WAMC Housing Series Part 2: Short-Term Rentals And Berkshire County’s Housing Crisis | WAMC

WAMC Housing Series Part 2: Short-Term Rentals And Berkshire County’s Housing Crisis

Dec 17, 2019

As the use of short-term rentals like Airbnb grows in Berkshire County, so are efforts to regulate their use around the region.

The official conversation around short-term rentals in Lenox, Massachusetts began in spring 2017. Multiple meetings, two years, and three drafts later, the town finalized its bylaw on the topic in November.

“Short-term rentals. They hit upon a lot of community planning issues that people are very passionate about," said Gwen Miller, the Land Use Director and Town Planner for Lenox, a town of about 5,000 residents with multiple cultural institutions that swell the summer population. She says the short-term rental conversation has been going on in the town for almost all of her five years on the job.

“People were seeing homes in their neighborhoods become not just a single-family residence where you know your neighbor and you might be friends with them, or not, but you know who’s there," Miller told WAMC. "It’s the same family. You’re comfortable with them. But they were seeing these homes turn into an Airbnb or a VRBO and they no longer really knew who was next door all of the time.”

But the conversation isn’t just about knowing your neighbors. It’s also about money, and the way it could reshape the culture of Lenox, which borders the county’s largest city, Pittsfield, to the south.

“In some cases, a property was being or could be purchased not by a family who intended to live in town and send their kids to the local school or volunteer for the fire department or volunteer for a town board or committee but a home might be purchased for the express purpose of being used as a short-term rental,” said the Land Use Director and Town Planner.

Miller says the burgeoning market could test Lenox’s housing supply, “where already home purchase prices are relatively high.”

Then there are the local hotels and inns.

“Who have invested a lot of money over the years in adhering to the local zoning bylaw, but also the building code and making sure they were a safe lodging option for guests," said Miller. "They felt like there was a big inequity between how they’re treated through the building and health code compared to how a short-term rental property does not have to meet the same code requirements.”

“They should be regulated the same way hotels are – so in other words, they should be taxed accordingly. They should have the same safety in place," said Janet Eason. "They should have the same fire codes in place. They should have to pass the same safety reviews that all of our hotels have to pass, and they don’t – and that’s where the struggle is.”

Eason is the Vice President of Main Street Hospitality, which owns four hotels in the Berkshires, including Hotel On North in Pittsfield and the historic Red Lion Inn in Stockbridge. She says despite the regulation issue, for the most part, the hotel industry has come to terms with services like Airbnb.

“We’ve made them our partners rather than our enemies," Eason told WAMC. "And I think that’s true of all of our hotels. We think of them really as another distribution channel. We have some inventory out with them, not a lot because they haven’t technically solved their integration with a set of key property management systems that hotels use, but I think it’s just like another Expedia or Booking.com. It’s another place for us to get the word out on our properties. They have a different kind of consumer who’s looking for a different product.”

“When I personally am looking at an Airbnb, I’m looking to save some money," said Colleen Rafferty. "When I’m looking at a hotel, I’m looking to treat myself. And we really try to lean into those things that make people feel like they’re treating themselves.”

Rafferty is the Guest Experience Manager at Tourists, a hotel in North Adams that opened in July 2018 – well after the short-term rental boom.

“We’re sitting in one of our rooms right now, and as you can see, it’s very clean, everything has been curated very carefully," she told WAMC. "If the motto of Airbnb is ‘isn’t it nice to be home wherever you go,’ our motto is, ‘isn’t it nice to be out of your home.’”

“I’m not an Airbnb person. I would never stay in an Airbnb," said Oskar Hallig, who rents out a room in his South Egremont home as an Airbnb. He used to run an actual B&B, and says the tensions between the hotel industry and short-term rentals aren’t as fraught as they would appear.

“I like to go to a hotel that has a name I recognize, a long hallway with a door that I get into with a key, and they give me some sort of points when I leave,” he laughed.

