New Regulations Coming...what to do?

Question

Hi everybody-

We have our first STR in a tourist destination and had a very successful first season. This area has perhaps 1000 permanent residents and the primary economy is tourism and always has been. However, we just heard that the area, and specifically our town, is considering new regulations and wanted to see if anybody has any advice. This is completely new as when we bought our place, we checked with the village and nobody was even considering any regulations. I just found out about this on Friday, so haven't had a chance to call the village board to get any additional information.

The regulations being considered that will affect us the most:

• -Talking about requiring a minimum rental night of 7 nights. We rarely rent for 7 nights and obviously make more money with more turnovers
• -Cannot rent for more than 180 consecutive days. Not sure why this is being implemented and how they define it. This year we rented from May-October but we only got it up and running in May and need to put in central heat to rent it year round.
• -Property manager or owner must live within 25 miles of property and must be available 24/7. Currently we self-manage and have a great cleaning team. My guess is we'll have to figure out an agreement with the cleaning team, but we'll obviously have to pay more to them.
• -Limit maximum number of renters to two/bedroom plus two additional occupants, whichever is less. We have 4 bedrooms but can sleep 10 with a sleeper sofa
• -Our parking area is gravel and they're saying parking has to be on asphalt!
• -No outdoor fire pit - people love to have a fire and roast s'mores. Could be a deterrent if other villages decide not to enact this same ban.

Questions:

• -Do we consider selling at this point if these regulations become law and if the numbers don't net us as much as we're doing now or do you think people will raise prices since everybody will be in the same boat?
• -Do we have any legal considerations?
• -What other questions should we bring up at the meeting or to the village board?

Thanks!

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Pam Smith · Answer

@Karen Margrave our place is in Door County, WI. It's a home with no HOA. The state of WI does not allow STR regulations for 7-28 nights so communities can only regulate under 7 nights. I have a license through the county, but now each individual community is pursuing their own regulations, including implementing a separate license for each community. Just curious if a lawyer has any ground to stand on to help get us grandfathered if that's not an option the community presents.

Pam Smith · Answer

Thanks all! The Village had a very productive conversation yesterday and it sounds like they are not interested in putting in too many restrictions but it's going to be open for public comment next month. We had a very successful first year last year, and already have half of the summer booked, so hoping they don't restrict any further!

@Michael Baum thankfully VRBO and Airbnb automatically updated the tax amounts in January. VRBO even is going to pay the difference in taxes for bookings made in 2021 for 2022.

@Wes M.Thanks so much for that language! If the they do restrict any further, I'm going to most certainly advocate for this language. I've already been in touch with several village board members.

Michael Baum · Answer

Hey @Pam Smith so there is some info on the bottom of the latest newsletter. It is pretty vague about the permit. It says you need it before getting started but it doesn't say if it is a county or city permit.

https://ephraim-wisconsin.com/...

There is really no other info on the site that specifically covers it. There was a mention in a previous newsletter of someone wanting to buy a former BnB and possibly using it as a AirBNB/VRBO unit. It mentioned the possible changes to the rules like you stated, but it hadn't been decided yet.

I think you need to get on the horn and have a long discussion with the folks down there. The home must be inspected before going online and operating.

EDIT - Also the new PRAT (Premier Resort Area Tax) tax takes effect Jan 1 2022. 14% occupancy tax for all resort type stays. That includes AirBNB/VRBO.

Wes M. · Answer

Sorry this has happened to you. It will be critical to determine if they intend to include an "amortization" clause, which will require existing STRs to come into compliance (or seek to exist) within a certain time frame. You can advocate that existing STRs become legal nonconforming uses ("grandfathered") so that you would continue to exist as is. I hope that helps!

Pam Smith · Answer

@Michael

@Michael Baum we're in Ephraim

Michael Baum · Answer

Hey @Pam Smith, what village/town is it located in. I looked at the Door County rules and they heavily rely on the local municipality for rules and regs. It would really help to know the exact town so we can read the proposed rules in the minutes.

Seeing as you have a current county license, I am not sure it will have any bearing on what the village/town does.

Mike Shemp · Answer

If it turns out you are grandfathered in, and the grandfathering occurs at the deed level and not the owner level, your house might be worth more than it is worth right now since you own a home that can be used as an STR without the regulations.

Mike

John Underwood · Answer

If these changes turn into law I would consider selling or changing to a LTR. If you sell you may take a loss as other people go to dump properties also.

New Regulations Coming...what to do?

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