B.C. cities clamp down on short-term vacation rentals

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British Columbia cities and towns are taking their fight to regulate short-term vacation rentals to an aggressive new level.

Some, such as Revelstoke, have started requiring owners to rezone their properties and go through lengthy public hearings to do so – a move that has created painful divisions as neighbours end up in disputes with each other.

Others are pushing to have short-term rental homes wholly or partially recategorized as businesses, as Victoria council began considering this week. Owners would have to pay the much higher business rate on their property taxes.

And still others, such as Tofino, are boosting their enforcement efforts significantly.

Instead of waiting for complaints, they are paying an outside agency to find out how many listings are being advertised on the Internet for their towns, and are going after those that haven't complied with local regulations.

For all of them, a big driver is the desperate housing shortage in their communities, which is being exacerbated by conversions of long-term rentals to vacation rentals.

"We just heard too many stories of 'I got kicked out of my suite because the landlord is changing it to vacation rental,'" Tofino Mayor Josie Osborne said.

None wants to ban short-term vacation rentals completely, but many mayors said the rentals need to be regulated and paying their fair share of taxes.

"We understand this is part of the new economy, but there has to be a balance and we want to make sure people are safe," said Nelson Mayor Deb Kozak, where the city has capped rentals at 110 annual licences, which can be rented out 120 days a year – 40 during the summer.

The city has licensed 41 operations and believes about another 50 are operating illegally.

Councils are being urged on by local and provincial hotel and tourism associations, who say that one of the biggest issues for their businesses is attracting employees, because affordable housing is in such short supply. That's especially true for ski towns and summer-vacation areas.

This summer promises to be worse than even the recent few years, said Walt Judas, CEO of the Tourism Industry Association of BC. "You try to bring people in. You can even attract them, but they can't find a place to stay," Mr. Judas said. "This is happening in communities all over the province."

Cities and towns that have brought in regulations, or are planning to, also include Whistler, Vancouver, Kelowna, Penticton, Rossland, Sun Peaks, Kamloops and Fernie.

Although Tofino, a popular tourist-destination town on Vancouver Island's west coast, established rules for vacation rentals in 2005, city council decided to move to more energetic enforcement this year. It doubled fines, which can run as high as $750 if someone is operating without a business licence or in a zone where vacation rentals aren't permitted. And it has hired an additional enforcement officer just to deal with the problems.

"And in the last week, we started ticketing people," Ms. Osborne said. So far, the town has seen 150 businesses comply out of an estimated 230 known public listings.

Also driving the push for cities and towns to become more militant are complaints from residents near vacation rentals, unhappy about noise and parking problems. As well, hotel, motel and bed-and-breakfast operators are angry about their competition getting a free ride on taxes.

As a result, many municipalities, besides demanding that vacation-rental operators obtain business licences and pay local hotel taxes collected for tourism marketing, are also looking at whether some or all owners should have to pay property taxes as businesses, which can be anywhere from double to quadruple the residential rate.

City councillors in Victoria, who decided Thursday to remove "transient" accommodation as a permitted use in residential buildings downtown, have also directed staff to look at a variety of measures.

A recent report included, among other things, the possibility of having vacation rentals classified as businesses for tax purposes.

"We suggested that, if a property is rented full-time, we could work with BC Assessment pro-actively to have it classified as a business," said Andrea Hudson, Victoria's assistant director of community planning. Victoria was estimated to have 300 vacation-rental listings as of last fall.

Tofino has already put in a request to BC Assessment, the agency that classifies and puts a value on every property in British Columbia for tax purposes, to come up with a split classification for this new kind of business.

Tina Ireland, a spokeswoman for BC Assessment, said the agency is "reviewing our internal policies" but is continuing to do assessments as set out in legislation.

Some of the new measures are proving to be a hard slog for both residents and councillors. Revelstoke conducted 59 public hearings last year for short-term-rental rezonings. Sixteen were turned down.

"It's ripped apart some neighbourhoods," said Dawn Low, director of corporate administration for Revelstoke, whose council capped the number of vacation rentals to 125 beds. So far, 105 have been approved.

Some areas of town, especially new developments near the ski hill where builders come in with clearly laid out plans to include vacation rentals, are more accepting, Ms. Low said. But "in our heritage downtown area, it's not flying."