Towns may get power to license short-term rentals

HARTFORD — As Connecticut continues to grapple with the effects of a chronic shortage of affordable housing, some lawmakers are calling for greater oversight of homeowners who rent out their properties on services such as Airbnb and Vrbo.

The popularity of short-term rentals offered on online platforms has exploded over the last decade, with more than 2.4 million listings available across the country last year, according to the research firm AirDNA.

The growth of the industry has also fueled concerns in many localities — particularly popular tourist destinations — over the number of houses being used exclusively by guests, pricing out local residents and generating nuisance complaints. In recent years, cities such as New York, New Orleans and Burlington, Vt. have passed rules limiting the number of short-term rentals within their borders.

A bill currently under consideration by the General Assembly aims to clarify the existing law around short-term rentals in Connecticut by expressly giving cities and towns the ability to license short term rentals, as well as allowing them to hire consultants to help them draft such an ordinance.

One of the lawmakers behind the effort, state Sen. Cathy Osten, D-Sprague, said that the bill was inspired by complaints out of Norwich, where she said officials claimed they lacked the the authority to deal with homeowners who flouted local zoning rules by renting out their properties.

“They’ve bought older homes and rented them out on weekends for weddings or other family events in residential neighborhoods with no parking, having 40 or 50 people coming to participate,” Osten said. “It has destroyed some of the character and the ambiance of their respective residential communities.”

The bill also has the support of the American Hotel & Lodging Association, which asked lawmakers to add additional language to create a state-wide registry of short-term rentals.

“States and localities across the country are recognizing the growing challenge of short-term rentals, which create safety concerns, reduce affordable housing inventory, drive up rent prices, and displace long-term residents,” AHLA Vice President Sarah Bratko said in a letter to lawmakers. “Many have adopted laws and ordinances, such as zoning regulations and tax collection requirements, to rein in illegal hotels.”

A spokesperson for AirBnB declined to comment directly on the legislation this week. Representatives from Vrbo did not respond to a request for comment.

Connecticut charges a 15 percent room occupancy tax on short-term rentals, but otherwise most regulations are left up to local officials through zoning ordinances.

Those taxes are paid to the state through the rental platform, and are not used to track the number of individual listings in Connecticut, according to Chris Collibee, a spokesman for the Office of Policy and Management.

Some groups representing local governments have also raised concerns that the bill does not do enough to define what specific actions towns can take against short term rentals, or how they would fund those initiatives. Brian O’Connor, the Director of Public Policy for the Connecticut Conference of Municipalities, said that many cities and towns would need a dedicated source of revenue to take on licensing duties.

“You can enact it, but the penalties have been an issue,” O’Connor said. “What we’re looking for is either a portion of the hotel and occupancy tax on short-term rentals, or an additional local tax on those entities again to help enforce and regulate.”

Leaders in several towns, including New Canaan, Stonington and Madison, have already explored ordinances to limit rentals, he added.

In Hartford, local regulations require that hosts obtain a zoning permit from the city before offering short-rentals, according to a legislative study conducted in 2018. That ordinance also sets restrictions on the number of guests and length of rentals, as well as guidance for handling nuisance complaints from neighbors.

The town of Middlebury went even further last year, banning short-term rentals altogether, according to the Waterbury Republican-American.

Osten said Thursday that she had no objections to allowing towns to collect a portion of the revenue from short-term rentals, or clarifying their ability to regulate the industry. Last year, a similar bill that would have allowed local governments to assess a 2 percent tax on short-term rentals was passed out of committee before it died on the Senate floor. Osten said that lawmakers “didn’t have enough bandwidth” to address the issue as they rushed to pass other bills during the final days of the legislative session.

This year’s bill is currently before the legislature’s Planning and Development Committee, which has yet to schedule a vote on the proposal.