The city of Ketchum is prepared to deliver a report on the effects of short-term vacation rentals, but a new law in Idaho will bind its hands on how to address the issue.
The city hired an Arizona State University graduate student, Genevieve Pearthree, in June 2016 to research short-term rentals listed on websites such as Airbnb, HomeAway and VRBO.
Pearthree will present her report to the City Council on Monday, city spokeswoman Lisa Enourato said.
Her research found 471 short-term rentals citywide, though city zoning codes limit the rentals to only tourist zones and short-term occupancy zones. Those areas are primarily in southwestern Ketchum, near the Warm Springs base area and in north Ketchum adjacent the Bigwood Golf Course.
About half the rentals listed as available in Ketchum were in residential zones or other parts of town where they are prohibited, according to the city of Ketchum.
By January 2018, however, the city won’t be able to address the zoning issues, thanks to a new law passed by the Legislature during its session last winter.
The law, HB 216, pre-empts cities and counties in Idaho from enacting or enforcing any ordinance that would prohibit a short-term rental from a certain part of their jurisdictions. It will take effect Jan. 1.
“The Legislature is calling the shots right now,” Enourato said.
The law does allow cities and counties to regulate health, safety and welfare related to short-term rentals.
Short-term rentals must also register with the Idaho State Tax Commission and pay state sales and use taxes. Idaho collects a 6 percent sales tax and a 2 percent lodging tax on short-term rentals, as well as hotel rooms statewide.
The city of Ketchum assesses a local-option tax on short-term rentals. The law gives the city flexibility to continue to administer and collect its local-option tax on the rentals, or to contract with the Tax Commission to accomplish that.
Enourato said the city hasn’t decided how to comply with the new law, and has been waiting for Pearthree’s report to be finished.
“It’s really difficult to track all of those listings,” Enourato said. “They do come and go. It takes an incredible amount of staff time to monitor those sites.”
Ketchum briefly contracted with the Tax Commission to collect local-option taxes in 2013, but terminated the contract a year later. The city’s LOT revenue declined while it owed the state an annual payment of $192,000 to administer its LOT collections, leading the city to cancel the agreement.
Tax Commission Public Information Officer Renee Eymann said the agency is preparing to send letters to online vendors notifying them of the new requirements. The letters will be sent in September, Eymann said.
Airbnb reached an agreement with the Tax Commission in 2016, prior to the Legislature’s passing HB 216.
Airbnb agreed to collect and remit taxes on behalf of the property hosts who list rentals on its website. The agreement started Dec. 1, 2016.
Pearthree’s research focused on analyzing the number of short-term rentals in Ketchum, as well as affordable-housing policies in Ketchum and across Blaine County. She looked at how other ski resort towns in the West handle short-term rentals, and compiled examples that Ketchum may want to follow. Her recommendations are intended to identify practices that would increase or preserve affordable housing, according to the city of Ketchum.
Of the 471 short-term rentals she found in Ketchum, 90 percent were vacation homes. Just 23 percent collected state and local taxes, according to her research.
Furthermore, she found that the number of long-term rentals—those offered for more than 30 days to a renter—has declined citywide in all categories.
Advertising for studio apartments in Ketchum declined from 38 rentals in 2012 to just four in 2016, the research showed.
For one-bedroom apartments or condominiums, the number of advertisements declined from 70 in 2012 to 12 in 2016.
The advertised number of two-bedroom units dropped from 24 in 2012 to 16 in 2016.
Advertisements for three-bedroom units declined from 54 in 2012 to 47 in 2016. In 2012, Ketchum had three advertisements for four-bedroom units and none in 2016, according to the research.
In an edition of the city newsletter in May, Mayor Nina Jonas criticized HB 216 and the impact that vacation rentals have on the long-term rental market.
“HB 216 overall is a net loss for Ketchum,” Jonas wrote. “As online [short-term rental] platforms have grown in popularity, the city has fielded an increasing (and relatively high number) of phone calls from real estate agents and potential buyers asking if particular properties for sale can be turned into [short-term rental] properties.”
HB 216 passed the House on March 3 by a 63-5 margin and the Senate on March 20 by a 35-0 vote. Gov. Butch Otter signed the bill on April 4. District 26 Reps. Sally Toone, D-Gooding, and Steve Miller, R-Fairfield, voted against the legislation. Senate Minority Leader Michelle Stennett, D-Ketchum, voted in favor.
The bill was supported by the Idaho Lodging and Restaurant Association and lobbyist Jim Clark. Clark told the Idaho Mountain Express in January that it was intended to ensure that vendors collect the required state and local taxes, as well as protect property owners’ abilities to rent their properties.