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Lewes looks to balance tourism, residents with short-term rental rules

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Lewes city officials are weighing how to handle Airbnbs and Vrbos, compared to other short-term rentals in the resort city. | PHOTO COURTESY OF WIKIPEDIA COMMONS

Concerns from residents over noisy parties and trash, along with the desire to monitor a changing rental market in town, have Lewes considering an ordinance regulating popular short-term rentals like Airbnb or Vrbo.

Online booking sites that help ordinary homeowners rent out their second homes or spare bedrooms have transformed the rental industry over the past decade, and property companies have also swooped in to take advantage of the platforms. That’s left cities and towns playing catchup with outdated laws that deal mostly with traditional hotels or bed-and-breakfasts.

“This has been a really hot topic all around the country, certainly any sort of beach, lake or ski town,” Jeffrey Goodman, a national consultant hired by Lewes, told city leaders and residents at a July 26 meeting.

The city formed a committee to come up with the new rules, made up of city council members, residents, and a short-term rental host. They wrestled with how to define terms like “short-term rental” and “dwelling unit” and what to do about issues like parking. The committee wrapped up Sept. 6 and will turn over a draft ordinance to the Lewes City Council for its Sept. 12 meeting.

Lewes certainly isn’t trying to ban such rentals. City Manager Ann Marie Townshend said they recognize that short-term rentals are an important part of the economy, and they don’t want to hurt the business community.

“While some people would prefer not to see short-term rentals … the committee’s really tried to focus on those behaviors that have made the short-term rentals difficult, and have parameters within the ordinance to address the behaviors while still allowing them,” she said.

Lewes is one of the few municipalities in the area specifically coming up with regulations for short-term rentals. Rehoboth Beach has had an ordinance in place for several years, but other towns say they don’t have specific rules. Most area towns, though, do require rental licenses for both short- and long-term landlords – for which homeowners using sites like Airbnb are supposed to apply. Those licenses come with fees and requirements like smoke detectors and other safety features.

Lewes already requires both long-term landlords and homeowners to get a license if they want to rent their property, but the new regulations would differentiate between short term and long-term rentals for the first time. Requirements for short-term rentals would include a maximum occupancy of two people per bedroom plus two people. A local contact person would also need to be available 24 hours a day to deal with potential issues, and short-term rentals would require the property to be inspected.

For enforcement, owners would get a written warning for the first violation in a given category, a $250 fine the second time and a $500 fine the third time, with revocation of the license for the rest of the year. The same fines would apply to long-term rentals that violate rules.

The threat of revoking a license is the best deterrent, Goodman said in the committee’s last meeting, noting, “That’s real money; that’s a big deal.”

A separate zoning ordinance would specifically allow short-term rentals in all areas of the city where residential housing is permitted.

As for why new rules for rentals are needed, Townshend said Lewes is increasingly becoming a vacation destination like its southern neighbor Rehoboth. That trend has happened over the past couple of decades, but especially since the onset of the COVID-19 pandemic when the city saw its rental fee income increase. Vacationers weren’t able to fly during part of the pandemic, and Lewes is just a short drive from many metro areas. And even as the pandemic eases, demand remains high.

Townshend said the city has also heard from residents pushing for regulation of the rentals. They’re concerned about issues like overcrowded houses, loud parties and not enough parking on some streets.

Right now, the city doesn’t have a way to tell how many people are renting out homes using sites like Vrbo, Townshend said. So this ordinance will give them a way to track that and get a better handle on the housing needs in the city.

“We’re not looking to be draconian,” she said. Rather, the licensing program will give the city a framework it can then strengthen later if stronger regulations are needed.

The rules would not just affect homeowners, but companies like real estate agencies that manage rentals in the area. Adriane Gallagher, a Realtor manager with Gallo Realty in Lewes, has attended committee meetings and been part of the discussion. She told the Delaware Business Times that she commends the committee for listening to both sides and downplayed the effect of the rules on companies like hers, which has its own website but has properties listed on sites like Vrbo.

Gallagher said the proposed rules add reasonable requirements like fire extinguishers and carbon monoxide detectors, and “these are all things that we tell our owners already.” Gallo also already has a 24/7 pager system to deal with issues and emergencies.

“I think most of it is very common sense,” she said.

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