There are rentals and then there are rentals, which is why two issues affecting local properties seem to be related. One is a state law requiring towns to allow additional accessory dwelling units (ADUs) and the other what to do, if anything, about short-term rentals (STRs). 

In this final part of a series, the Register asks: Are short-term rentals replacing year-round residences? What impact will the state accessory dwelling unit mandate have on local properties?

 Not all rentals are created equal

LD 2003 was enacted in 2022 with the intent of creating more affordable housing in Maine. It required changes to local ordinances to address Maine's housing shortage by permitting accessory dwelling units (ADUs) on properties. 

Over the past year, three of the peninsula's towns created ordinances to comply with LD 2003 and voters approved them in Edgecomb, Boothbay and Southport. Boothbay Harbor is working on its ordinance and held a public forum Oct. 8 to discuss amending the land use code as it relates to LD 2003.

In Boothbay, planning board chair Bruce Bowler summarized the town's ordinance. "We have said that if you have a dwelling unit as a result of this ordinance the shortest rental you can have is one month," he said.

Skip Simonds chairs Southport's planning board and explained that the town's ADU ordinance was approved unanimously at a special town meeting on July 24. It set a density requirement for ADUs on the island and a minimum of one year for rentals, which was included to address concerns that new units could add to the number of STRs.  

In a phone interview, Simonds explained that an earlier proposal to register STRs was put on hold after a series of public meetings failed to create agreement. The meetings resulted from discussions with Southport selectmen about the need to do something concerning short-term rentals which, Simonds said, "Got to a bit of a crescendo about a year ago." 

"We took the proposal off the table," he said. "We agreed that we need to do something but we didn't want to put a proposal out that couldn't pass a town vote."

Instead, the planning board brought the proposed ADU ordinance forward, which has a minimum rental of one year.  Simonds explained LD 2003 made the issue easier because it forced an ordinance change that was required by the state. 

Rebecca Graham brings a dual perspective to the ADU and short-term rental question. She chairs Edgecomb's planning board and is also the senior legislative advocate for Maine Municipal Association (MMA). In May, the town approved an ADU ordinance which set a minimal rental period of 90 days. Graham explained the minimum was to "... carve out short-term rentals. We didn't want (ADUs) to be used as transient rentals."

Graham spoke about the difficulty in financing an ADU which she said averages $375,000. "Essentially you need cash or a line of credit," she said. "Banks don't consider an ADU as more than a 'feature' and don't consider the residential or income value. That's a problem for people who want to build ADUs for family members. They can't get financing products to do that other than a line of credit."

"The people who can afford to build an ADU are those who can currently afford to buy here," she added. She said Belfast had long allowed the units before LD 2003 but, due to the shortage of financing products, only two people were able to build ADUs. "So it didn't really solve the problem," she said.

Discussions lead to short-term rentals

It doesn't take very long for conversations with towns about ADUs to touch on short-term rentals.

Mark Osborn, Boothbay Harbor selectman, owns hospitality businesses and seasonal vacation homes. He pointed out that tourism has always been one of our region's biggest industries and, "In the past few years, a number of lodging businesses have closed, greatly decreasing the available hotel rooms in our area — over 300 less rooms I believe."

He said in a phone interview, "We need to find a way to strike a balance between affordable housing and our tourism industry." 

He said he is an advocate for starting a short-term rental program in our community. "What the details of that program would be is up for debate but I believe at the very least it should include reporting of all rental homes, a fee for short-term rentals to help support the administering of the program and proof of the proper insurance." Osborn also said there should be no fee for long-term or year-round rentals.

"Once we have collected the data, we can then begin to look at what if any additional measures should be considered to increase or encourage more affordable housing in the area," Osborn continued.

He has identified a significant aspect of the short-term rental issue. We asked each town on the peninsula, "How many short-term rentals do you have and do you know where they are located?"

None of the towns knew.

