How Airbnb, VRBO pushed MDI to the edge, straining housing crisis; Bar Harbor responds but not other towns ...

OTHER NEWS: Cruise ship for housing?

NORTHEAST HARBOR, Nov. 19, 2022 - It could have been a meeting of the local Realtors so well attended were their representatives Tuesday night to influence the town’s drafting of new short-term rental regulations.

All the blue chippers were there. Swan’s, Knowles, and, of course, Katrina Carter. Several landlords were also present to keep a watchful eye on the Land Use Zoning Ordinance committee as it went about crafting the language.

They appeared to have succeeded.

The end document is appearing more like a survey than a piece of serious regulation to deal with the housing crisis on MDI.

It’s political theater dressed up to look like progress.

It ignores the elephant in the room - the crushing velocity of online vacation booking sites and their impact of an already strained ecosystem.

Airbnb listings - 11 of them - were first reported on MDI in 2015, according to the Island Housing Trust’s foundational study on the housing crisis. https://static1.squarespace.com/static/569fba9076d99cc6c04e5005/t/5cc204b16f3d150001a80f8a/1556219104894/IHT-Housing-Study-2018.pdf

The number of listings grew to 110 in 2018 for the four MDI towns - a tenfold increase, the study stated.

Today, the Town of Mount Desert alone has 197 listings on AirBNB and VRBO.com, according to data aggregated by AirDNA.com. That’s 9 percent of the housing stock, which the 2020 census put at 2,168 units.

The three towns outside of Bar Harbor had more listings combined this year than Bar Harbor - 733 to 645. The contrast is even larger because Bar Harbor has many hotels and inns which also use these marketing channels. Mount Desert has only five hotels and inns, so virtually all its listings were for homes.

What do we mean when we say housing crisis?

Bar Harbor/Mount Desert police chief Jim Willis stated that his officers encounter workers and visitors sleeping in their cars frequently during the tourist season. “We ask them to leave and people are generally compliant so enforcement action beyond the warning is rare.”

Some upper-class students at College of the Atlantic have taken to camping from the start of the fall session to mid October or even later, because housing once available during that period are now rented out as short-term lodging for tourists, according to interviews with several students. COA has launched a campaign to build more housing on campus.

Many businesses on MDI - restaurants, coffee shops, stores - are unable to staff a full schedule. Some have closed permanently.

Enrollment has declined for 20 years in every school on MDI, the principal reason being many families with school-age children are unable to find housing they can afford.

In 2018, The IHT analysis stated 54 percent of MDI workers commute onto the Island. About 78 percent of business respondents agreed or strongly agreed that finding affordable housing is a major challenge for their employees, and 60 percent agreed or strongly agreed that the lack of affordable housing options negatively impacted their business. That analysis is now 4-years-old.

One park ranger told me Acadia National Park is “hemorrhaging talent,” and pointed to the starting pay at Walmart in Ellsworth as being comparable and affordable housing more attainable off island. Park Superintendent Kevin Schneider said he was not able fill 50 seasonal positions out of about 160 openings this past summer.

The Bar Harbor Employment Hub page on Facebook has 11,642 members.

The Mount Desert Island Hospital has 88 job postings on its website.

Conclusion: We are now prisoners of our own device (Hotel California). We live in a beautiful place, but many of us avoid Bar Harbor, the park and even Northeast Harbor and Southwest Harbor. We can’t get any trades people to return calls. We worry about the decline in essential services. We’ve cut back on dining out because it’s just too hard. Still, those of us with homes consider ourselves lucky.

Housing crisis is a continuum

It started decades ago when summer people priced residents out of homes, turning once year-round villages and town centers on MDI into ghost towns from Thanksgiving to Easter. In recent years, businesses began to buy up more year-round housing for their workers.

That was not ideal, but stakeholders tried to achieve a holistic balance between summer residents, the seasonal workforce, weekly renters, campers and those who stayed in hotels and inns for a few nights.

That delicate balance turned into a raging fire in 2018. The accelerant? Airbnb and VRBO (vacation rentals by owners). By 2021, after short-term rentals exceeded 20 percent of the town’s housing stock, Bar Harbor implemented a freeze on all registrations until they fall below 10 percent which will take decades. Bar Harbor also placed a minimum four-night rental on non owner-occupied units and two nights on owner-occupied rentals. Former planning board member Erica Brooks, a real estate broker, sued to reverse that freeze in Maine Superior Court. That suit is pending.

