You’ve been enjoying your home in an
established Bend neighborhood, with very little traffic and minimal noise except
for kids playing and the intermittment buzz of mowers and lawn edgers.
You’re happy you researched the
neighborhood before buying here.
Then you get a notice from the city.
The new owners of the home next to you or maybe a few doors away plans to
make their property a nightly rental for visitors. The application for a short
term rental, or STR, has been filed. Now the city is giving you a two-week window
to weigh in on this.
Your first reaction is, “Can
they really do this? I recall that there was something in the documents when we
bought the house that said only rentals of more than 30 days are allowed.”
You dig out your closing papers from
years back. There it is, clearly stated in the Convenants, Conditions and Restrictions,
or CCRs: There under section 4.14 Transient
Rental Use. “No owner or owners of any unit within (Happy Acres – a pseudonym) subdivision
shall be permitted to rent their unit to any person or person for transient
occupancy which shall be for a period of 30 days or less.”
So, shouldn’t that solve the issue
for this application? The city wouldn’t
allow this if it goes against the CCRs, you think. Well, not exactly. And the
relationship of CCRs to Bend's processing of nightly rentals has become a
flashpoint in established single family neighborhoods.
As Bend becomes ever more popular with
tourists – boosted by pentup pandemic travel demand – more residential property
owners are seeing a potential revenue stream in nightly rentals. And among these
are out-of-area and out-of-state buyers seeing an opportunity to stake out a
place in Bend.
The conclusion, after discussing all the the upside of property appreciation and rental revenue, "All in all, Bend is one of the best markets for Airbnb on the West Coast....a must-invest for out-of-state and Oregon Airbnb hosts."
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| A balloon festival in Bend |
Local opinion is mixed. Facing an outcry from some residents beseiged by noisy parties and parking issues arising from tourist rentals, the city responded a few years ago with a series of public meetings, eventualy distilling the results into a new section of the development code.
Several types of short term rentals
The new code provisions distinguish
STR permits by several categories.
A Type III permit applies to a
development that clusters nightly rentals in areas outside of residential
single family zoning.
One Type I, permit allows a property
owner to have “infrequent” nightly rentals of no more than 30 nights. Another Type
I permit limits rentals to fewer than 30 consecutive nights and two rooms, without
a kitchen, while the owner occupies the dwelling. These are allowed in single
family zoned neighborhoods.
Perhaps the most controversial STR is
a Type II that allows for a “whole house” rental of unlimited days and nights
each year in typical single family residential neighborhoods.
In
an effort to mitigate having multiple nightly rentals on a single street, the code
requires a distance of 250 feet separating Type II STRs.
The permit mandates a certain number
of offstreet parking spaces, limits guests according ot the number of rooms,
requires the owner to post regulations and to provide 24-hour contact information
for neighbors to complain about noise or other problems. STR owners must also pay fees of slightly over $2,000 for a permit and $275 each year to renew an operating license, as well as an 10.4% lodging tax.
However, the city will not act on
neighbor complaints until they reach the level of a code violation related to
the permit, such as excess parking and too many guests in a STR.
In both Type I and Type II
permits the city merely requires property owners to verify by signature that they
have read their neighborhood CCRs as applicable to nightly rentals. The
applicants do not have to affirm the nightly rental would not violate the CCRs.
Therein is the crux of a festering
issue that has divided Bend neighborhoods. With the city’s hands-off position, residents must act through homeowner associations or independently to enforce CCRs.
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| Mirror Pond on the Deschute River in Bend |
In many older, mature neighborhoods with long-time homeowners the developer may have ended involvement in the community. There may be no homeowner association. And most residents may have forgotten the CCRs, absent major problems in the neighborhood.
However, CCRs typically remain valid for 30 years, with automatic 10-year extensions unless a percentage of homeowners vote to terminate them.
Enforcing a CCR provision, such as limitation of nightly rentals, could well require legal action. The situation in turn may result with some homeowners claiming the STR is a property right and others arguing it destroys the integrity of the neighborhood.
Another issue gaining atttention is a section of the STR code that prohibits transfers of permits issued after April 15, 2015 at the time of a property sale. Although specifically stating a permit “does not run with the land,” a loophole allows an existing permit holder to void it, and apply for a new permit on behalf of a buyer before a property sells.
This circumvention of the no-transfer provision creates an attractive incentive for sellers and real estate brokers to entice buyers with the promise of acquiring an immediate income producing property.
Short Term Rentals, CCRs and legal action
A couple of recent STR applications—one
that was withdrawn and another that went through and perhaps heading for litigation—are illustrations of how CCRs have
become part of the nightly rental discussion.
As reported by The Source weekly, residents
of the Tanglewood subdivision of southeast Bend mobilizied to amend their CCRs
after a homeowner applied for a STR, perhaps with the intent of making the
house more attractive for a buyer.
The application was withdrawn after
the amendment passed with a majority vote, likely with some ill will from the
applicant when the property sale fell through. Although the CCR amendment to
limit rentals to more 30 days may have blunted the homeowner’s plans, under the
current city STR regulations it would not in itself have scotched the permit.
Another, more complicated STR
application has brought into sharper focus the issues of transferring a permit,
and the place of CCRs in the equation.
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| STR types explained |
A homeowner with a Type II whole house permit voided it, then applied to the Community Development department for a new permit on behalf of a prospective buyer – before the property had changed hands.
Although there was at that time no written authorization for the seller to act for the buyer, the city recognized the application process – and only weeks later had the buyer and seller complete the authorization.
More than a dozen neighbors in that subdivision and nearby objected, citing prior noise, parking and traffic problems experienced with the property as a STR. But the application met city offstreet parking and other requirements and the permit was approved. Later the property buyer applied for and was given an operating license as needed to rent the property nightly.
Many of the neighbors objecting to the new permit cited the previous parking and noise problems, none of which the city considers in review an application. Instead the regulation puts the onus for complaints with neighbors to contact the STR owner-operator.
In this case, however, several objections were raised as to the loophole allowing transfer of the permit, and violation of CCRs that don’t allow rentals of fewer than 30 days.
Now a neighbor immediately adjacent to the STR property has decided the only option is to consult an attorney, who has tactfully informed the new owners by letter that the CCRs prohibit nightly rentals.
For now, it’s a wait and see strategy for the neighbor, with advice from the attorney that the first nightly rental – none as yet – could trigger action to prevent further rentals.
Meanwhile other neighbors are raising problems with the city regarding the STR permit transfer loophole and ineffective language addressing whether a STR would violate the neighborhood CCRs.
In a reply, a top city official wrote regarding the transfer loophole that, “This is a known issue that we have documented and staff can be ready to recommend changes to the Development Code when/if Council desires to make changes to the STR portion...”
As to the tightening permit language related to CCRs, the official noted the, “...idea to have STR permit applicants acknowledge that they have read and understand their CCRs as well as that the CCRs are not violated by the STR Permit application sounds reasonable.”
