As a progressive state with a population of less than 625,000, Vermont has long been a laboratory for lawmaking. Legislation in Vermont can serve as a pilot test for larger states with similar goals.
That trend has continued in its approach to regulating short-term rentals. Owning a vacation home in Vermont is a time-honored tradition built on the state’s picturesque beauty and appealing ski resorts. According to 2019 Census Bureau data, about 17% of Vermont’s total housing units are second homes.
Not all of those are rented out as vacation rentals. According to the Vermont Housing Finance Agency’s 2020 Housing Needs Assessment Report, short-term rentals make up 2.5% of the state’s total housing stock. The agency’s most recent tally (March) estimates there are about 8,300 short-term rentals across the state.
In the past two years, local and state officials have honed in on regulating vacation rentals. The regulations have largely been piecemealed from town to town, though Vermont does have some statewide rules in place.
The Vermont Short-Term Rental Alliance will cover the following legislative updates and more on advocacy across the state in their upcoming 2022 Vermont Short Term Rental Conference & Trade Show on June 2-3 in Montpelier, VT.
Vermont currently has a statewide safety checklist for short-term rentals, which safety experts hail as the strongest of its kind. (The list, issued by the state fire marshal, goes beyond the quintessential smoke alarm to include GFI outlets, railing heights, stair railings, and other in-depth requirements, said Justin Ford of Breezeway.)
For two consecutive years, state lawmakers have also attempted to create the nation’s first statewide rental registry, which would include short-term rentals. Gov. Phil Scott vetoed the 2021 bill, Senate Bill 79. (Last year the legislature also considered House Bill 200, which would have disallowed out-of-state residents from renting their Vermont second homes as vacation rentals, but it did not pass.)
This year’s version, Senate Bill 210, looked as if it would meet the same fate – even though lawmakers weaved in provisions to exempt some short-term rentals from having to register.
In order to avoid another veto, lawmakers on May 10 scrapped the rental registry from the bill and instead established a Rental Housing Investment Program.
Designed to increase the state’s limited housing stock, the program would provide up to $50,000 per unit to help homeowners renovate their properties or build accessory dwelling units. (Grant recipients would be prohibited from short-term renting buildings that receive this funding.)
The compromise bill also adds $400,000 to fund five full-time positions for a statewide safety inspection program to enhance safety at both long-term and short-term rentals.
Under the legislation, the state Division of Fire Safety would assume responsibility for rental property inspections from town health officers whose roles currently include responding to health and safety complaints at rental units.
Julie Marks, founder and director of the Vermont Short-Term Rental Alliance (VTSTRA), credits the slowing of both bills to the wave of engagement from short-term rental advocates.
“I think the massive public reaction that occurred after House Bill 200 was introduced had a big effect,” she said. She recounted being in the Statehouse in April and legislators still acknowledging how many emails they got in response to the bill.
Marks was at the Statehouse because she was one of a handful of people invited by a House committee to speak in person on Senate Bill 210. VTSTRA generally supports a registry with some modifications. For example, she cited the exemption for operators who rent less than 90 days a year as something the organization appreciated.
For those who rent more than 90 days per year, the legislation would have required homeowners to register their rental property annually with the Vermont Department of Housing and Community Development, pay an annual $35 registration fee, and provide detailed information about the rental unit.
Proponents of the registry say it would provide much-needed data about available housing in the state that could help inform how to invest tens of millions in federal housing dollars.
Several towns and cities in Vermont have already started registries for short-term rentals amid a groundswell of efforts to attempt to regulate the industry. The state bill would have consolidated that information into a statewide database.
The Vermont state legislative session runs through May. It is unclear if the statewide rental registry attempt will resurface again in 2023.
Local Perspective: Burlington
Burlington was one of the state’s first major municipalities to consider new rules. In response to the city’s housing shortage, Burlington City Council in February passed an ordinance that prohibited short-term rentals anywhere except inside permanent residences. The ordinance would have significantly reduced the number of short-term rentals in the city.
However, Burlington Mayor Miro Weinberger vetoed the ordinance in March, saying that it violated residents’ property rights.
“The City should not be interfering with the ability of residents to make personal decisions like this, and I am concerned that in doing so we will cause some residents serious hardship,” Weinberger wrote in a letter to city councilors.
He argued that the ordinance should allow property owners to add a separate short-term rental unit to their property such as an accessory dwelling, duplexes, or triplexes.
By levying a new fee or tax on short-term rentals, the city could generate income for building more affordable long-term housing through the city’s Housing Trust Fund.
City Council did not have the votes required to overturn the veto.
The successful end to the nearly two-year process was the result of the endurance and effort of dozens of people, said Marks, who was also a founding board member of the Burlington Short-Term Rental Host Coalition (now a chapter of VTSTRA). Advocates worked hard to form relationships with their council members and mayor and craft a unified message with solutions to their mutual goals.
“Having those two years to get to know the council, and to get to know each one has their own issues and agendas, we were able to tailor our conversations to each of them to collectively bring about an outcome that was desirable for us,” she said.
Still, Marks noted the legislative process is never over, and the end of every session means it is time to prepare for the next one.
Read more: Small State, Big Opportunity: How the Vermont STRA Incubates Innovation
In Burlington, their legislative “off season” was a quick one. Following local elections in early April, the newest cohort of council members began reworking the ordinance. A compromise ordinance by Councilor Sarah Carpenter addresses the mayor’s concerns while still slowing the growth of short-term rentals in the city.
The proposal would allow a short-term rental in accessory dwelling units, duplexes, and buildings with up to four units in addition to primary residences. If a host owns a multifamily building with one “affordable” long-term unit, they would be allowed to short-term rent a separate unit in the same building.
Councilors also were discussing adding a short-term rental fee that would help support the city’s Housing Trust Fund for affordable housing projects.
The councilors voted to have a committee review Carpenter’s proposal and report back with feedback and recommendations by June 1.
Photo courtesy Craig Tidball