Holiday Homes

Dear Management Doctor:

I met you 2 years ago in Boston at the planning conference and I am on your circulation list.

I would like to know whether you have any information as to how holiday homes are managed in tourist zones of town planning schemes.

My problem is that if you allow subdivision to create lots - how is it ensured that the land will be used for holiday homes and not become part of the housing stock as permanent uses such as residential. I am trying to get an idea how tourist towns work in the US. I am doing planning in a tourist town in Australia where land is now in private ownership, all policy indicates that tourism should remain but the landowner of the holiday homes zone tries to subdivide the land in 600m2 lots and I am sure they will become permanent residential and not holiday homes. It appears that subdivision should not be allowed.

Any advice or referral would be appreciated.

Regards
Johan Gildenhuys
Perth

Dear Johan,

Your question is a bit out of my area of expertise but I will pass it along to my emailers and see if they have some thoughts for you.

I do know that some communities require these homes be registered and include an annual fee or license or even a fee on rentals. I know this was an issue in Maui when I did some organizational work for them a few years ago so you may want to give the Planning Department a call.

I hope we can help you with this.

The Management Doctor

P.S. The Management Doctor would like to come to Australia to do some management seminars. Maybe you can give the word to your professional organization.


Reader Responses

Our problems are usually the opposite way---people converting permanent stock into short term rentals…

Barbara Holly, AICP
City of Tyler, TX


It sounds like he is asking how to keep a “holiday home” from being used as a regular single-family residence. The City of San Antonio usually deals with the opposite (how to keep people from renting out single-family residences as vacation homes).

It is my understanding that “holiday” or vacation homes are subject to the State’s hotel tax if the rental agreement is for less than 30 days. As such, the city classifies such uses as hotel/motel or bed & breakfast, each of which has its own zoning requirement (not allowed by-right in residential zoning districts). Additionally, B&Bs have supplemental use regulations that limit the number of guest rooms and requires owner-occupancy in residential districts (UDC Section 35-374).

If the rental agreement is for 30 days or more, it’s simply a residential lease and use.

Hotel/motel uses are not permitted in residential districts; so properties that have the zoning for a hotel is not likely to allow single-family residences (although there are some exceptions).

B&Bs may be allowed in residential districts with the approval of a Specific Use Authorization; in these cases, the property can still be used as a single-family residence because that use is permitted by-right in the base zoning district.  

I think the City of San Antonio is working to better regulate vacation homes, but I am not certain when this will go to ordinance.

Hope this helps. 

Anna Galimore
San Antonio, TX

We have the opposite problem here in Jackson Hole, WY, which is a wealthy tourist town adjacent to Grand Teton and Yellowstone National Parks. People have figured out that they can make a lot of money by renting their homes via www.VRBO and other websites. Our community has indicated in its Comprehensive Plan that short-term rentals should be concentrated into certain areas; places with restaurants and other services, such as the Town of Jackson and the ski area in Teton Village. There are a handful of other locations in the County that are grandfathered to allow short-term rentals, but in general, residents of neighborhoods do not want transient accommodations in their neighborhood, at it erodes community character. Also, our community recently imposed a lodging tax that generates revenue, and many of the short-term rentals are not contributing to the lodging tax.

There are different ways to accomplish what you are trying to do. In the past, we have conditioned development approvals to only allow short-term rentals, and we have also approved condominiums with tiny kitchenettes or no range (and no 220 outlet) to try and ensure this. In Teton Village, the CC&Rs require a certain amount of occupancy to be short-term, so for example, if a 20-unit condominium gets built, while under County regulations it is all considered short-term rental, the CC&Rs require (I believe) a minimum 50% of them to be in an active short-term rental pool. Many more of them generally are. You can also zone the area as commercial, requiring a certain percentage to be short-term rentals, while allowing some long-term rentals or ownership opportunities for the workers who service these areas.  Around here, the market/economics seem to take care of the problem you are concerned about.

Many of our worker housing units slowly seem to be converting to short-term rentals via the vacation rental by owner activity on the internet, which drives up home prices and pushes the working class out, so it is interesting to hear that you are considering the opposite problem.

Click here to see a recent newsletter from a local conservation group that discusses the issue.

Cheers,

Susan Johnson
Teton County, WY


Cannon Beach, Oregon has addressed this issue extensively trying to allow but limit the number of holiday rentals.

