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Worth seeking solutions to legitimate concerns

There has been a flurry of articles in the NOTL press in the past few weeks concerning short-term rentals (STRs).

There has been a flurry of articles in the NOTL press in the past few weeks concerning short-term rentals (STRs). The negative bias and misinformation in some of these articles is very concerning, especially the casting of STRs as a blight on the town, and the calls for their elimination. As president of the Niagara-on-the-Lake Bed & Breakfast Association (BBA), and a B&B proprietor myself, I would like to provide my perspective, and suggest an approach to addressing concerns regarding STRs.

First, I would like to provide a bit of background. My wife and I moved here four years ago, purchasing a house in the Old Town which had been a B&B for the past 20 years. Our plan was to run the B&B for some number of years as a semi-retirement activity, prior to fully retiring in NOTL.  

We had first stayed at a B&B some 40 years ago on our honeymoon, and have always had a soft spot in our hearts for the B&B experience – charming homes, welcoming hosts and hearty breakfasts. My wife and I had stayed at B&Bs in NOTL (and hotels too) many times over the years and the thought of running one, especially in the wonderful town of NOTL, was one we could embrace with enthusiasm. We have also stayed in cottage rentals over the years, although not in NOTL, and found that they can be a great form of travel accommodation as well, especially when travelling with children, family or friends.

My wife and I had been involved in not-for-profit organizations in our previous community, and we soon found ourselves getting involved with the B&B Association. I now find myself serving as president of the organization, unexpectedly involved in many issues I never knew existed just a few years ago.

I have learned a great deal about STRs over the past four years. I am told that not too many years ago, NOTL was considered the B&B capital of North America, with over 300 B&Bs. Now it is estimated that there are perhaps 150. As B&B numbers have gone down, cottage rental numbers have gone up (especially as the popularity of Airbnb has grown). Whereas most B&Bs are licensed by the town, the percentage of cottage rentals that are licensed is lower, making this segment more vulnerable to being a source of problems.

B&Bs have required licences in NOTL for decades, however it wasn’t until 2013 that a bylaw was introduced that covered the entire STR spectrum. NOTL’s 2013 STR bylaw defined STRs as including B&Bs, cottage rentals, villas and country inns. By definition, B&Bs and cottages have three bedrooms or less, villas and country inns have four bedrooms or more. In 2020, the town introduced an updated STR bylaw (more on this in a minute).

Whereas B&Bs are almost all owner-occupied, cottage rentals are generally not. There is apparently a belief in some quarters that most cottage rentals are owned by greedy out-of-town investors who seek to siphon off profits from NOTL’s prosperous tourism industry. From my knowledge, most cottage rentals are primarily vacation homes, owned by individuals who want to spend part of the year here and rent their property out at other times to help defray the cost of ownership. Most of these folks plan to retire to NOTL in time. I have combed through the town’s list of licensed STR properties and have found that there are very few cases where properties are owned by a company and only a handful of cases where an individual or company owns more than one property. Info on unlicensed properties is not available, but I believe that the perception of STR owners as greedy out-of-town investors is exaggerated.

Similarly, I believe that statements about STRs hollowing out NOTL’s neighbourhoods are overstated. According to the 2016 census, there were approximately 7,964 private dwellings in NOTL (and this has likely grown since). Of the 255 licensed STRs in NOTL, about 150 are B&Bs, leaving 105 as unhosted cottage or villa rentals. Thus, licensed cottage rentals account for just over 1 per cent of the private dwellings in NOTL (adding unlicensed cottage rentals might increase this number to around 2 per cent). By comparison, the 2016 census indicated that there were 875 homes not occupied as a principal residence (these are generally vacation homes). Even making allowance for the number of these which are rental cottages, I suggest that the number of unoccupied vacation homes contributes more to the hollowing of NOTL than STRs do. 

By way of example, on my block, there are eight houses. One of these is a B&B (ours). One is a villa rental (whose owners live locally).  Two others are vacation homes that are not rentals and are left empty for most of the year. Yet another house is a vacation home that has been owned by the same family for many years, and is used frequently. The remaining three houses are lived in by full-time residents. In total, five homes out of eight are in full-time or frequent use by long term NOTL residents. Of the three houses not occupied by NOTL residents, only one is a STR. I suspect that this situation is more typical than not. Yes, there are a significant number of houses not lived in full-time by NOTL residents, but STRs are only one contributor to this situation.

Similarly, there is a belief by some that STRs are responsible for driving up the price of homes in NOTL beyond the ability of average families to afford. Once again, I believe that the concern over the impact of STRs on NOTL real estate prices is overstated. If unhosted STRs account for just over 1 per cent of properties, they assumably account for a similar percentage of real estate transactions each year.  It would seem unlikely that STRs are the main driver behind high real estate prices in NOTL.  

