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State College Borough Council restricts short-term rentals. What does that mean for Airbnb?

The State College Municipal Building is pictured on Wednesday, July 28, 2021. ABBY DREY Centre Daily Times, file

After a three-hour State College Borough Council meeting — which the council president adjourned with the gusto of a man who just finished a marathon — the borough is set to change the regulations on short-term rentals after finding what they hope serves as a middle ground between local homeowners and out-of-town developers.

Council’s goal was to disincentivize companies from buying homes for the sole purpose of operating them like hotels, renting them out a few days at a time on websites such as Airbnb and Vrbo. At the same time, council also wanted to avoid punishing community-minded homeowners just looking to supplement their income. To do that, borough council agreed Monday night to limit the number of nights a property can annually rent out to 120, while approving a number of other regulations developed by borough staff.

Among those changes included requiring one off-street parking space (located on the property) per bedroom rented, creating a limit of nine rooms a property can rent out at once to discourage potentially exploitative fraternity use and increasing the cost of a short-term rental license to $300, from $175. Existing rules that passed last year — such as requiring a person on the lease to live in the house at least eight months a year — will also be enforced later in the fall.

Violations will range from $300 to $1,000.

“I just wanted to say thank you for the people that wrote to us, emailed us and spoke up. That was very educational,” Councilman Peter Marshall said, right before the revised ordinance passed following about two-and-a-half hours of discussion. “And the other thing I want to say — I want to thank the planning staff for putting that ordinance together. I think you did a very good job. A very good job.”

Targeting nuisance properties, effect on housing market

More than a dozen community members exchanged stories Monday night about their experiences with short-term rentals. Some homeowners said they used it responsibly as a way to battle rising costs and mounting bills. Other neighbors — who didn’t rent out their homes — painted scenes of out-of-control parties and changing neighborhoods, where faceless companies or out-of-town homeowners took advantage of lax oversight.

One woman with gray hair spoke on behalf of her friend, a retiree on a fixed income, who rents out extra bedrooms in her house to help pay the bills. She worried the activity cap of 60 days — which was initially proposed — might force her out of her home. By contrast, several neighbors on Hillcrest Avenue recounted seemingly endless parties at a property owned by an out-of-stater with a focus on profit over people.

“As a mother of school-age children, one of whom is going to be a teenage daughter very soon, I am extremely uncomfortable with the things we were hearing and the people we were encountering,” one woman told council.

Even without the nuisance properties, others brought up concerns that companies and entrepreneurs who buy multiple houses — strictly to rent out for days at a time — were hurting the local housing market. The facts bear that out. A study revised in 2021, undertaken by Carnegie Mellon researchers and others, showed that Airbnb rentals reduce both long-term rentals and affordable housing.

On the flip side, with inflation running rampant, some homeowners shared how Airbnb allowed them to off-set increasing costs. One Wegmans worker told council how she and her partner, who works for a human resources company, lived in the borough for five years by renting out their basement and taking great care not to disturb their neighbors.

“I love this community and do not wish to relocate,” she said. “Please do not pass an ordinance that includes limits, which disenfranchise hardworking community members and create another barrier for housing opportunities in State College.”

Finding a middle ground

Borough council peppered both the solicitor and planning director with questions and scenarios that would essentially help the struggling homeowner and hurt the non-struggling company. But there were no simple solutions.

Could council limit short-term rental licenses to one per entity to prevent companies from snapping up multiple properties? Sure they could limit licenses, but then the company could just create shells — one named BigBusiness1, another named BigBusiness2, etc. — to easily get around it.

Wouldn’t current requirements that a person on the lease stay there eight months out of the year prevent companies from buying up real estate for Airbnbs? Not necessarily, because some companies have already taken to having one long-term tenant mixed in with short-term ones as a workaround. Could the borough require the homeowner — not just a tenant — stay there at least eight months a year to counter that? No, the solicitor said, because state law would likely prevent that on the basis of socio-economic discrimination since you’re disqualifying people who can only afford to rent and not buy.

“We have to be really careful about how we structure this … without penalizing community members,” Council member Deanna Behring said.

About 200 properties have so far been identified in the borough as having short-term rentals. At this point, it’s unknown how many of those might be homeowners acting in good faith vs. “tourist homes,” or houses used solely for short-term rentals — although the borough should have a better idea in the coming months, with the help of a national monitoring agency.

Council debated altogether eliminating a cap on the number of nights a property can annually be rented out, with the thinking that other regulations would disincentivize businesses from operating Airbnbs. But Marshall, who’s long been an active community member, worried aloud that having no cap would simply cause businesses to find ways to skirt the spirit of the rules.

Councilman Divine Lipscomb then proposed a 120-night cap, double the initial proposal of 60 nights. Soon thereafter, council voted unanimously to pass the ordinance.

On Tuesday, a retiree who operates an Airbnb expressed relief to the CDT that the cap was increased to 120 nights. In a story published online Sunday, that same retiree worried she might be forced to leave the borough if the 60-night cap was implemented.

“Oh, I think I’ll be OK,” she said Tuesday. “I’m thankful I can get what I can get.”

Planning director Ed LeClear said he anticipated offering updates to borough council on a rolling basis. And if there are any issues, or sticking points, once more information becomes available, the ordinance can always be revised.

Monday’s discussion was one of — if not the — longest the borough council has had on a single topic so far this year. Borough manager Tom Fountaine joked he “unfortunately” had a brief report to share after the vote, Behring lauded a student representative who stayed put the entire meeting (“Gold star,” she joked), and the voice of council President Jesse Barlow rose before he hammered the gavel to end the meeting.

