Short-term rental issues plague a small Idaho town near Yellowstone

ISLAND PARK (Idaho Capital Sun) — Idaho’s picturesque views and endless supply of outdoor recreational opportunities have always attracted visitors — tourists and new residents alike. But the dynamic changed in the past decade, with the rise of third-party rental websites like Airbnb, VRBO and Vacasa. These short-term rentals and vacation homes opened up lodging to more visitors in some corners of the state.

One of those corners is Island Park, population 266, where city and county officials have been unable to regulate short-term rental properties, causing complaints from some residents.

Fremont County Commissioner Blair Dance said the real estate industry in Island Park, a half-hour drive from West Yellowstone, has exploded in recent years. And it likely won’t let up anytime soon — May was a record-breaking month for visits to Yellowstone.

“(The short-term rental market) built up and developed and became a viable economic option for people with their residences, their second homes, to help defray some of their costs, and more and more people were getting into it,” Dance said. “The word spread, and it really has mushroomed quite rapidly in the last five to 10 years.”

While other rental-heavy areas across Idaho have staff and plenty of information around rules and regulations for short-term rentals in a designated area, Fremont County has a brochure outlining the permitting process and three staffers in the planning and zoning department to enforce the county’s ordinances. 

The county’s rules allow property owners to get a transient lodging permit — which is a stay of fewer than 30 days. The permit is broken into two classifications based on the home’s guest capacity — a Class 1 permit costs $200 for up to 15 guests, and a Class 2 permit costs $500 for 16 to 30 guests. Both include requirements for septic and well inspections every two years.

“I assume that there are those people who are avoiding letting people know that they’re renting out their home on short-term rentals, and our struggle is, ‘OK, how do we get that policed, and how do we find the manpower to do that?’” Dance said. “It’s a challenge.”

Tom Cluff, planning and building administrator for Fremont County, told commissioners at a meeting in April that he estimates about 60% of the cabin rentals in the area are permitted. In a follow-up email to the Idaho Capital Sun, Cluff said that number is a worst-case scenario estimate.

“I was telling the commissioners that our records show there are nearly 600 permitted cabin rentals in Fremont County,” Cluff said. “There are some other people who think there are more than that — maybe as many as 1,000 rentals in the Island Park area.”  

A search of Airbnb.com found so many short-term rentals in the Island Park and Fremont County area, that it stopped at the maximum display of 300 rentals. A search on VRBO.com found 896 rentals. Short-term rental data and analytics website AirDNA lists 838 active rentals in the area.

Fremont County had 13,099 residents and 9,186 housing units as of July 2019.

If Cluff discovers an owner is renting without a permit, whether through a resident complaint or other methods, the focus is on compliance rather than punishment. People almost always choose to get a permit after they are contacted, he said, and fines and other penalties are rarely necessary. No set of rules is perfect, he said, but Fremont County’s procedures have worked pretty well for the most part.

‘The peace and tranquility of the area … is gone’

Ken Watts, a resident since 2010, is chairman of the Island Park Preservation Coalition, a local advocacy group. Watts said transient rentals have caused a tremendous amount of conflict in the community. He said he has submitted complaints to the county about short-term rentals in his area that went unanswered, including one last July. Cluff said he was aware of the complaints but could not comment on current investigations or pending enforcement efforts.

Watts said the rental across the road from his home costs $735 per night, and he knows others cost more than $1,000 per night. Those prices often attract big groups and multiple vehicles parked in front of the home, along with a lot of noise and sometimes people shooting off guns or yelling at neighbors.

“You cannot believe the tension and conflict it’s causing for the people who live here. The people who live here full time or part time, they just hate it,” Watts said. “The peace and tranquility of the area they moved to and built homes in is gone.”

Watts partly blames House Bill 216, which was passed in the 2017 session of the Idaho Legislature and signed into law, for the county’s lack of response. The law bars local governments from restricting short-term rentals. He says some officials interpret that as barring them from regulating the rentals at all, but the law also includes language about protecting the integrity of neighborhoods and health and safety.