The reality is that NOTL is a very popular place to live and there will always be strong demand from people looking for vacation homes or retirement homes in NOTL. As a result, prices will always be higher than the surrounding area. As a further point, by our informal count, approximately 10 to 15 per cent of NOTL’s STRs have sold in the past year, and many of them were sold as private homes, not B&Bs or cottage rentals. Frankly, with property values so high, the appeal of buying a house in NOTL purely as a STR is greatly reduced. In any case, it is unlikely that eliminating STRs would produce much more than a temporary blip in NOTL’s ever-rising house prices.

On a related note, a particular concern of mine (living in a historic home as we do), is that eliminating STRs would result in many quaint older properties being sold as private homes and being either renovated beyond recognition or replaced with modern-looking homes. I can see examples of this today as I walk around the Old Town. I believe the disappearance of the small, quaint older homes once so common in the Old Town is a great loss for the town and would be accelerated by eliminating cottage rentals.

To be clear, I am not trying to downplay the concerns of residents regarding STRs. There are certainly issues to address. But I do believe that STRs in all their forms add value to the town and that a movement to eliminate STRs hurts the tourism industry and ultimately hurts the town.

I believe that it is worth seeking solutions that address legitimate concerns while allowing STRs to survive and thrive. I don’t deceive myself into believing there are perfect solutions to these concerns, but I certainly believe there are bad ones. For example, implementation of a “principal residence” requirement, whereby STRs must be owner-occupied, would essentially eliminate cottage rentals.  Cottage rentals have been a feature of NOTL for many decades.  They not only provide an alternative for families and groups for whom hotels are not a viable option, they also help reduce the cost per day of a stay in NOTL (especially by not having to eat out for every meal), and allow visitors to stay longer and participate in more activities.  Their disappearance would be a great loss for the town.

I would like to suggest three cornerstones for successfully addressing concerns around STRs: licensing, bylaw enforcement and stakeholder consultation.

The first cornerstone is licensing. The precise number of unlicensed cottage rentals is unknown, but it is estimated by some to be comparable to the number of licensed cottage rentals. It will be impossible to address the concerns around STRs unless the unlicensed properties, which I believe account for a disproportionate number of the issues, can be brought into the fold. The town has hired the firm Granicus Host Compliance to assist with this. It is early days, but it looks like progress is being made. I believe that last month 12 properties were fined for operating without a licence. 

The second requirement is fair and consistent bylaw enforcement.  Historically, the town has not had the ability to effectively enforce its STR bylaws, especially with regard to noise complaints, with the result that people come to believe that more rigorous bylaws are required, when in fact what is required is more rigorous enforcement of current bylaws. That said, it is important that the bylaws be fair, enforceable and effective, which leads to my next point. 

My third recommendation is for consultation and collaboration with stakeholders. In the fall of 2020, council was presented with a revised STR bylaw package that included many terms that would have been very punitive for STR owners. These terms were put forward in response to feedback from some citizens
with some very specific issues, but the proposed remedies were heavy-handed and overly severe.

At the suggestion of the B&B Association, a temporary STR committee was formed, including councillors, tourism industry representatives and NOTL citizens. The committee investigated the issues thoroughly and objectively and proposed solutions back to council that would serve the needs of all stakeholders. That committee is on hold for now, having fulfilled its purpose, pending presentation of its recommendations to council. We believe the work of the STR committee has led to a more fair, enforceable and effective STR bylaw and provides a model for dealing with future issues.

We may not have to wait long for an opportunity to test this proposition. We are now faced with the proposal to implement a Municipal Accommodation Tax (MAT) in NOTL. There are some very vocal individuals in the town that support this direction but there are many in the tourism industry that are concerned about the potential impact.  

The B&B Association believes that the best way to move forward would be to create a temporary committee of stakeholders, as was done with the STR bylaw, and let them work through to ensure that decisions are made in a spirit of collaboration and fairness, with the best interests of our community’s future in mind. In particular, it will be important that any possible MAT be in synch with the overall Tourism Strategy for NOTL and that good governance and transparency be in place around the spending of MAT-generated funds. The B&B Association would welcome the opportunity to participate in such an activity.

I believe STRs add to the character of NOTL and provide forms of accommodation a significant number of tourists are looking for. STRs have been part of the tourism ecosystem in NOTL for many decades.  For my wife and I, and for many others, they are a part of the charm of the town and, in our case, are a significant part of the reason we are here. While there are legitimate concerns to address regarding STRs, I certainly believe that on balance they add to the town, and that proposals to
eliminate STRs are misguided and would ultimately hurt the town. It would be far better to leverage the proven approach of consultation and collaboration to find solutions that serve all stakeholders.

We in the Bed & Breakfast Association hope that the talents and creativity of the many stakeholders in NOTL’s success can be brought to bear to address the issues of concern while preserving this very valuable asset of our community.