“Hello Bend city government. Are you
listening?”
That is the admittedly tongue in
cheek question that may be on the minds of many Bend residents as the city
faces challenging issues of a growing homeless population and escalating
housing costs while grasping for elusive solutions.
This dilemma is recently illustrated
with two projects under review by city planners, one a proposed mixed use development
in a thus far all residential neighborhood, and the other to revise the code
regulating controversial short term rentals, or STRs.
In public comments on planning
applications for both projects, the frustration of residents has boiled over.
The milieu has revealed a culture in
which city staff appears reticent to respond proactively to city code
issues, unless having “direction,” from a council experiencing turnover in
members and leadership.
In the past year, the elected mayor and
two city councilors have resigned, and the two recent council replacements have
said they don’t intend to run for election in November.
One current councilor is running for
mayor against a former council member who is vowing to improve constituent communication
by listening to the city’s network of volunteer neighborhood associations.
A look at the proposed development
on a lot zoned commercial convenience at the intersection of Mt. Washington
Drive and NW Awbrey Road highlights a split between the council’s push for more
multi-family and “middle housing,” and the character of an existing
neighborhood.
Maybe more significant, it shows how
investors and developers are working to bend current development rules to fit a
narrative of more needed housing density, while raising the alleged NIMBY (not
in my backyard) and YIMBY (yes in my backyard) tension.
In the past two years the project, dubbed Compass Corner, has
been proposed, withdrawn, then put on hold twice
-- most recently after a failure to comply with development code provisions was revealed.
The opposition to Compass Corner
The latest delays came after more
than 70% of the nearly 300 residents commenting on the project objected to it
in some form—some urging that it not be considered at all, and others
recommending substantial changes.
The development team took their
message to local media, resulting in one report that for and against comments
were more evenly divided, and emphasizing the ostensible NIMBY – YIMBY rift over
increasing housing density.
But several detailed analyses by
some of those commenting pointed city planning officials to a major flaw that
had been used to justify an additional fourth floor. They argued that the
ground floor lacked sufficient commercial area, that was instead taken up by substantial
space for building systems such as heating, ventilation and air conditioning
and the elevator shaft.
The city planner then informed the
development team of the problem, prompting a request to delay the application
for slightly more than a month.
Some observers have asked why the
city had not recognized the problem earlier, perhaps saving many hours of
time put in by the staff, the neighborhood association which tracked the
proposal and even work of the development team.
Instead of waiting to see what various
plans the developers were proposing, couldn’t the city staff have guided the
process with neighbors and the developer was a question asked.
Short Term Rentals due for code changes
In another planning application
process, city staff responded to a discussion by the city council which turned
on potential ways the code provisions for short term rentals might be revised
to encourage more long term rental housing.
To that end the city STR program
manager and staff conducted a survey of fewer 752 STR permit holders – under
70% of the more than 1,000. Only 44% responded. Out of that number of open
ended responses, staff attempted to determine how many would consider renting
long term.
The key question asked:
“What types of incentives would
encourage you to rent to a long-term tenant (30 days or more)?
A review of the scattered responses
showed fewer than a dozen of the 300 answering that question mentioned removal
of a requirement that there be a single STR rental within a 12 month period.
Other responses cited the need for a
subsidy to offset loss of higher revenue from STR rentals and changes in
landlord-tenant laws regarding evicting problem tenants, among other measures
that they would favor.
Yet, with the scant comments related
to removing the once in 12 months requirement, the city staff recommended a
code change to accomplish that.
A staff presentation to the Bend
planning commission noted that the change would mesh with the city council’s
objective to: “Reduce regulatory barriers for housing development, with an
emphasis on incentivizing rent and price restricted affordable housing, middle
income housing, and housing that serves vulnerable community members.”
Another code change presented by the
staff, at direction of the council, was to extend the required separation
between STRs from 250 to 500 feet. In effect, if a Type II “whole house” permit for
unlimited nightly rentals were terminated, it
could not be renewed if another existing Type II permit were within 500 feet.
The planning commission went a step further and amended by a 3-2 vote September 12 for the proposed code to include any "Vacation Nightly Rental" in buffer calculation. These permits, issued before the current code effective date of April 15, 2015, were grandfathered and would not terminate if a property is sold.
The STR section of the city development code emerged after complaints of noise, parking impacts and other problems
with nightly rentals in several neighborhoods, as well as incursion of STRs
into other newer and established areas of single family homes.