“Short-term rentals are using your home, your property to have a different opportunity to bring economic independence to your life," said Airbnb policy team member Kelley Gossett. She says the company views its rentals as a part of the gig economy that should be treated differently from commercial properties.

“This is primarily people’s homes, it’s where they live the majority of the time," said Gossett. "They’re just using this option, this platform, for another use.”

In December, the company – which brought in over a billion dollars in revenue in just the second quarter of 2019 – announced it had remitted $2 billion in tourist and occupancy taxes by the end of the year.

Back in Lenox, the conversation around regulating short-term rentals brought up internal weaknesses in the town’s existent bylaws.

“We did have a very vague, open to multiple interpretation zoning bylaw which made it difficult to review the whole concept of short-term rentals, or enforce any of the interpretations of the bylaw,” said Land Use Director and Town Planner Gwen Miller.

The town’s first attempt at a bylaw failed.

“The first proposal that went to town meeting in 2018 many voters saw as too strict," said Pamela Kueber, who chairs Lenox’s Planning Board. “The Planning Board, I would say, was taking a very conservative view with that version of the bylaw about protecting the interests – the residential character of existing neighborhoods – and about protecting the housing supply.”

That first version required a special permit for all short-term rentals of entire houses, and required operators to be town residents, ruling out second home owners. As Massachusetts refined its own laws around the topic and the Lenox Planning Board held meeting after meeting, the town ultimately crafted a successful bylaw – only after a second draft also went down. Kueber says the third, final bylaw breaks down into three basic parts: “The short-term rental of rooms, short-term rental of entire dwelling units, and in general requirements for both,” she explained.

Up to two bedrooms in dwelling units can be put up for rental year-round, as long as the owner or tenant is living in the home. Entire apartments or homes without the owner in the house – which Kueber says make up the majority of the area’s short-term rental market – can be rented up to 75 days per calendar year without going before the zoning board of appeals. A special permit can extend that to 110 days.

“There also is a requirement that if there are multiple dwelling units on one parcel, that all those numbers apply to the parcel – not to the units themselves. And again, that has to do around controlling for intensity in primarily residential neighborhoods – and I’ll underscore again here that one of the key purposes of the bylaw is to protect and maintain the residential character of existing neighborhoods, at the same time wanting to enable residents to earn money from their properties," said Kueber. "So it’s kind of finding that balance.”

The last part of the bylaw requires adequate parking on properties, no events that would require tents or permits – an effort to avoid so-called party houses – and no advertising signs.

The ultimate Lenox zoning bylaw around short-term rentals is just the second of its kind in Berkshire County, following neighboring Richmond’s.

Now, other county communities are formulating their own policies. CJ Hoss is the city planner of Pittsfield, the county’s largest municipality with around 43,000 residents. He says the city is lying low for now, while keeping an eye on surrounding communities and on issues like overcrowding.

“We’ve had one or two instances with rentals that have come up, generally related to parking because maybe a residence was rented to have a party or some sort of event,” Hoss told WAMC.

“It’s a tricky one because unlike particularly places in Eastern Mass – because we are a community that is smaller now than we were built for 100 years ago – we do have additional housing stock," said Tom Bernard. "But what that stock gets used for is the question.”

Bernard is the mayor of North Adams, a small city of around 13,000 about 30 miles north of Lenox.

“If people are investing in property and improving them, that will improve the valuation of the community, that will improve comps and housing values, but you also have that concern on people about affordability," he told WAMC. "Your home is the biggest asset that most of us have, and you want to see it appreciate, but there’s a tax implication to that as well and it’s a tricky thing to balance.”

“A good portion of our population have a real housing crisis, and there are way too many people facing housing instability and that is driven in large part by the economics," said Brad Gordon, the Executive Director and Staff Attorney for the Berkshire Regional Housing Authority. He says wages in the county are already inadequate for many residents to find housing as is.

“What we’ve seen in the larger urban areas and I’m afraid we’ll see some of that here as well is that there will be people that come in and invest and buy up properties and then utilize those properties for the short-term rentals, further exacerbating that market demand and driving prices up – and that would be really unfortunate,” Gordon told WAMC.