No such regulation is being contemplated in Mount Desert, which is simply requiring smoke detectors and other safety equipment already in the town code, and setting maximum occupancy limits.

Meanwhile, Southwest Harbor and Tremont, with 330 and 204 listings respectively have nothing proposed to regulate short-term rentals. (SWH is most vulnerable to becoming the next theme park village on the island. It has virtually no zoning. A mini golf course a la Bar Harbor’s Pirate’s Cove is set to open next spring.)

In four short years, almost 15 percent of the housing stock on MDI became short-term rentals - or, in effect, unregulated small inns. In every town except Bar Harbor, you may book for just a single night.

The renters tend to be younger, less mindful of the comity of residential neighborhoods and more apt to party. And most of them come in cars. So they are mobile, quickly able to take over villages like Northeast Harbor, Seal Harbor and Somesville, and tourist destinations like Jordan Pond House.

Arizona this summer enacted a “party ban” on short-term rentals. https://www.azfamily.com/2022/06/28/airbnb-permanently-bans-parties-after-restrictions-short-term-rentals-arizona/

Other local and state regulation of short-term rentals is growing.

‘You can’t fight a raging fire with a garden hose … a revolution is not a dinner party’

If MDI is serious about reversing its housing crisis, it cannot tinker at the edges as Mount Desert is doing. The game could be over in one or two years. (The game could be over now.)

The proposed regulation in Mount Desert exempts owner-occupied units, unlike Bar Harbor. It also does not differentiate non owner-occupied from seasonally occupied rentals.

They are very different animals.

Bar Harbor council member Joe Minutolo told me about an investor he met from New Orleans who spends no time here and bought a house for the sole purpose of renting it to vacationers on Airbnb.

That is markedly different from locals who rent out their houses for weeks in the summer and then move back in the fall.

The first step is easy. Classify non owner-occupied units as lodging businesses and prohibit them in residential zones.

The next step is to enact ordinances which limit stays to a minimum of seven nights (or more).

New York City, the nation’s largest short-term lodging market, has done that and more, in cooperation with the hosting websites.

Most unhosted rentals in NYC under 30 days are illegal. Stiff fines are in store for those caught renting illegally.

Except for some obvious differences - NYC has many more multi-unit buildings - the NYC regulations would make a good template for MDI towns to consider adopting.

The seasonal workforce housing need here is more intractable, but not insurmountable. Two weeks ago the Terramor luxury campground in Town Hill was given approval to increase its RV dormitories for staff, but not after several strict constructionist Planning Board members made some minor concessions.

More concessions like that should be encouraged

Bar Harbor is leading the way in relaxing zoning requirements to allow businesses to construct seasonal dormitories instead of gobbling up year-round housing stock around town.

One such building will be reviewed at a Planning Board public hearing Dec. 7 for Witham Hotels to replace an existing, unused building at the corner Kebo and Mount Desert streets with a three-story dormitory called a “shared accommodation” which does not require minimum area per family of 5,000 square feet.

OLD, EXISTING BUILDING

PROPOSED NEW DORMITORY (SHARED ACCOMMODATION)

“Our company and others in the business community were coming under scrutiny for the housing we were acquiring and the adverse impact it was having on the character of these neighborhoods,” hotelier David Witham told the Islander. “I made a conscious decision to try to get out of these neighborhoods and return this housing stock back into year-round housing for folks.”

The new building will house 83 of Witham’s workers. That’s a lot of rooms freed up for year-round housing.

Witham is a businessman who holds the view that the destruction of a community is not good for business in the long run. What a concept!

Southwest Harbor is moving in the opposite direction. The owner of its largest hotel, the Claremont, has been acquiring inns and houses at a rapid pace for workforce housing since he purchased the hotel in 2020. Several messages left for owner Tim Harrington for a call-back were unavailing.

SWH was named a Top 10 market for investment in short-term rentals by AirDNA in February. That’s not a list to be proud of if you’re worried about housing.