As Graham explained, "Traditional B&Bs are licensed through the state and aren't taxed at the same category as a residential property  — it's likely to be higher. But we don't have a category that allows assessors to isolate transient rental properties as a commercial property versus their residential neighbors."

"We can't separate them from the residential stock without establishing a registry program so Edgecomb has zero ability to know and no capacity or staff necessary to register short-term rentals." 

Boothbay Harbor code enforcement officer and assistant assessor Geoff Smith said the exact wording of LD 2003 is "... Establish, in coordination with the Maine State Housing Authority, a statewide housing production goal that increases the availability and affordability of all types of housing in all parts of the State.”

So, Smith pointed out, "It doesn’t say the words year-round, it also doesn’t say the word seasonal, it says all types of housing." So there are a lot of questions that have to be answered about the process, he said.

Asked about short-term rentals, Smith said, "I think there are opportunities with short-term rentals to license them. He suggested self-registration with a fee. 

Are rental properties replacing year-round homes?

We reached out to AirDNA, which analyzes data for Airbnb and Vrbo rentals, to see how many STRs were added since 2018. Air DNA tracks rentals and is used by investors, municipal planners and property owners. 

The company responded to our request, providing detailed information for Boothbay, Boothbay Harbor, Edgecomb and Southport.

Because AirDNA's report shows September is traditionally a high volume rental month, we compared September rental numbers between 2018 and 2023 and also for July 2024, at the time the most recent month available. 

Towns' numbers are on the chart accompanying this article. 

Overall, the only town that had a decrease was Southport and even that showed, despite fewer rental units, more nights were booked and higher occupancy rates. The three other towns on our peninsula show increases in the numbers of rental units available and rental nights and occupancy. 

To gain a local understanding of the vacation rental market, we contacted Audrey Miller, who co-founded Cottage Connection of Maine more than 30 years ago and is founder and board member of Northeast Vacation Rental Professionals. Cottage Connection provides local management for 50 rental properties.

Asked about the numbers from AirDNA, she suggested adding about 20% more to the numbers to include rentals that don't use national platforms for their listings.

But the numbers don't answer whether STRs are replacing year-round properties. Since voting is linked to residency, we wondered about voter registration and asked the peninsula's clerks if the number of voters has gone up or down. They reported registered voters in all towns have increased in the past few years. 

Local services and infrastructure don't seem to be overwhelmed by the area's STRs. Public safety, emergency response, refuse and sewer districts all replied they aren't seeing an increase. 

Jon Ziegra, Water District superintendent and general manager, reported that STRs haven't affected the summer flows, but "It's killing us in the winter from not enough use." He explained since 2020 some traditionally year-round homes became seasonal, resulting in less pumping in the winter which causes problems with the distribution. "We've been turning off more (seasonal) residents than we used to," he said.

Register? License? Certify?

Since the data shows most towns on the peninsula have seen an increase, should STRs be identified or recorded?

Both Osborn and Smith are in favor of some STR registration.

Simonds commented, "Everyone agrees that something needs to be done around the issue of short-term rentals. No one agrees on what should be done."

While several towns in Maine have created programs to register and oversee STRs, the best example for coastal communities like ours may be Stonington.

Linda Nelson is its economic and community development director and, in a phone interview, shared some of the issues the town faced. She told the Register that Stonington, a top lobstering port, was "facing a surge of water in climate change and a surge of money in gentrification."

After much discussion, last year the town adopted an ordinance to register STRs. The town grandfathered owner-occupied rentals because of its traditional vacation rental market, but put a ceiling on non-owner occupied rentals, Nelson explained.  "We need houses, it's not a place for investors unless they're going to start companies and create jobs," she continued. 

The plan seems to be working for Stonington. Nelson said it has seen home prices come down because the rental investment market isn't there.

Stonington's response may help other Maine towns decide how or if they should manage short-term rentals. If identifying a problem is the first step in finding the solution, Nelson's perspective is a good one:   

"This is a community where people live, not your bank."

While too numerous to name individually, the Register wishes to thank everyone who provided information for this series.