La Grande planning commission, council members discuss pause on new short-term rentals in La Grande

Aug. 9—LA GRANDE — For those visiting La Grande, renting an Airbnb or vacation rental may sound like the optimal option for a brief stay. For city residents, however, these short-term rentals might be countering efforts to deal with La Grande's housing shortage.

The La Grande City Council and the city's planning commission had a joint work session on Monday, Aug. 8, to discuss the possibility of pursuing a temporary moratorium preventing residential property owners from converting full-time dwellings into what the commission calls BnBs — short-term rentals, Airbnbs, VRBOs and vacation homes.

Recently, the city's planning division received calls from real estate agents and an investor — who don't live in the area — looking for residential property to buy and convert to short-term rentals.

City officials have also heard that local real estate agents were encouraging owners to convert rental properties into Airbnbs. This increased interest in new short-term rentals in La Grande's residential areas prompted the Aug. 8 meeting.

"That's just kind of raised some red flags for us," said Michael Boquist, the city's community development director. "We're still trying to figure out our housing needs and how we're going to address our housing needs."

Initial concerns

Boquist and members of the planning commission posited during the meeting that the influx of short-term rental applications is in direct conflict with the city's recently adopted Housing Needs Analysis and Housing Production Strategy.

According to the needs analysis created in 2019, La Grande needs 800 new units within the next 20 years to accommodate a projected growth of 1,392 new residents — approximately 40 new units every year to meet the prediction. These dwellings range from single and multi family homes to townhome and duplexes.

The proposed moratorium would give the planning commission time to find what Boquist called an "appropriate balance" between the increasing number of applications for short-term rentals and the city's growing housing demands.

According to the needs analysis, approximately 51 homes should have built built by 2022. In actuality, 26 have been build, while 18 units have been converted to short-term rentals.

The planning commission has been taking note of the increasing applications of short-term rentals and began discussing how to address issues around these rentals through city code in November 2021.

Influx of short-term rentals

Before 2020, La Grande had "hardly any" short-term rental applications, Boquist said. In the past two years, however, the planning commission has considered 28 applications for 30 dwelling units. Of these dwellings, 24 were single-family homes that were taken off the market and used for short-term rental. Six have been retained and occupied by a full-time tenant.

"It's the ones where they're converting investment property into a BnB that we've had interesting conversations about," Boquist said. "How is that affecting our housing and where is our priority as a community?"

During the meeting, Mayor Steve Clements noted that although he and his family rely on short-term rentals when they travel, he's conflicted about his own city's capacity for these properties.

"I'm kind of torn, honestly, between letting the market do what it is supposed to do and losing residential housing without any kind of alternative to new housing," he said. "That really concerns me."

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Over the past few years of dropping interest rates, increased building material costs, supply chain challenges and rising mortgage rates, housing construction has taken a hit.

Toward the start of the COVID-19 pandemic, Gov. Kate Brown and Oregon lawmakers passed legislation that placed a moratorium on evicting tenants who didn't pay their rent. Boquist said that several local property owners applied with the planning commission to convert their rental dwellings once the tenants, who they were unable to evict, moved out on their own.

"They were so relieved to have their house vacated," he said. "Our first wave of BnBs was folks that were just getting out of the rental market."

Boquist noted that this trend continued, and the commission has received two to five applications every month, which it approves or denies based on neighborhood compatibility and parking allotment.

Questions and concerns

During the meeting, city council members expressed a variety of concerns, both about the prospect of a moratorium, and the impact of leaving the short-term rental market as-is.

Councilor David Glabe said that although housing is needed in La Grande, a moratorium might not be the optimal way to address an issue that is relatively new.

"I worry that we may be overreacting to what is likely a very short-term response to a problem that was created by a policy that the state enacted," he said, referring to the moratorium on evictions.

Some members questioned the legality of the moratorium, and whether the commission would be allowed to prohibit property owners from applying for short-term rentals.

Anne Morrison, a member of the planning commission, noted that — with the assurance of a city attorney — the issue would not give rise to legal troubles.

"This has been an issue across the state," she said. "We've looked at samples of what other municipalities have done around the state in terms of addressing this issue. It's been addressed in numerous towns in Oregon."

In November 2021, residents in Lincoln County voted to phase out vacation rentals in unincorporated residential areas. Proponents of the vote said short-term rentals made the community less affordable for residents.

Next steps

By the end of the Aug. 8 meeting, council members and the planning commission agreed to make the moratorium an action item for the Sept. 7 city council meeting. During this meeting, the council will have a first reading of the ordinance. At the Oct. 5 meeting, a second reading would take place, and the council would vote on whether to pass the ordinance and enact the moratorium. During both of these meetings, the public would have the opportunity to make comments.

If passed, the proposed moratorium for La Grande would go into effect as early as Oct. 5, 2022. It would not affect current Airbnb and short-term rental properties, but it would place a 120-day halt on the city accepting new applications. During this time, the planning commission would revisit its application process and reconsider rules around short-term rentals in La Grande before deciding whether or not to extend the moratorium further.

At the end of the 120-day period, the planning commission would submit a report that identifies their recommendation for further action — if any. Another public hearing would be held to determine if progress is being made toward addressing the situation. The council would vote to either drop the moratorium or extend it to allow further changes.

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Shannon Golden is a reporter for The Observer. Contact her at 541-624-6015 sgolden@lagrandeobserver.com.