You might also inquire into Whistler, B.C. as the majority of units are condos and weekly rentals or hotels. I have not done any research on them, but with Canadian providence planning I am sure this was addressed as well as worker housing.

There are the examples of Del Web developments in Arizona – developments that were developed for 55+ year olds, where they do not pay school taxes.

Property “Covenants” have always been the mechanism for not allowing subdivision of lots once platted and any other restrictions.

Heather McCartney, FAICP
City of Mukilteo, WA


I worked in a couple of communities with vacation or holiday homes. I don’t know the laws in Australia—which is the first place to start—but in the U.S. there is no means of limiting a subdivision lot to vacation rentals. In my experience in three states, ultimately, the vacation home owner wants to retire to the resort location and live there full time. The best solution is to treat the subdivision as a project that will have full-time occupancy and require all improvements and taxes to reflect that foreseeable reality.

Unless the local government wants to start managing occupancy and enforcing such standards—an impossible task, if it’s constitutional—treating a holiday house as a house is the best mechanism. In addition, holiday houses are often rented out by the owners on a regular basis, which is actually a bigger impact than single family occupancy. Often, vacation homes in demand areas are rented at very high rates so that they are shared by multiple families for the short duration.

This means that parking is needed for more than two vehicles, utility demand is higher than normal family use, and there is no incentive for conservation efforts such as recycling or maintaining energy-conserving utility settings.

Eric Jay Toll
Scottsdale, AZ


Thank you for circulating my holiday home issue to your readers and I enjoyed reading the responses. In reading the responses I can now provide further information.

The subject area is located in a very remote location of Australia and considered a premier tourist destination in terms of what the coast and ocean can offer for camping, swimming, snorkelling and coral viewing, boating and fishing. The main holiday season is from March to September with very little happening outside this period; so it is very seasonal. There are caravan, camping grounds and bungalows for renting purposes but people are not allowed to stay there longer than 90 days and the areas are zoned Tourism in the Local Government's Town Planning Scheme. People who live there have a caretaker role and workers live in a demarcated area which is a temporarily arrangement. There is no residential area where people can retire to use the houses on a permanent basis and strategic plans for this area indicate that no residential settlement would be allowed here as that would enable the holiday destination to grow under normal market forces and would require services and facilities that would normally be expected from a town (such as schools, medical, emergency, etc.). This is what the authorities are trying to prevent to keep it a holiday destination; also given the environmental sensitivities of the Coral Reef.

A developer has now obtained 30 hectares of land in this remote holiday destination and intends to subdivide the area into 300 lots of about 600m2. The concern is that if the land is subdivided and sold, people could start living there permanently and this would then trigger requirements for other facilities normally associated with residential settlements. The developer does not intend to manage the area as a typical tourist resort but rather to sell the 300 lots as a means to gain finance to do the development - streets and infrastructure. The local authority in principle supports the subdivision to further provide for a holiday experience, but do not want to have residents retiring there or living there permanently as it would trigger the need for community facilities. The idea at this stage is to write a set of provisions into the town planning scheme to restrict the use to holiday homes for periods no longer than 90 days (called short-stay accommodations here), aligned with building requirements to fit the area as well. The local authority is preparing to take on the management which I agree will be difficult given that their administration offices are located 250km from the subject tourist area. More appropriate might be to allow the creation of large superblocks/lots of say 8000m2 which could then be sold for typical unit or tourism for short stay but this is not the developers intention. The idea is more to cash in on the creation of small lots. It appears that there is not the capital to do the development and then to choose an appropriate tenure arrangement to manage the units as only short stay holiday accommodation.

If there is someone out there who knows how these lots could be managed only for holiday accommodations without creating a residential settlement - please can I hear from you.

Regards,
Johan Gildenhuys
Johan.Gillies@gmail.com


Do they have the option of adding a minimum lot size requirement to their code that would prevent many small lots, and instead encourage the larger size mentioned?

And how about requiring the filing of covenants that run with the deeds restricting the ability for anyone to live there year round as a condition of subdivision approval? Not sure if that is legally allowed. In New York we were able to require covenants preventing the habitation of units off-season as part of a site plan approval in our resort zone.

Heather Lanza


A couple of ideas:

  1. Allow platting (subdivision of the land) only after all improvements have been installed. This would require all the investment up front.
  2. Zone the property only for short term rental with a reasonable density allowance but a high minimum lot size and restrictions on subdivision.

Tom Lanahan


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