“As the largest city on the ‘Quiet Side’ of Mount Desert Island, home to Acadia National Park, Southwest Harbor is a popular alternative for guests looking to escape the crowds of Bar Harbor,” stated AirDNA.

“Southwest Harbor has benefited from an expansion of its peak season, with guests visiting earlier and staying later in the season than ever before. Combine the higher occupancy levels with the average daily rate, and it’s obvious how properties in this area reach an annual revenue of $73K. Other nearby markets with high Investability and slightly lower price points include Bernard, ME, and Ellsworth, ME.”

The Quietside is ripe for easy pickins’ as Bar Harbor cracks down. The total number of homes in SWH and Tremont listed on AirBNB and VRBO likely already matches that of Bar harbor, if you exclude hotels and inns.

The clock is working against us because municipal governments grind slowly and the barbarians are already inside the gate. If Mount Desert wastes its town meeting opportunity next summer with a perfunctory licensing plan with no teeth, six months will go by before another opportunity presents itself. In that time, we will no doubt lose more nurses, teachers, tradesmen, fishing crew, cops and other citizens who make all our lives more secure and livable as a functional community.

Katrina Carter and her real estate cohort may rest easy if Tuesday night were an indication of how the town’s short-term rental policy will play out. Carter, who manages one of the largest inventories of rentals, is actually a member of the committee drafting the short-term rentals regulations. She has never disclosed her conflict nor recused herself from any of the discussions. For a second, I thought I was attending a meeting in Bar Harbor.

Cruise ships as dormitories for seasonal workers?

BAR HARBOR - Can cruise ships be the salvation for MDI? Can this industry actually fix our housing crisis in big way?

Portland activist Kenneth A. Capron, described as brilliant or quixotic by insiders there, believes they can. He is applying for a grant from the Robert Wood Johnson Foundation to study buying decommissioned cruise ships to house low-income residents there.

“The thing that I tried to explain to everybody is that a cruise ship is nothing more than a 12- or 15-story steel-framed building. Whether they're willing to spend $25 million on a homeless shelter for 200 beds, they could have had a 1,200-bed shelter for the same price in a steel frame building, not a wood frame building.

“The question is what is wrong with the thinking here that you will reject a gift horse in the mouth?”

Capron has several supporters including CallisonRTKL, a global architecture firm, which investigated the novel idea and presented their research at an architecture research conference last year.

Architectural designer Abe Desooky conducted a study of 362 Miami residents who indicated their willingness to live in one of 900 one-person cruise ship units, which he estimated would cost tenants $1,250 per month.

Other cities that have expressed an interest in the idea include New York, San Francisco and Oakland, Calif.

But all those cities are trying to solve a homeless or low-income housing problem.

Bar Harbor has different challenges, one of which is seasonal workforce housing, where the town has advantages and disadvantages.

It has been seeking a long-term use for the marine terminal it acquired in 2017. Say a 500-room ship may be obtained for $30 million and docked at the terminal. The ship will need to be fortified by a bracing dock because the easterly wind can be daunting. It will need to connect to the town sewer, water and electric infrastructure.

That’s a lot of work.

Still, 500 rooms with double occupancy can off load a lot of carrying capacity for the island’s businesses.

Buses can transport workers to downtown, or they can walk.

The idea may ultimately fail, but “out-of-the-box” thinking should not be discouraged amid a crisis. https://www.citysignal.com/c

How Northeast Harbor lost its street cred as a legit year-round Maine community

8 Rock End Road, Northeast Harbor

NORTHEAST HARBOR - Longtime local residents are unambiguous about the beginning of the end of this village as a year-round community.

They pointed to the sale in October 1987 of the house at 8 Rock End Road from Jack and Carol Wright to Marion and Charles Gogolak of Westwood, Mass. By today’s thinking the sale would have been unremarkable, a 1930s bungalow with a handsome and welcoming front porch on a street steps from the Neighborhood House passing hands.

But 35 years ago it was seen as the first encroachment by “summer people” into a neighborhood heretofore occupied exclusively by year-round locals, according Town Manager Durlin Lunt and others, including Terry Renault, owner of McGrath’s Variety Store on Main Street.

