City monitors growth of vacation rental industry
Vacation rentals are increasingly common in Newberg's downtown core. They are growing the supply of what has sometimes been considered a shortage of lodging units in the city. Housing affordability advocates and city officials, meanwhile, are taking a wait-and-see stance on how the trend affects housing supply for the city's long-term residents.
There are 31 vacation rentals operating in the city, according to the community development department. It's up from 13 officially operating about a year ago, as this newspaper reported at the time, but is still a modest figure for a city of Newberg's size.
Figures compiled between 2010 and 2014 by the U.S. Census Bureau and Portland State University indicate the city had roughly 7,900 housing units at that time.
The vacation rental figure includes a variety of non-hotel entities renting to visitors for fewer than 30 days. It can be single-family homes or bed-and-breakfasts, as well as buildings with multiple units for rent on a short-term basis. The Yamhill Flats rentals at First and Howard streets are an example of the latter category.
All vacation rentals are required to pay the transient lodging tax (TLT), money that is divided between the city's general fund and tourism promotion, just like hotels and motels. The city learns which properties are operating as vacation rentals through conditional use permits that are required in some cases, and through rentals registering with the city.
For those that fly under the radar, the city discovers them in the same way customers do.
"We still go and look on the travel websites, AirBnB and others, to look and see who's advertising," said Doug Rux, director of the community development department. If any of the advertised properties are not registered with the city, "We send them a welcome package and remind them that they are required to pay a transient lodging tax," Rux said, as well as to check they are following land use guidelines.
Regulations for a single-family home wishing to operate as a vacation rental are fairly straightforward. The property owner or a representative must submit a conditional use application and go before the planning commission for consideration. They are required to provide two off-street parking spaces, to provide standard utilities including garbage collection, to post certain notices explaining that the property is a vacation rental, and more.
Four single-family homes have gone through the conditional use process in the 2017 calendar year, Rux said.
Where are they?
Thirty-one units is a small portion of the city's housing stock, but certain neighborhoods have seen more interest in renting short-term than others.
"The highest number of vacation rentals is occurring north of downtown, north of Hancock Street up to the railroad tracks, and then south of First Street going down towards the river," Rux said. There are a few outliers at the east end of the city and north of the railroad tracks, he added.
The downtown area has been prime vacation rental territory for a few reasons. Rux pointed to the proximity to shopping and restaurant destinations, as well as the Chehalem Cultural Center.
Local homeowners have converted their properties to vacation rentals for a range of reasons. Of the recent applications, one couple purchased a home so their son could live in it while attending George Fox University during the year, and then rent it as a vacation unit during the summer. Another owner converted an accessory dwelling unit on their property into a vacation rental rather than renting it to long-term tenants. A local business owns a property and uses it as a second home, and then rents it to visitors while its not in use.
Others, Rux said, are using it to augment their income in order to help make mortgage payments on their property.
The growth of vacation rentals has paralleled Newberg's increased profile as a tourism destination. The Willamette Valley region was recently designated as the wine region of the year, and visitors have traveled from around the country and internationally to visit local vineyards and wineries.
Although Newberg's tourism committee hasn't prioritized promoting vacation rentals, it recognizes they provide lodging accommodations that generate tax revenue that supports the tourism program overall, Rux said. The committee is responsible for managing a portion of funds raised through lodging taxes.
The committee reviews proposals on how to develop Newberg as a tourism destination and how best to market the city. During those discussions, Rux said, some questions focused on whether the city has enough lodging supply to accommodate the growth in tourism those plans aim to facilitate.
"And some of the response that came back was, no, we don't have enough," he said.
In a shortage of tourism lodging, vacation rentals provide a relatively quick and cost effective solution.
"A new hotel is an expense, if you take an existing single-family home the building is already there," Rux said.
But vacation rentals have also raised questions about their impact on neighborhood character, he added.
Housing impact concerns
Vacation rentals haven't risen to become a major concern for their impact on housing supply and affordability, but the concept is still being noted at the government level.
During the Nov. 6 City Council meeting, the Housing Newberg group that has been monitoring and crafting proposals on housing issues within the city advised city officials to watch the impact of short-term rentals on the city's housing availability.
"We didn't feel it was something we could make a recommendation on at this moment," said Rick Rogers, executive director of Newberg Area Habitat for Humanity and organizer of the housing group. "But … hearing from other communities, Cannon Beach, Hood River and Bend, particularly, this can be something that can get neighbors on edge, if there are a lot of short-term rentals in their neighborhood."
He referenced regulations that have been adopted in other cities. Hood River, for instance, has a distance requirement between vacation rentals. And Cannon Beach has gone as far as to restrict the number of vacation rental permits that will be issued each year.
"In some situations, people are converting accessory dwelling units to vacation rentals rather than long-term rentals," Rux said, noting that phenomenon can have an impact on the long-term rental community.
So far, the council hasn't made any decision to further restrict vacation rentals. If the city did, Rux said, "community members would have to start, if there were concerns, expressing that to the council," and the group could make it a priority to tackle with more regulations.
For now, elected officials haven't identified the trend as a problem. Councilor Denise Bacon, who has advocated for housing affordability at the council level, said she doesn't think vacation rentals have yet substantially contributed to Newberg's identified shortage of housing stock.
"Could it someday? Yes," she said. But she added it's hard to say whether landlords that would have rented a home to long-term tenants have instead opted to rent their property as a vacation rental. "Did they buy it out from underneath someone who might have made it their home? Maybe. But I wouldn't guess it (would) be a very high percentage."