

[10] Ibid.