A city staff presentation on the
proposed code changes estimated that eligibility for new Type II STRs would be
reduced from 54% of city housing areas to 34% with the new 500 foot buffer
provision.
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STR map if 500 ft buffer
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Written comments directed at the
revisions were split between most full time residents in single family homes favoring
the extended buffer as a way to reduce STRs. But owners of the “whole house” night rentals were vigorously
opposed.
Among the objections, some STR
owners pleaded that local real estate brokers had told them the value of a home
with a permit could increase by $40,000 to $100,000 over comparable properties.
The owners said their purchase was for an income producing investment that
would be jeopardized if they decided to sell, noting the increased buffer could
prevent the property’s continued use as an STR.
Bend has been on the radar as attractive for nightly rental investors. In 2020 a Bay Area based website concluded that, "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."
Objecting to the proposed code changes, a Los Angeles based STR investor wrote
that...”…people like me really would appreciate our STRs staying eligible in
the case of a sell—we have banked on it.” Another out of town investor wrote he
had, “….factored in the value an STR permit..” adds to property values.
“Our realtor indicated that it can
be upwards of $40k in desirable neighborhoods. We used this information when
making our offer and knowingly paid over-asking because of this value boost for
an STR-eligible property."
Noting the code change would wipe
out equity in his investment, the owner added:
“Speaking for myself, this means we
will need to hold onto our property longer than originally planned in order to
make up for this lost money.”
The idea of STR-permitted properties
as lucrative investments was supported in code change comments by the political
committee of the Central Oregon Association of Realtors.
Voicing opposition to the extended
500 foot distance between STRs, the Realtors wrote that, “…the ability to periodically
rent a home is an important, and increasingly common, criterion for home buyers within
the City.”
The Bend city council will have a first reading and public hearing on the measures at an October 5
session.
The following evening after the planning commission action, STRs were prominently
on the agenda of the Neighborhood Leadership Alliance. It includes
representatives of neighborhood associations throughout the city which are intended to
act as sounding boards for government leaders.
That discussion leaned to the modest
effect the code change to reduce the once in 12 months nightly rental requirement
would have on increasing long term rentals. Although the code presentation memo
by staff cited city council goals to create workforce housing, the lead staff
planner conceded that the change was not intended to improve housing affordability
but could increase overall inventory.
Original STR Regulations Aimed to protect neighborhood integrity
A city staff attorney at the Alliance meeting
explained that the original STR code created in 2015 was not focused on housing
affordability.
Instead, “…the focus then was on
neighborhoods, preserving the good things ….it was about neighborhood
integrity, character, balancing all of these things. The regulatory structure
was created around that.”
With the STR buffer extension,the city predicts there will be fewer new Type II limited nightly rental
permits as existing ones are terminated at the time of sale if there are others
within 500 feet.
But in the background are other two
other issues of the STR code that many residents have urged the city to
address.
One is the so-called “transfer
loophole.”
As written in 2015, the code specifically
states that STR permits “do not run with the land,” and therefore cannot be
transferred. However, a so-called “transfer loophole” allows a property seller
with a STR permit to void it, then apply on behalf of a buyer even before the
sale closes.
This is a frequent tactic that results
in property buyers being enticed by real estate brokers with the prospect of
acquiring a property with a permit.
A number of comments regarding the newly
proposed code changes urged the city to also look at closing the transfer
loophole. This would further eliminate some STRs even if they were in locations
at 500 feet or more from another at the time of sale.
Critics of the existing STR
provisions say the city should do more to thwart permit applicants from
violating the covenants, conditions and restrictions, CCRs, of neighborhoods.
But the city has repeatedly said it cannot interfere with “private contracts,”
a position that most legal analysis supports.
However, some have argued that a
current stipulation that STR applicants acknowledge by signature they have read
neighborhood CCRs should be strengthened to “affirm” a permit would not be a
violation. Many CCRs prohibit rentals of fewer than 30 days in single family
neighborhoods.
Even so, a city attorney has said he
would like to put more distance between the city and any relationship to CCRs
by merely “suggesting” that an applicant read them.
That position has been taken in the
city planning staff responses to those commenting on both the Compass Corner
apartment project off NW Awbrey Road and the proposed STR code changes.
In effect, the only alternative is
for either a Homeowners Association, or HOA, or lacking the latter, an
individual property owner to take legal action to enforce the CCRs.
PREVIOUS POSTS ON SHORT TERM RENTALS
Get out those CCRs- renewed focus on short term rentals and multi-family units
