Editor’s Note: Jim Donahoe of Windermere Real Estate in Ocean Shores presented the following “revenue idea’ to the City Council on Nov. 2 during a budget study session. The idea would be to increase the number of homes and residences allowed to participate in a city-controlled overnight rental program.
Reasons to allow transient rentals throughout Ocean Shores:
1. Beneficial to our local economy.
A. Allows us to compete with similar tourism cities.
B. More visitors equal more tourist dollars spent locally in restaurants, activity businesses and retail shops.
C. More real estate buyers.
Our office turns away an average of between one and three buyer prospects per week that inquire about purchasing a home that allows overnight rentals. When told we do not allow overnight rentals, they disappear.
D. Increased tax base. More visitors, more real estate buyers, more home building and more tax revenue.
E. More construction and local construction jobs.
2. Pride of ownership improves.
A. Additional income allows homeowners to continually invest in their properties and the open, competitive rental marketplace encourages this investment. This equals higher property values.
3. More revenue for the city through increased sale tax revenue; Dramatic increase in 2- and 3-percent hotel/motel tax.
I would sincerely hope that this revenue would be used to promote our city as a tourist destination; and we have the ability to recoup what is now lost revenue from non-reporting properties operating illegally in Ocean Shores.
4. Create rules and regulations for homeowners participating in the rental program in order to assure safety to those renting their homes.
5. The big question — how to allow these rentals with the least disruption to neighbors.
A. Illegal overnight rentals are already happening in Ocean Shores.
B. Develop a strong set of rules and regulations that provide up-front and ongoing fees that would allow sufficient hiring within Code Enforcement to assure compliance.
C. Develop some type of agreement that reflects this allowance is a privilege, not a right, and that there will be established a process whereby the homeowner would lose that privilege based on an established level of complaints or code violations.
6. Numbers: What’s happening now?
A. VRBO shows 200 rentals in Ocean Shores; Airbnb shows 131 rentals in Ocean Shores.
How many of these are illegal with the city not collecting any tax revenue?
B. Seabrook did over $6 million in gross cottage rentals in 2016 with approximately 160 homes participating. That generated $300,000 in 2- and 3-percent taxes.
That revenue equals an average of $37,500 annual rent per home.
C. What could that look like in Ocean Shores? With 800 homes participating, there would be an estimated $20,000 average gross annual rental income, producing $16 million in gross annual revenue and $800,000 in additional tax revenue.
This does not reflect additional sales tax that would be collected from the other businesses in Ocean Shores. It also does not include the user fees that would be collected from all participating homeowners and applied to the costs required to administer this program.
If 800 participants each paid $300 in annual fees, the city would have $240,000 to administer the program.
Let’s get real:
1. Ocean Shores is competing with many other cities for tourism dollars. We are at a competitive disadvantage because:
A. We no longer offer “oceanfront” accommodations in the central downtown or “motel row” sector because the brush has grown so high you must be on the second or third floors to view ocean waves.
B. We have no theme or attractive central core pedestrian friendly shopping experiences.
C. We have not made promoting Ocean Shores a priority
2. Ocean Shores is constantly searching for new revenue … this proposal offers a nearly instant and steady revenue stream to fund tourism promotion and also creates a very favorable ripple effect for income and taxes in our local economy.
3. Overnight rentals are allowed and seem to be working well for almost every other Northwest coastal community. Why not here?
4. Overnight rentals are happening now in Ocean Shores. We miss out on tax collections and the renters are not afforded the benefit of a code that could provide needed safety measures for them.
Let’s make this happen.