“Imagine you’re in a residential neighborhood and you see 20, 30, 40 strangers walking all around your streets,” Watts said. “We never used to lock our doors or windows, and now we don’t know who’s in our neighborhood, so we’re more cautious.”

Watts said his goal is not to abolish transient rentals, but he does want the criteria for a rental to become more consistent with the neighborhood in which it is located.

“So if the average is four people in a given house, well, then try not to exceed that very much (in a rental), because it would change the character of the neighborhood to put 20 people in there,” he said.

Officials don’t single out HB 216 as a contributing factor

Cluff said he is exploring what options might be available to issue citations to individuals in response to a problem rather than mailing a violation notice that requires a response. Cluff said those citations likely wouldn’t be aimed at unpermitted rentals, but rather those who are causing problems for a neighborhood like the ones Watts describes.

But he disagrees that House Bill 216 had any effect on enforcement efforts. When the bill passed, he said, Fremont County’s rules for short-term rentals had already been in place for several years.

“I don’t think it makes enforcement against unpermitted rentals any harder,” Cluff said.

Seth Grigg, executive director of the Idaho Association of Counties, said he hasn’t heard complaints from many county officials about short-term rentals not being regulated or registered properly. The bigger concern he hears is about the effect on housing costs, as individuals or investors buy homes in popular vacation communities, then rent them out.

Executive Director of the Idaho Association of Cities Kelley Packer said she hasn’t heard widespread concern about short-term rentals from city leaders. And further, as a former legislator, Packer voted yes on House Bill 216 in 2017 and said it was meant to protect personal property rights and purposely included a carveout for the regulation of health, safety and welfare for residents.

“I think there’s a fine line between maintaining personal property rights and a community still being able to create reasonable standards for homeowners within their jurisdiction,” Packer said. “… So I think 216 was a pretty good bill.”

Residents worry about lack of enforcement mechanisms

Another issue of short-term rentals raised by Island Park residents is registration with the Idaho State Tax Commission. House Bill 216 changed the law so that if an owner chooses to advertise a rental through a third-party site such as Airbnb, the company automatically collects the applicable taxes and sends it to the tax commission on the host’s behalf. 

But if an owner lists a rental through the classifieds section of a newspaper or only reserves short-term stays through direct contact, they can theoretically skirt the state’s occupancy and lodging taxes. It is up to the owner to register as a short-term rental with the state to remit taxes within 45 days.

Ron Folsom, former Ammon city administrator, lives in the Island Park area and said he knows it is a problem.

“I have people I know that have had rentals here for 30 years, and so they have long-term tenants that come every summer and they’re not registered (with the state to collect taxes),” Folsom said.

Folsom inquired with the state tax commission about registration, asking for confirmation that a formal enforcement mechanism for registration of such rentals doesn’t exist.

Daniel Reines, a tax research specialist for the Idaho State Tax Commission, responded to Folsom’s inquiry by saying there are individuals at the commission who are aware of short-term rentals and dedicated to their responsibilities and promoting voluntary compliance.

Reines said he thinks the goal of compliance is ensuring a fair and competitive market, but tax specialists also have to consider whether the effort and methods of gaining compliance are more costly than the revenue that would be collected.  

Could HOAs step in? ‘We are digging into it’

While adding more staff to Cluff’s department could help with enforcement, Dance also thinks homeowner’s associations could be used to make sure rentals are permitted. House Bill 216 does not allow an association to restrict short-term rentals, but Dance said the association could require proof of permits as a means of enforcement.

“It’s just a process we’re learning about and trying to address,” Dance said.

He and the two other Fremont County commissioners are communicating with other counties across Idaho, as well, to understand how they address short-term rentals.

“We are digging into it and going through an educational process and looking to formulate ways that we as a county can, through various means, get a return on (rentals) from that industry that will help defray the additional costs that these additional people bring, the burden that they bring to the county,” Dance said.

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