He says it hits extremely low, very low, and low- income households in the county particularly hard.

“And that respectively is 30%, 50%, and 80% of the median household income in Berkshire County,” he explained.

Gordon says that around one in three households in the Berkshires rent their permanent housing.

“What we know from the National Low Income Housing Coalition as well as through the most recent American Survey is that about close to 50% of those households are rent burdened," he told WAMC. "That means that they’re paying in excess of 30% of their income for the rent.”

That measurement is commonly used to indicate housing stability. If you’re paying above that 30% line, it indicates instability. But Gordon doesn’t think it’s the most accurate way to depict the kind of need extremely low-income households experience.

“Households that are at 30% of median income – which is probably somewhere around $16,000 a year in annual income – if you have a very minimal amount of income to start with, 30% of that still may put you in a situation where you’re facing housing instability," he said. "And I think for our population in Berkshire County, probably around 23% of our population in Berkshire County falls at or below 30% of median income.”

That’s just over 29,000 people. Gordon says the kind of people looking for short-term rentals are nothing like the region’s most vulnerable.

“Those are typically people that are going to be vacationing or maybe they’re using it for a short-term business trip, but where the dynamics of a rental housing shortage and short-term rentals intersect is that it’s just simple market economics," he said. "That is that, there’s less units on the market if they’re being utilized for short-term rentals and just having a shortage of available rentals drives the price – just simple market economics – drives the price of rentals up overall.”

Gordon says short-term rentals aren’t the only factor driving up rents in Berkshire County, but they’re part of the problem. He says those rising rents hit low-income residents the hardest.

“If you look at the FMRs, the fair market rents, for a one-bedroom, it’s a little over $900. For a two-bedroom, it’s about $1,100. For a three-bedroom, it’s over $1,300. And for a four bedroom, it’s over $1,500. So if we’re talking about folks that are somewhere between 80 and below median income, that alone, that market rent, presents challenges to those households,” said Gordon.

He says the Great Recession that rocked global markets about a decade ago created a new paradigm for housing.

“In Berkshire County we saw an uptick of about 3% of people renting, but that’s significant when you have a shortage," Gordon told WAMC. "And I think it’s people’s response to the new economy after the Great Recession where people didn’t feel like they had long-term job stability and they wanted to have the flexibility of being able to move if they needed to, which is harder to do if you’re a homeowner. And also the reality is, for younger folks – especially millennials – they’re burdened by student loans and other things that make homeownership less accessible to them, so they have been driven into the rental market maybe more than some predecessor generations.”

Despite his concerns, Gordon isn’t strictly against short-term rentals.

“For some folks, especially in South County, where we know taxes in some of the communities are a little bit higher and people may be on fixed incomes there too, it may open up an income opportunity for them so they can actually keep their permanent housing," he said. "That’s a good thing! And it may create in some ways create some economic stimulus in those communities as well that benefit other people.”

He says that laws should be crafted in such a way that differentiate between those offering short-term rentals to survive and those strictly attempting to profit.

“So maybe it’s looking at owner-occupied situations differently than investor situations, and thinking about different taxation rates sand different regulatory structures that put some limitation on larger business entities or speculative investors which I think is destabilizing too for communities as well," proposed Gordon. "You start to lose your permanent population there and I think that’s challenging for communities in a lot of different respects.”

Southern Berkshire County’s largest community is exploring how to craft its own bylaws around short-term rentals.

“Great Barrington has challenges with housing like many communities do, and we’re trying to address it in a variety of ways," said Brandee Nelson, chair of the Great Barrington Planning Board. “We recognize that there are a number of people who have purchased houses and are using them more for commercial businesses as opposed to primary residences, and so we want to explore what that impact is on our community so that we can try to make room for more housing for more people.”

She says the town of about 7,000 wants to emphasize long-term rentals to provide stable housing for people who work in Great Barrington.