The wealthy summer people occupied the “donut” part of the town or the waterfront homes dotting the harbor, like Peabody Drive and Harborside Road. The year-round denizens, many of whom made their living catering and supporting the summer people, were ensconced in the Neighborhood Road district.

The Gogolaks are well-liked summer residents, like many others. But they will always be considered members of a brigade of rich outsiders from away buying up the town. Charlie Gogolak and his more famous brother Pete are Hungarian immigrants who introduced the soccer-style of kicking to American football.

In the 2013 documentary Summer Colony, which took almost 10 years to make, the late Northeast Harbor Library director Robert Pyle traced the origins of the local population exodus to a 1963 state ruling that put an end to the practice of “double-booking” — assessing the taxable value of comparable houses at different rates for year-round and seasonal residents.

Locals’ property taxes rose, and within a few years, some were selling their homes and moving elsewhere. Terry Renault remembers friends whose parents cashed out and moved to Lamoine and Trenton. The outflow accelerated as home values climbed ever higher.

Downeast Magazine in June captured the diaspora in an article, “Can Northeast Harbor stay livable year-round?”

It wrote that Summer Colony, directed by Northeast Harbor native Jeremy Lunt (Durlin’s son), was not an optimistic movie. “I think Northeast Harbor is dying,” Peter Godfrey, a lifelong summer resident, told the filmmakers. “The cleaning shop just closed. There’s no drug store. You walk down Main Street and you see art galleries and gift shops. God forbid if the news store or hardware store close. The place would be gone.”

As it turned out Northeast Harbor did not die. It just morphed into a four-month outpost for the pleasure of the ephemeral conquering class.

Northeast Library has four copies of the movie. Below are three trailers from Youtube:

Is $100 fine enough to change all cruise ship itineraries?

BAR HARBOR - If I were a cruise line executive, I would assign one of my smarty pants MBAs to model out several pricing scenarios to account for the just adopted $100 per person fine to disembark in Bar Harbor.

That fine is the linchpin of the ordinance to restrict cruise ship visitors approved overwhelmingly by voters Nov. 8, which assumed that $100 for every visitor disembarking beyond the 1,000 daily cap would be enough to reduce visits significantly. But is that assumption correct and could the industry come up with work-arounds?

Example: Take the Norwegian Breakaway with 4,000 passengers which charges $1,109 for a seven-day cruise from New York, to Newport, Portland, Bar Harbor and Canada. Is the pricing elastic enough to withstand another $100? Say for that price, you may visit Acadia National Park, or stay on board and get a $100 credit at the casino. (That would last me about 5 minutes at the Blackjack table). The ticket revenue is around 60 percent of total revenue on cruise ships, according to reported industry standards.

Then there are the high-end ships, like the 490-passenger Seven Seas Navigator. The Navigator’s fare ranges from $6,449 to $18,000. Those consumers drop C notes every time they empty their pockets.

Shortage of supply could have unintended consequences such as inducing demand for those willing to pay. Just look at the market for new cars right now.

Could Bar Harbor become the high end destination for price agnostic consumers? Without question the industry possesses data that shows how attractive Bar Harbor is. It’s already busy at work to model out various marketing possibilities.

Not all the ships that fit into this category are small. Sky Princess, which charges $5,499 for a balcony berth, and visits Bar Harbor from Southampton, England, has a capacity for 3,660 passengers.

I can easily see Sky Princess passing the cost of the fine onto its passengers. The ordinance - Article 3 - did not include days without ships. If we start getting ships willing to pay the fines, could we have days when the visitors exceed our current 5,500 cap? That would be the mother of all unintended consequences.

Consider amending the ordinance?

If the 1,000-visitor cap prove to be illusory, and we end up with a lot more traffic than anticipated, then an amendment to the ordinance would be in order.

I always liked the “Val Peacock” Plan for 1,000 to 2,500 daily passengers depending on the month. I called it the Val Peacock plan because she was the inspiration behind the town council’s drafting of it in 2021. It’s a nice middle point between Article 3 and the current plan accepted by the industry.

CORRECTION

In last week’s email edition, the quote. “The voters obviously want faster changes than the Council has been able to negotiate. The ball is now in the industry's court” should have been attributed to Bar Harbor council member Gary Friedmann, as he was asked to comment on the passage of the 1,000-visitors a day cap from cruise ships.