State and local officials agree the growth of short-term rentals such as those on Airbnb and VRBO has disrupted Rhode Island’s housing market, but that’s where the consensus ends.
A special legislative commission chaired by Rep. Lauren H. Carson, D-Newport, has started meeting to review existing statutes on short-term rentals and scrutinize the impact of these rentals on local housing and is expected to make recommendations regarding the issues by March.
Fireworks are expected because of what’s at stake: money being made by owners of the most desirable summer homes, the impact of vacationing, short-term visitors on residential neighborhoods and the effect of these rentals on the availability of affordable housing.
“This is a very emotional issue. And it will be an emotional commission,” Carson said. “We are going into the eye of the storm.”
First on the to-do list is to determine what is a short-term rental, an important definition since Rhode Island laws prohibit the state and its municipalities from outright banning such uses.
After that, Carson says she hopes the commission can strike a balance between the rights of property owners and concerns over public safety. Right now, there is a growing patchwork of municipal ordinances but no statewide policy.
“We want to look at where the state might be able to step in,” she said.
Complicating matters is the money these rentals are generating. Airbnb said in 2022 that it remitted a record $6 million in 2021 tax revenue to the state.
“These are really businesses,” Carson said.
Short-term rentals have been a challenge to address for municipalities because they’re difficult to track. Jordan Day, associate director of the Rhode Island League of Cities and Towns, says part of the problem is the discrepancies between state and local agencies. In Newport, for example, 547 short-term rental properties are registered with the state. Only 364 have registered with the city.
A Nov. 8 presentation to the commission showed 4,904 registrations statewide, according to the R.I. Department of Business Regulation. All 39 municipalities have properties on the state registry; however, they are concentrated in 12 cities and towns.
About a dozen municipalities have enacted or are considering ordinances regulating short-term rentals. North Kingstown recently passed its own, which treats short-term rental properties as businesses that disqualify owners from a 5% homestead exemption to their property taxes. Now North Kingstown Town Manager Ralph Mollis is bracing for the barrage of complaints from those property owners when the town issues notices on Dec. 1.
“We are going to need to explain why we are treating them differently than anyone else,” he said.
Greer Gagnier is executive director of the Rhode Island Short Term Rental Association ,which formed last spring in response to a growing number of proposed ordinances and state legislation looking to regulate the industry.
Gagnier, whose family rents out cottages in Pawtuxet Village, is now a member of the legislative commission.
She agrees better data collection and education are needed. However, she says that short-term rentals might not be the big businesses that some are making them out to be. The association says data from online platforms indicates the average Rhode Island operator makes $15,000 a year and that only 1% of the state’s housing is being rented short term.
“This is our livelihood,” she said. “But for a lot of people, it’s how they can remain in their homes. Any ban or restrictions would really harm everyday Rhode Islanders.”