“We are adjourned — thank you, everyone!” he said.

By Josh Moyer

Centre Daily Times

After a three-hour State College Borough Council meeting — which the council president adjourned with the gusto of a man who just finished a marathon — the borough is set to change the regulations on short-term rentals after finding what they hope serves as a middle ground between local homeowners and out-of-town developers.

Council’s goal was to disincentivize companies from buying homes for the sole purpose of operating them like hotels, renting them out a few days at a time on websites such as Airbnb and Vrbo. At the same time, council also wanted to avoid punishing community-minded homeowners just looking to supplement their income. To do that, borough council agreed Monday night to limit the number of nights a property can annually rent out to 120, while approving a number of other regulations developed by borough staff.

Among those changes included requiring one off-street parking space (located on the property) per bedroom rented, creating a limit of nine rooms a property can rent out at once to discourage potentially exploitative fraternity use and increasing the cost of a short-term rental license to $300, from $175. Existing rules that passed last year — such as requiring a person on the lease to live in the house at least eight months a year — will also be enforced later in the fall.

Violations will range from $300 to $1,000.

“I just wanted to say thank you for the people that wrote to us, emailed us and spoke up. That was very educational,” Councilman Peter Marshall said, right before the revised ordinance passed following about two-and-a-half hours of discussion. “And the other thing I want to say — I want to thank the planning staff for putting that ordinance together. I think you did a very good job. A very good job.”

Targeting nuisance properties, effect on housing market

More than a dozen community members exchanged stories Monday night about their experiences with short-term rentals. Some homeowners said they used it responsibly as a way to battle rising costs and mounting bills. Other neighbors — who didn’t rent out their homes — painted scenes of out-of-control parties and changing neighborhoods, where faceless companies or out-of-town homeowners took advantage of lax oversight.

One woman with gray hair spoke on behalf of her friend, a retiree on a fixed income, who rents out extra bedrooms in her house to help pay the bills. She worried the activity cap of 60 days — which was initially proposed — might force her out of her home. By contrast, several neighbors on Hillcrest Avenue recounted seemingly endless parties at a property owned by an out-of-stater with a focus on profit over people.

“As a mother of school-age children, one of whom is going to be a teenage daughter very soon, I am extremely uncomfortable with the things we were hearing and the people we were encountering,” one woman told council.

Even without the nuisance properties, others brought up concerns that companies and entrepreneurs who buy multiple houses — strictly to rent out for days at a time — were hurting the local housing market. The facts bear that out. A study revised in 2021, undertaken by Carnegie Mellon researchers and others, showed that Airbnb rentals reduce both long-term rentals and affordable housing.

On the flip side, with inflation running rampant, some homeowners shared how Airbnb allowed them to off-set increasing costs. One Wegmans worker told council how she and her partner, who works for a human resources company, lived in the borough for five years by renting out their basement and taking great care not to disturb their neighbors.

“I love this community and do not wish to relocate,” she said. “Please do not pass an ordinance that includes limits, which disenfranchise hardworking community members and create another barrier for housing opportunities in State College.”

Finding a middle ground

Borough council peppered both the solicitor and planning director with questions and scenarios that would essentially help the struggling homeowner and hurt the non-struggling company. But there were no simple solutions.

Could council limit short-term rental licenses to one per entity to prevent companies from snapping up multiple properties? Sure they could limit licenses, but then the company could just create shells — one named BigBusiness1, another named BigBusiness2, etc. — to easily get around it.

Wouldn’t current requirements that a person on the lease stay there eight months out of the year prevent companies from buying up real estate for Airbnbs? Not necessarily, because some companies have already taken to having one long-term tenant mixed in with short-term ones as a workaround. Could the borough require the homeowner — not just a tenant — stay there at least eight months a year to counter that? No, the solicitor said, because state law would likely prevent that on the basis of socio-economic discrimination since you’re disqualifying people who can only afford to rent and not buy.

“We have to be really careful about how we structure this … without penalizing community members,” Council member Deanna Behring said.

About 200 properties have so far been identified in the borough as having short-term rentals. At this point, it’s unknown how many of those might be homeowners acting in good faith vs. “tourist homes,” or houses used solely for short-term rentals — although the borough should have a better idea in the coming months, with the help of a national monitoring agency.

Council debated altogether eliminating a cap on the number of nights a property can annually be rented out, with the thinking that other regulations would disincentivize businesses from operating Airbnbs. But Marshall, who’s long been an active community member, worried aloud that having no cap would simply cause businesses to find ways to skirt the spirit of the rules.

Councilman Divine Lipscomb then proposed a 120-night cap, double the initial proposal of 60 nights. Soon thereafter, council voted unanimously to pass the ordinance.

On Tuesday, a retiree who operates an Airbnb expressed relief to the CDT that the cap was increased to 120 nights. In a story published online Sunday, that same retiree worried she might be forced to leave the borough if the 60-night cap was implemented.

“Oh, I think I’ll be OK,” she said Tuesday. “I’m thankful I can get what I can get.”

Planning director Ed LeClear said he anticipated offering updates to borough council on a rolling basis. And if there are any issues, or sticking points, once more information becomes available, the ordinance can always be revised.

Monday’s discussion was one of — if not the — longest the borough council has had on a single topic so far this year. Borough manager Tom Fountaine joked he “unfortunately” had a brief report to share after the vote, Behring lauded a student representative who stayed put the entire meeting (“Gold star,” she joked), and the voice of council President Jesse Barlow rose before he hammered the gavel to end the meeting.

“We are adjourned — thank you, everyone!” he said.

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