In an unexpected move, the Chincoteague Town Council voted this month to reject both a ban on new short-term rentals (STRs) in certain neighborhoods and an increase in business licensing fees for such rentals from $50 to $500.
If passed, existing STRs located in the island’s 10 R-1 neighborhoods would have been grandfathered in, pending the town conducting a housing study of all STRs.
The rejected proposal would have impacted neighborhoods that are zoned R-1. They are typically low-density established neighborhoods consisting of single-family dwellings.
The neighborhoods that would have been affected on Chincoteague included: East Piney Island, Oyster Bay 1 & 2, Richardson’s Landing, Smuggler’s Cove, Wild Cat, DeMarco Lane, Chester Park, Highland Park and Sunnywood.
Town Planner Amanda Baker said the study results could lead to creating a zoning overlay to determine where to limit STRs. That could eventually lead to restrictions in other residential zones, she said.
While the town’s decision came as a surprise ending to an unusually long meeting fraught with issues that prevented its full live streaming, it’s not the end of these two topics.
In fact, it’s created some additional issues for the town.
Expecting the fee increase to pass, Town Manager Tolbert had included an anticipated $375,000 in projected business license revenues (based on $500 each for 750 STRs) in the fiscal year 2027 budget.
At a June 11workshop meeting, Mayor Denise Bowden, Tolbert and some councilmembers considered options to address the budget deficit that now exists.
The town still plans to move forward with housing and economic impact studies, which many attending the Town Council meeting in early June felt should have happened first, before town leaders considered a ban.
Several among the nearly 50 speakers agreed it was “a solution in search of a problem.”
For others, opposing the ban was purely a property rights issue, saying it restricted their ability to do what they want with their properties.
Residential homes, including having a vacation rental, in Chincoteague’s R-1 districts are considered a “by right” use, meaning the owner doesn’t have to ask for the locality’s permission to construct such structures or run such a business on that land.
Short-term rentals are defined as having a duration of less than 30 consecutive days. Month-to-month rentals last longer than that, and are also considered a by-right use in the town’s R-1 districts.
Some homeowners in R-1 districts retired in Chincoteague after renting their properties, while others were still renting out with that goal in mind. Others wanted to preserve a short-term rental option in the future for their children.
Lance Stitcher, a real estate broker who co-owns Seaside Vacations & Sales with his wife, has perhaps been the most vocal and long-standing critic of the ban and fee increase.
He reminded town officials of the average $2.7 million in transient occupancy tax revenues Chincoteague gets each year from short-term rentals and hotel and motel bookings.
The amount is based on a 5% tax per transaction. Accomack County collects another 2% on top of that.
Baxter Brashure, a former real estate agent, favored the STR ban in his Sunnywood neighborhood and opposes grandfathering. He said they are incompatible with the neighborhood’s covenants and restrictions.
“Those who purchased for residential purposes should not be forced to live where these rentals violate deed restrictions,” he said.
If covenants and restrictions are more restrictive than a local zoning ordinance, they should prevail. If something isn’t permitted under a town’s zoning, it wouldn’t be allowed at all.
Several speakers sought other solutions, including allowing neighborhoods to decide.
Stitcher advocated for the creation of a “stakeholders’ committee” to provide research and recommendations to the town.
Angela Conklin Abell, another local real estate broker, said the law of supply and demand could create the ultimate solution: As available STRs increase, rental revenues tend to drop without a similar increase in demand.
That could lead owners to consider other options, including long-term renting – a move that could help address the island's housing shortage.
Providing tax incentives for this type of rental was also suggested.
“We are a tourist town, we know it,” Mayor Bowden said. “But we want balance, (so) that people want to live and invest here, or vacation here.”
The studies will proceed, she said, but Bowden also shared cautious words.
“It may not turn out the way you want it to be, so keep that in mind,” she said.