“I think it’s similar to lots of communities that have tourist-based economies," said Nelson. "There are desirable places to live here in the community, but we’re very surface-based in our economy. It’s hard to have someone who has to live in Otis but work in Great Barrington come all the way in. It’d be much more convenient if they could be here and be part of the fabric of this community.”

Echoing Gordon’s observation about Southern Berkshire County, Nelson describes the town’s housing situation as in crisis – a claim verified by a nonprofit that focuses on that part of the Berkshires.

“Whether it’s folks who are eligible for our housing – which is pretty much folks who are at 60% of area median income or lower eligible for subsidized housing – we have over 700 households on our waitlist," said Jane Ralph, Executive Director of Construct, which provides affordable housing support services to the South Berkshires. She has her own concerns about short-term rentals.

“I think it does take housing that could otherwise be set aside for permanent rentals to really keep someone stably housed while they’re working in that community," said Ralph. "It prices that out of the market in many cases.”

She says the economic impact is twofold – on the workers Nelson identified, but also on the town’s businesses.

“If you talk to pretty much any restaurant or shop owner in the South Berkshires, their workers are coming from quite a ways away," Ralph told WAMC. "Austerlitz, sometimes even Springfield, definitely Pittsfield or beyond, just to be able to staff their restaurants, staff their stores. It’s really a challenge for folks to be able to live in the communities where they’re working. So that’s hard for the businesses and it’s hard for the individual who’s trying to maintain a job.”

Back in comparatively urban Pittsfield, City Planner CJ Hoss says short-term rentals haven’t affected the housing market in the same way.

“I think where we’re seeing Airbnbs happen more frequently is with single-family homes or former single-family homes," said Hoss. "That’s a market that doesn’t appear to be strained by this. If Airbnbs were cutting into what were previously apartments or are apartments now, I think that might be more of a concern.”

For its part, Airbnb points to millions of dollars it says the company has brought to the region over the past year. Between Memorial Day and Labor Day, the company says around 31,600 guests visited the county, bringing $6.1 million to local hosts. It says last winter, the ski season brought 14,000 guests and $2.3 million into the Berkshires. As far as how short-term rentals impact the housing market, Airbnb policy team member Kelley Gossett says the company’s activities are nothing new.

“Vacation rentals, etcetera, have been part of the Berkshire community for quite a long time – long before Airbnb came along," Gossett told WAMC. "So we’re happy to provide another option for folks in a way to utilize their home and utilize their space to participate in the short-term rental industry.”

Connor and Marissa Meehan are among those folks.

“We just bought this house actually in the spring, and it’s got two units – the side we live on and then the smaller kind of apartment rental side,” Connor told WAMC.

“It wasn’t like, oh, we want to start an Airbnb, let’s look for a property," said Marissa. "It was like, oh, this is a great property and it has potential to do this. We can start this business and try this opportunity and then we can live there and see what happens.”

Their house – a white cottage that sits on a hillside surrounded by farmland – is in the largely rural community of Richmond, which abuts Lenox to the west and sits just southwest of Pittsfield. Connor, a musician, says they’ve hosted families from Europe, Japan, and across the U.S.

“I’d say the majority are from New York and the Boston area coming out for a weekend,” he said.

Marissa, a software tester, says she didn’t know what to expect when they started renting out their space.

“We’ve used Airbnb a handful of times before we started this, just staying places, but I’ve been really impressed with how easy it is to use it," she told WAMC. "And also, we’ve had almost 30 groups staying with us in the last six months, and we haven’t had any issues with anyone. So I think for us, we’ve had a really good experience with Airbnb.”

Even more so, she says it’s allowing them to remain in the town they love.

“I don’t know that we could afford Richmond if we didn’t have this set up," she told WAMC. "We could afford – we were living in Pittsfield before. We were also doing kind of a rental situation there. I mean, I think we could afford with the jobs we have – but in Richmond, this particular space, we couldn’t have unless we had thought of this plan that is luckily going really well, but I was nervous about it. But, So far so good.”