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Proposed Hampton short-term rental rules draw mix of support, concern

Crowds on Buckroe Beach during a hot summer day, June 29, 2020.
Courtesy of Shutterstock
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Crowds on Buckroe Beach during a hot summer day, June 29, 2020.

Local researchers think home price and rent cost increases will be marginal, focused in tourist-heavy neighborhoods.

The City of Hampton’s Planning Commission recommended new short term rental policies officials said they hope will balance the maintenance of neighborhood character with the interests of local entrepreneurs.

The laundry list of zoning ordinance amendments drew dozens of residents to the public hearing to propose edits to the policy as well as raise concerns about possible nuisances and impacts to property values.

Local researchers, though, don’t envision large impacts to Hampton home values or rental cost solely because of short-term rentals.

Rules and Regulations

The proposed regulations institute a new process by which short-term rentals such as Airbnbs and VRBOs are approved.

Prospective short-term rental owners would pay $200 to apply for a permit and schedule a unit inspection for $50.

The permit and inspection would replace the current requirement to undergo two public hearings for approval.

The regulations also propose new rules on the density of short-term rentals, dividing the city into 51 zones. Only 1% of each zone’s residences could receive a permit to operate a short-term rental.

Additionally, short-term rentals would have to abide by proximity rules. The regulations establish a 500-foot separation requirement between short-term rentals with the caveat that mini-clusters of two units side-by-side would be permitted.

Short-term rentals operating legally before 2022 city rules would be grandfathered in and wouldn’t be held to the proposed proximity requirement. They would still have to apply for a permit.

The regulations include a swath of additional rules short-term rentals must follow. They cannot host events; must provide on-site parking; provide a floor plan and fact sheet to tenants for safety reasons; and assign a responsible local person to address issues or nuisances reported to the city.

If city investigators identify violations of the policies that go uncorrected, the owner can face fines as well as revocation of the zoning administrator permit.

Edits and opposition

Multiple residents found the proposals too restrictive for short-term rental owners and operators.

Among them was Ali Alphonzo, who argued homeowners should by right be allowed to rent out a room in their home without a permit. He also wanted to see proximity rules relaxed.

“Not allowing three rentals next to each other doesn’t make sense to me. I think families like to travel together and stay close to one another,” Alphonzo said.

Other speakers proposed an increase from the 1% cap included in the recommendations, particularly tourist destinations like Buckroe Beach and Phoebus.

“Buckroe is different. It is the beach, it is the only beach on the peninsula,” said Kathy Monroe. “People want to be at the beach, let them come.”

On the other side, residents like Jennifer Perry were apprehensive about short-term rentals moving into other neighborhoods, like Riverdale, where she lives.

“We’re not a Buckroe where people want to visit, we’re Riverdale,” Perry said. “Maybe there’s a way you can take a percentage out of my neighborhood because we just lost long-term renters that were good neighbors because the homeowner wants to turn this into an Airbnb next to my home.”

Perry was joined by additional speakers raising concerns about losing the sense of community in their neighborhoods, worsening parking availability and potentially raucous parties.

“I live in an established neighborhood, I know my neighbors and strange people coming in and out might be a little hectic,” said Jeanette Andrews.

Planning commissioners voted to recommend the measures for city council consideration, though multiple members agreed that the city council should consider loosening some of the proposed restrictions.

“My recommendation would be that the 500 feet be lessened,” said Commission Chair Michael Harris. “I think that’s a little bit extreme.”

Commissioner Kathy Rogers, though, was not sold on instituting a percentage cap in Buckroe Beach area zones that differed from the rest of the city.

“Buckroe is also a neighborhood where ordinary, everyday people live who want a neighborhood just like everybody else,” Rogers said.

Ultimately, planning commissioners didn’t make any edits to the proposed regulations and instead referred their comments to the City Council when it considers the zoning amendments on June 12.

If approved, they go into effect in July with enforcement beginning October.

Upward pressure on home prices

Multiple Hampton residents also raised concerns about the potential for short-term rentals to decrease their property value, a question not unique to the city.

A study from the National Bureau of Economic Research, California State University, Northridge and the University of Southern California finds that’s not the case nationally.

Published in 2021, researchers found a 1% increase in Airbnb listings in a zipcode with the median rate of owner-occupied homes saw a less than half percent rise in home values.

Old Dominion University’s Lei Zhang said that’s largely the same in Hampton Roads.

Zhang, alongside researchers from Colorado State and Georgia College and State University, explored the impact of Airbnbs in the seven cities as well as Williamsburg and York County.

Their findings indicated home sale prices increased about 0.34% for each active Airbnb unit within a four-month time frame and 300 meters of the sale.

“It’s not a huge impact, but if you are thinking about an average house, $300,000, it has some impact. If you’re surrounded by many Airbnb listings, this will be a larger impact,” Zhang said.

Zhang said every additional 100 reservations within a four month time frame and 300 meters of a sale brings the price up 1.69 percent.

The areas in Hampton most likely to see these bumps are Buckroe Beach and Phoebus, she said.

“If investors compete for the limited quota in these tourist-heavy areas, the 1% cap will be quickly reached. So during this period, we should expect a positive impact on surrounding house sale prices,” she said.

That impact, though, should be short-lived.

“Upward pressure on house prices will stop once the 1% quota is reached,” Zhang said.

There is the possibility that the upward price trend could spread to nearby zones once the 1% cap is hit in Buckroe Beach and Phoebus.

“Later on, investors may look to surrounding short-term rental zones as an alternative target,” Zhang said.

“The rental market is a many-headed hydra”

The national study from the National Bureau of Economic Research found Airbnbs are also associated with small upward trends in rental costs.

Researchers reported 1% increases in short-term rentals in areas with median owner-occupancy rates led to 0.018% rises in rents.

But according to Alex Fella, director of the local research organization CityWork, the picture is more complicated in Hampton Roads.

He said that while research points to net increases in rental costs in hot tourist destinations in major metro areas, the unique qualities of Hampton Roads make identifying short-term rentals as the cause of rent increases in the region more difficult.

“People live in Norfolk, they live in Virginia Beach, but commute to Hampton, or they live in Hampton and they commute to Norfolk, so people aren’t necessarily always renting in the places where these ordinances are being passed and they might experience the effects of short-term rentals on the housing market differently,” Fella said.

Additionally, capping short-term rentals at 1% of the total housing stock serves to limit a general impact on overall rent costs in Hampton, according to Fella.

Fella does see the potential for an impact on rental prices on the higher margins of the cost spectrum in Hampton.

“So the places where rent is already high, Airbnbs concentrate there and some research points to a small increase in rents in those neighborhoods where they’re already in the upper 10% for rental costs,” said Fella.

He pointed to areas around Buckroe Beach, Phoebus and Hampton University as areas that could see small rent increases as a result of more short-term rentals.

And while Fella acknowledged a 2022 research finding that shows some cities were able to successfully reduce long-term rental prices through regulating short-term rentals, he believes the factors contributing to rental costs in general are too complex to single out one cause.

“The rental market is a many-headed hydra,” he said “It responds to flood insurance rates, cap rates, variable mortgages that financial firms and landlords have used to purchase apartments - it’s very hard to tease those things out.”

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