Push to regulate short-term rentals unlikely to ease housing costs

Short-term housing rentals have become a red-hot topic in Harpswell, according to Select Board member Jane Covey. But when it comes to the drivers of Harpswell’s increasingly unaffordable housing, they’re also something of a red herring, she said.

Short-term rentals have skyrocketed in popularity with the advent of online booking sites such as Airbnb and Vrbo. Harpswell has no regulations or restrictions specific to the properties, but that could change in the near future. 

Many of Maine’s coastal communities have been eyeing or passing new rules, and Covey is heading up a task force to examine whether such regulations are needed in Harpswell, and what form they might take.

Town officials have estimated there were 450 short-term rental listings in Harpswell in the summer of 2023, more than 10% of the town’s roughly 4,200 residences. A regional housing study by the Midcoast Council of Governments made a slightly lower estimate of about 7% of Harpswell homes being used as short-term rentals in July.

Still, Covey said the intent of any local regulations would most likely be to make short-term rentals safer for guests and less disruptive for neighbors, minimize the drain on local resources and promote fair competition among hospitality providers. She doesn’t think adding new rules would make homes in Harpswell more affordable, and recent housing studies seem to support her perspective.

“I actually got an email from a friend of mine here in Harpswell whose brother lives in Provincetown, Massachusetts, and they (The Provincetown Independent) reported on a study … with the surprising finding that (short-term rentals) don’t necessarily have much effect on affordable housing,” she said.

Another recent study by the Maine State Housing Authority, also known as MaineHousing, reached the same conclusion.

Covey said it’s important to remember that Harpswell “has been a vacation community forever,” and that summer rentals have long been the norm. As the task force deliberates on what, if any, rules to impose, she said it must endeavor to respect the community’s history.

“Whatever we come up with really needs to be tailor-made for Harpswell,” Covey said.

Study skeptical of impact

To glean why cracking down on short-term rentals wouldn’t likely result in lower housing costs, it’s important to understand why homes in coastal Maine have gotten so much more expensive lately. According to the recent MaineHousing study, a pandemic-induced influx of newcomers to Maine is only one of multiple contributors.

The MaineHousing report describes a post-pandemic trend in which older Mainers have been retiring from the workforce in historically high numbers, creating job openings that must be filled by younger workers.

But most of those retiring Mainers aren’t leaving their homes, and there aren’t enough new homes being built to house all their replacements in the workforce.

“Maine currently has a very high share of unfilled job positions, with many parts of the state having more vacancies than available workers,” the October 2023 report says. “Many of these jobs skew somewhat lower-income, reflecting a growing mismatch between what many new workers could afford and the price of Maine’s available homes.”

A compounding factor is the advanced age of Maine’s housing stock, it says, which increases the share of uninhabitable homes in need of repair at any given time.

Maine’s available housing stock has long been shaped by the state’s tourism and seasonal economy, according to the MaineHousing report. In 2021, roughly 16% of Maine homes were seasonal, about 120,600 units. That’s actually a slight decrease from 124,500 housing units in 2016, it says.

About 85% of the state’s seasonal homes were concentrated in the coastal and central western regions, it says, where seasonal housing makes up close to one-fifth of the housing stock, a share that has remained steady for the past two decades.

“While short-term rentals make up an increasing share of seasonal homes, they are not always directly comparable to homes that might otherwise be available to year-round residents looking for housing because of their type, size, location and price point, or because the owners occupy them for part of the year,” the report says. “Many such properties would not viably serve as year-round housing at all.”

It also noted that the number of short-term rentals in Maine’s coastal region that could be considered within the affordable price range make up just 1.4% of the region’s total housing supply.

Task force urges caution

The stated goal of Harpswell’s nine-member Short-term Rental Policy Task Force, formed in November, is “to assess the nature and perceived impact of short-term rentals in Harpswell and develop a regulatory policy” for consideration by voters at the next Town Meeting in March.

During a meeting on Nov. 28, members of the task force unanimously passed a resolution stating that the group’s objectives should not include trying to bring about lower housing prices by regulating short-term rentals.

“Can we at least agree that short-term rentals don’t affect affordability? … That’s a myth, I think,” said task force member Howard Levitan, a retired lawyer and former innkeeper. “Multiple studies have debunked it.”

