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

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

Residents’ concerns about loud parties and litter, along with a desire to monitor developments in the city’s rental market, led Lewes to consider an ordinance regulating popular short-term rentals like Airbnb or Vrbo. Online booking sites that help ordinary homeowners rent out their second home or spare bedroom have transformed the rental industry over the past decade, and real estate companies have also rushed to take advantage of the platforms. This has left cities and towns caught up in outdated laws that mostly deal with traditional hotels or bed and breakfasts. “This has been a very hot topic all over the country, certainly at any type of beach, lake or ski resort,” Jeffrey Goodman, a national consultant hired by Lewes, told leaders and residents of the city at a meeting on July 26. The city formed a committee to craft the new rules, made up of city council members, residents and a short-term rental host. They wondered how to define terms like “short-term rental” and “housing unit” and what to do about issues like parking. The committee ended on September 6 and will deliver a draft ordinance to Lewes City Council for its September 12 meeting. Lewes is certainly not trying to ban such rentals. City Manager Ann Marie Townshend said she recognizes short-term rentals are an important part of the economy and she doesn’t want to hurt the business community. “While some people would prefer not to see short-term rentals … the committee really tried to focus on the behaviors that made short-term rentals difficult, and have parameters in the order to address the behaviors while still authorizing them,” she said. Lewes is one of the few municipalities in the area to specifically offer regulations for short-term rentals. Rehoboth Beach has had an ordinance in place for several years, but other cities say they don’t have specific rules. However, most cities in the region require rental licenses for both short-term and long-term landlords — which landlords using sites like Airbnb are expected to apply for. These licenses come with fees and requirements such as smoke detectors and other safety devices. Lewes already requires long-term landlords and landlords to obtain a license if they wish to rent out their property, but the new regulations would for the first time distinguish between short-term and long-term rentals. Requirements for short-term rentals would include a maximum occupancy of two people per bedroom plus two people. A local contact person should also 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 receive a written warning for the first offense in a given category, a $250 fine the second time, and a $500 fine the third time, with license revoked for the remainder of the year. The same fines would apply to long-term rentals that break the rules. The threat of revoking a license is the best deterrent, Goodman said at the committee’s last meeting, noting, “It’s real money; it’s a big problem. A separate zoning ordinance would specifically allow short-term rentals in all areas of the city where residential housing is permitted. As to why new rental rules are needed, Townshend said Lewes is increasingly becoming a vacation destination like its southern neighbor, Rehoboth. This trend has happened over the past two decades, but especially since the start of the COVID-19 pandemic, when the city saw its rental income increase. Vacationers were unable to fly during part of the pandemic, and Lewes is only a short drive from many metropolitan areas. And even though the pandemic is easing, demand remains high. Townshend said the city has also heard from residents pushing for rental regulations. They are concerned about issues such as overcrowded houses, loud parties and lack of parking on some streets. Currently, the city has no way of knowing how many people are renting homes using sites like Vrbo, Townshend said. So this ordinance will give them a way to track that and better understand the housing needs of the city. “We’re not trying to be draconian,” she said. On the contrary, the licensing program will give the city a framework that it can then strengthen later if stricter regulations are needed. The rules would not just affect landlords, but businesses like estate agencies that handle rentals in the area. Adriane Gallagher, a real estate agent with Gallo Realty in Lewes, attended committee meetings and was part of the discussion. She told the Delaware Business Times that she commends the committee for listening to both sides and downplaying the rules’ effect on companies like hers, which has its own website but whose properties are 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 we already tell our landlords.” Gallo also already has a 24/7 pager system to deal with problems and emergencies. “I think most of the time it’s common sense,” she said.