At last week's City Council meeting, the debate over how to manage short-term rentals began to take more focus when City Council voted unanimously to support the first reading of ordinances that include a new short-term rental licensing program and changes to land use code that limit the concentration of what are frequently referred to as vacation rentals. After listening to concerns from residents—mostly relating to noise levels and livability in specific neighborhoods—it seems as if City Council is favoring means to limit the burgeoning short-term rental market.
That step toward regulation is an important means to bring some sanity to a freewheeling rental market—but for reasons that were not expressed during the City Council deliberations. That is, we are hoping that the discussion about short-term vacation rentals will begin to consider the larger impact on affordable housing and long-term rentals, an increasingly pressing problem for many residents, and at the center of discussions about how and if Bend can retain its "livability."
Namely, short-term rentals are creating two major pressures on the market for affordable housing and long-term rentals. For starters, it tends to be more profitable to rent out rooms or houses on Airbnb than a traditional month-to-month or year-long lease—often easily doubling or tripling revenue. Over the past couple years, this has motivated a major shift in the housing market, with hundreds of former or potential long-term rental units shifting to short-term vacation rentals. There are currently about 500 short-term rentals registered with the City of Bend, while the Central Oregon Rental Association's 2014 tallied only 17 rental vacancies in Bend.
In turn, that dramatic change in supply-and-demand has pinched the rental market by both reducing the availability of rental space for residents, while increasing the prices. Yes, this is a major and complicated problem, and one that also has created a philosophical undertow for the city's attitude about housing—that is, it makes Bend a city more hospital to tourists than its residents, and only complicates the available solutions for affordable housing.
On Sunday, the Bulletin ran an editorial that expressed the same concern, that "Bend has an affordable housing problem." However, their solution was ridiculously simple: They suggested that "SDCs should be anelection topic."
In a nutshell, SDCs (System Development Charges) are fees collected both by the City and by Bend Park & Recreation from both commercial and residential developers. In turn, that money helps fund basic infrastructure—like the city's streets, sewers, and water lines, as well as preserving parks in the region. The Parks & Rec fees add roughly $5,000 per unit to the cost of building a 92-unit apartment building.
The argument seems to go that SDCs force housing prices higher so that developers can recoup these additional expenses—and certainly there is validity in that calculation. But The Bulletin urges that "[s]ystem development charges should be front and center in [the May election of three Parks & Rec Board members]."
Trying to solve Bend's affordable housing problem by pulling out SDCs from Parks & Rec is like removing one stick from a Jenga tower; the problem of affordable housing is complicated and interconnected, and hardly has one simple solution. Moreover, it seems acutely disingenuous to suggest removing a funding source for public parks and open spaces as a means to create more access and livability for the city's working class families.
A month ago, a proposal was floated to Parks & Rec for waiving SDCs for multi-family housing dedicated to households at or below 60 percent of the median income. Yes, that idea is an attractive notion for encouraging developers to build more affordable housing in the region—and, could serve as one piece of the puzzle, but it certainly does not represent the entire solution and should be an option limited only to permits for projects dedicated to low-income housing.
To declare that candidates' stances on SDCs should be the central feature for the upcoming election oversimplifies the solution for affordable housing, while also setting a dangerous precedent that hands over the power and responsibility for solving affordable housing problems to private market forces—hardly an economic or civic theory that has a strong track record.
Affordable housing is a huge problem, and we need to think about the big picture.