BREAKING NEWS: State's highest court upholds Bar Harbor's short-term vacation rental cap

Another victory for residents; another black eye for the tourism class

BAR HARBOR, March 27, 2024 - The local tourism industry was dealt a second, embarrassing loss in as many months, as the state’s highest court this week upheld the town’s 2021 citizens ordinance to freeze short-term vacation rentals until they fall below 9 percent of the town’s housing stock.

The news was broken by Richard Cohen of Tremont, a retired New Jersey jurist who writes a newsletter on judicial topics.

The lawsuit was brought by former Planning Board member Erica Brooks, an agent with Swan Real Estate, who said the ordinance was illegal because it did not have a supermajority of two-thirds of the vote. The ordinance was adopted by 60 percent - 1,260 to 840. Brooks was on the board when the ordinance was contemplated. She was not reappointed in July 2021 after she openly worked against its adoption.

Neighboring towns of Mount Desert and Tremont have vacation rental ordinances on their annual town meeting agendas in May. Mount Desert’s is more like the Bar Harbor version with a cap, while Tremont is simply seeking registrations without a cap. Short-term vacation rentals on Airbnb and VRBO have impacted rental and sales prices, according to land-use consultant Noah Musson, cutting into the stock of year-round affordable homes.

The state Supreme Court upheld an earlier decision by the Superior Court striking down Bar Harbor’s unique provision for the supermajority approval on land-use ordinance changes.

Cohen wrote, “The town's land use ordinance provided that, if the planning board did not support a proposed ordinance, it required a 2/3 supermajority to enact it.  The planning board had split 2-2, and thus did not support the ordinance, 60% is less than 2/3, and so opponents sued for a ruling that the ordinance had not been adopted.  Yesterday, Maine's Supreme Judicial Court released its decision disagreeing, and upholding the ordinance.”

A critical consideration cited by the Supreme Court was a friend-of-the-court brief from the Maine Municipal Association. Cohen wrote the MMA argued, “for the first time, that the requirement of a 2/3 vote was invalid, because the statute required such a requirement to appear in the town charter.  It didn't appear there, and so, the MMA argued, the LUO requirement was ineffective.

“The Supreme Judicial Court agreed, and upheld the short term rental ordinance for a convincing reason which neither party nor the superior court judge had recognized.  Proper result, but a number of embarrassed lawyers, I bet,” Cohen wrote.

MMA was represented by Sarah J. Jancarik.

Erica Johanson (orally) and Paige Eggleston of the Portland firm of Jensen Baird represented Erica Brooks and Victoria Smith. Jonathan P. Hunter (orally) and Stephen W. Wagner, of Rudman Winchell, Bangor, represented Bar Harbor.

The ruling came one month after U.S. District Court Judge Lance Walker, in a blistering critique of the tourism class in Bar Harbor, struck down a lawsuit by hotels and restaurants to prevent the town from enforcing a cap on cruise ship passenger visitation.

But instead of enforcing Walker’s ruling, the Town Council gave the industry a free pass to conduct business as usual in 2024.

In 10 years, business groups which have sued the town have not had a single victory. Yet the council continues to behave defensively and gives the industry wide berth against the interest of residents.