City to regulate Internet BNB rentals, short-term vacation rentals

By Karen Cornelius

The Legislative Committee met on Monday night, November 13, and spent some time discussing what to do with AirBNB (bed and breakfast) and short-term vacation rentals. Currently there are no regulations for these temporary rentals by property owners offered over the internet where only a credit card is required. The city does have an ordinance requiring all rental property owners to register, but that has been unsuccessful so far, possibly due to the fact this requirement is relatively unknown and not enforced presently.


Legislative chair Frank Loucka told council members he and clerk of council Gwen Fisher have done some research to see how other cities handle these Internet rentals or short-term vacation stays. They collected information from Florida, Texas, and even Minnesota. Loucka said Vermilion has a lot of legislation on rentals but it is scattered into several different ordinances. For example, bed and breakfast businesses are only allowed in the historic district zoning and there are no fees or no bed tax to pay. Another ordinance addresses hotels and motels with five or more rooms for rent in B-2 zoning and there are no fees, but a three percent bed tax. Apartment rentals are covered for R5 zoning only and there are no fees or bed tax. However, rentals conducted over the Internet appear to be about 50 in the Greater Vermilion Area with several in the townships and one in Amherst, according to Loucka. While they do encourage tourism, there are no regulations, zoning, fees, or otherwise, for them.


The consensus seemed to be that all property owners who rent property need to register with the city including these AirBNB’s. Councilwoman Barb Brady said Vermilion has these operating now and they could compete with the small hotels and motels. She said it is income for the property owner and it is a business. She stated that they should have control over them and they are a taxable entity. She said it is not fair to those who do pay taxes to let these small businesses go. She said even though the city has a register requirement for all rentals, they did not get the word out that there is a penalty for those who do not comply. She suggested the city put a notice in the water bills to get property owners to register their rentals.


Councilman Jim Forthofer agreed it isn’t fair to those who pay taxes. He said enforcement is necessary but where does Vermilion get the manpower to do it. Finance director Brian Keller said he talked to RITA the city’s tax administrator and they could not give him any information to identify these rentals. From the audience, Steve Holovacs suggested the city use the court system since they do evictions on rentals every day as another place to look. Councilman Brian Holmes said since these AirBNB’s and other rentals are on the Internet there are addresses that someone could go and enforce the law although it is a staffing issue to do this. He suggested maybe the police could stop and give people a copy of the registration ordinance.


Chair Loucka asked members what they wanted to do on these Air BNB’s. He said in Minneapolis a license is not required if the property owner is there, but there are regulations if a unit is rented and the property owner leaves. Council president Steve Herron said he was impressed with Fort Lauderdale, Florida’s ordinance which was simple and based on safety issues. This city keeps track of the businesses and if they are in compliance with safety such as fire regulations. Herron said Vermilion should be interested in health and safety and keeping track of them. Loucka said Austin, Texas requires a license if a property owner rents a house for a short-term.


“We don’t want to discourage people to stay in Vermilion, we just want to know the property owners,” said councilman Holmes. Brady stated that on the plus-side these short-term rentals do encourage property owners to keep their property up looking nice. On the bad side, she said people are coming to homes in residential areas where they do not know the neighborhoods and the rules and they can come and go at midnight, have too many cars to park, and can make noise. She knows some neighbors that are suffering. “Make them taxable,” said Brady. She said it is hard to find them and there should be a big penalty if they don’t register.


Chair Loucka agreed they should have regulations, but they need enforcement. He said he would like to work with the law department and create one comprehensive ordinance covering all types of rentals in Vermilion. Loucka said this is a work in progress and he will put the topic back on next month’s committee agenda.


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