Most of the group’s members agreed, although task force member Peter Shiras, a part-time Orr’s Island resident who occasionally rents out his home short term, pushed back slightly against Levitan’s assertion.

“I’m not sure there’s anything we can do about it because it’s market forces,” Shiras said, “but I’m not sure, empirically, we can say there’s no relationship (between short-term rentals and home prices).”

Overall, task force members seemed to agree that the focus should be on making sure the town’s short-term rentals are safe for guests while setting reasonable occupancy limits and leveling the regulatory playing field among short-term rentals and traditional hospitality providers such as motels and bed-and-breakfasts.

They also discussed the possibility of creating a registry of short-term rental operators and charging a fee to fund property inspections and other administrative costs. Some group members said doing so would help the town better understand and track the growth of such properties, while ensuring they meet certain standards.

In addition to Covey, Levitan and Shiras, the group’s other members are Jennifer Bisson, of Orr’s Island; Sheri Blackstone, of Great Island; Nellie Clifford, of Harpswell Neck; Bruce Davis, of Orr’s Island; Bob Gaudreau, of Great Island; Bethany McNelly-Davis, of Bailey Island; and Mark Sgantas, of Harpswell Neck.

All but three of the task force’s members either own, manage or provide services to local short-term rentals.

But Sgantas, a registered nurse and former fire chief who doesn’t own or manage any short-term rentals, agreed that the group should tread lightly when considering possible regulations.

“I’m not here to try to shut anybody down,” he said. “We need to be cautious about unintended consequences.”

Rental owners weigh in

North Harpswell residents Lisa and Bob Coombs own and operate seven short-term rentals, including four in Harpswell. Recently, they completed work on an accessory dwelling unit in their own backyard that now serves as their latest rental property.

The couple said they would not be opposed to regulations on the quality and safety of short-term rentals operating in town. They might be amenable to Harpswell creating a registry of short-term rental owners and properties but said it would depend on the registry’s purpose.

“I’m for having everything up to code and making sure everyone has a quality, safe place,” said Bob Coombs, president of building and remodeling firm R.L. Coombs Inc.

Still, the couple said they would oppose any sort of cap on the number of short-term rentals Harpswell can have.

“I don’t think I’d be for that,” Bob Coombs said. “This town was basically founded on rentals.”

The only cap the couple said they might support would be on the number of homes an out-of-state resident can operate as short-term rentals, arguing that locals tend to care more about the quality of their properties and how they affect the community.

“You can do a lot of great things with short-term rentals, but the good intentions need to be there,” Bob Coombs said.

Harpswell homeowner and part-time resident Andrew Jones and his partner bought a five-bedroom house in 2021 near Potts Point, at the southern tip of Harpswell Neck. They rent out the property whenever they’re at their primary residence in South Bend, Indiana.

Jones, an attorney, said the couple hopes to eventually retire to Harpswell. Offering the home as a short-term rental is helping to make that goal financially possible, he said.

Jones said he would strongly support regulations that hold absentee owners to account for the condition of their Harpswell short-term rental properties.

“I think it’s important … that the owners be held responsible if the home falls into disrepair,” he said. “I would expect the town of Harpswell to hold me accountable in some way.”

Maureen Turgeon used to rent out her two-bedroom Orr’s Island home while living in Massachusetts but stopped when the COVID-19 pandemic struck, “mostly because it was too hard to get cleaners to sanitize to the state standard,” she said.

“Also, we came to Maine for long periods during COVID because it was safer there than in Massachusetts,” she said.

Turgeon said she understands the concern about short-term rentals taking away housing stock that could be occupied by long-term residents, but she said there is a high risk of unintended consequences if the town of Harpswell cracks down too hard.

“If the push to tax or restrict rentals is to make homes available to long-term residents, it is bound to fail,” she said. “People from away can still outbid locals for homes in such a beautiful and desirable locale as Harpswell.”

Turgeon said town officials’ time would be better spent identifying relatively undeveloped areas that have drinkable water, finding a way to bring that land to market, and removing any tax policies that make it difficult to develop less expensive housing.

She particularly favors taking steps to make more modestly priced housing available to older residents.

“Housing is a very charged and complicated issue,” Turgeon said. “It’s important to understand the real problem before you attach a solution.”

Have a comment or news tip? Email J. Craig Anderson at craig@harpswellanchor.org.