Short-term rentals becoming a hot topic

A subcommittee of the Hill City Planning and Zoning Committee comprised of four to five people have met a half dozen times over the course of a three-month period to try to address the short-term rental issue in Hill City.
The Hill City Council asked planning and zoning to look into the matter out of concern the short-term rental issue in residential neighborhoods was “getting out of hand,” said Ron Walker, chairman of the Hill City Planning and Zoning Commission.
According to Dani Schade, developmental services director for Hill City, the city would occasionally get complaints about excessive noise or of rental guests blocking driveways of nearby neighbors. The town wanted to pursue viable options before the situation escalates.
“In small towns there are only a certain number of pieces of real estate. All the people who can afford a smaller home are being priced out by others who are buying them and renting them out,” Schade said.
This has multiple consequences, Schade said. One of the biggest is that people who work in Hill City may not be able to afford to actually live in Hill City, meaning many service industry workers would have to find housing elsewhere and commute to town. Those commuters might then find the cost of commuting to be too high and look for jobs in the town they can afford to live in.
Schade estimates she gets one call a week from out-of-towners who have bought homes in Hill City and want to know the rules about renting them. And while Schade explains the town knows there is a place for these people, it also wants to make sure “it doesn’t impact residents negatively.”
Waiting to address the situation could have dire consequences. Many small towns have already found their seasonal workers being impacted and younger residents being priced out of the housing market. Towns like Steamboat Springs, Aspen and Breckenridge in Colorado and Missoula and Bozeman in Montana are scrambling to balance the lives of their residents and visitors. Towns across these states are studying the issue, requiring licenses and tracking the number of rental properties in residential neighborhoods. Schade thinks Hill City is about five years behind these resort towns.
“We better address it now,” she said.
A quick search of sites such as AirBNB and VRBO advertise in-town properties that start at $129 per night and go up to as high as $600 a night, with most fetching nightly rates above $200. Boasting proximity to Main Street appears to be a valued amenity.
The planning and zoning subcommittee is making three recommendations for the city council to consider.
The first would put an 8 percent cap of platted lots on different groupings of different streets.
The second would address when the city has an excess of 8 percent. The city would be able to “walk this back some” of those properties by not allowing the variance that allows for short term rentals to be transferred if property ownership changes. The third recommendation would result in an impact fee on non- owner-occupied short-term rentals in residential zones. The $1,000/year fee would be earmarked for affordable housing with the intention of the city eventually building workforce housing with rent controlled units.
“We don’t want to go down the road so many other communities have where no one could afford to live and work in Hill City,” said Walker.
None of these recommendations would affect owner-occupied units or units that are located in commercial zones. Nor would these recommendations limit homeowners’ ability to rent their homes during Sturgis Bike Week. People who live in their residential zoned property and rent a room out or have a traditional state defined bed and breakfast would not be affected.
These recommendations would strictly be applied to non- owner-occupied houses that are located in residential neighborhoods. Walker believes there are 40 rental homes of some capacity within the city, half of which are in residential zones.
The city hopes to have three public input meetings on this issue. The meetings would give residents an opportunity to hear more about the recommendations and for the public to comment on the ideas. The first takes place June 3 at 8 a.m. Subsequent meetings are June 9 at 7 p.m. and June 14 at noon. All meetings take place at the senior center.
The town has worked to notify every resident about the meetings. Mailings went out with water bills and city staff went door to door to inform residents who live in communal spaces like trailer parks where individual owners don’t receive separate utility bills.