April Burbank

Free Press Staff Writer

The house used to be a nice vacation spot — before it was called an un-permitted hotel.

Groups of up to six people would set down their bags at the house in Burlington's south end and take in views of Lake Champlain from the back porch.

Mark and Lois Helland bought the house on Eastman Way as a second home last summer. They lived most of the time in Wisconsin, so they decided to list the two-bedroom house on Airbnb, a popular rental website that appeals to vacationers, at $325 per night.

The Hellands had traveled with Airbnb in the past, and they wanted to share their home with visitors.

A couple of guests hosted parties, and the street filled with cars. Neighbors began to complain to the city, setting off a series of events that led to Burlington's classifying the Hellands' house as a hotel without a permit.

The house no longer is listed on the Airbnb website — but more than 300 other Burlington rentals are.

Visitors can choose from a wide variety of lodgings, including a downtown guest room at $100 per night, a cottage at $100 per night and a tiny house in someone's backyard at $50 per night.

"I think it is a benefit to the city, because people come and they discover the city," said Kathleen Ryan, an Airbnb host. Using Airbnb helps her financially, she said, and allows her to meet people from around the world.

The Hellands' case this summer was the first test of Burlington's related regulations. The situation has prompted some officials to ask for clarity regarding the city's treatment of short-term rentals.

Burlington planning experts began looking at the issue this month, and the Mayor's Office recently launched its own efforts.

Meanwhile, the state of Vermont has begun a concerted push to collect rooms and meals taxes on private rentals, raking in more than $400,000 in taxes, penalties and interest since September, according to Tax Commissioner Mary Peterson. Vermont is far from alone in the effort.

"This is an issue that is wildfire across the country," David E. White, Burlington's director of planning and zoning, said during a recent meeting as a city committee discussed next steps after the Hellands' case. "There are communities all over the country, large and small, who are all in the same place we are, going, 'What is it? How do we regulate it? How do we tax it?' "

Boxed in

Burlington lacks a zoning category where Airbnb rentals would neatly fit, the Development Review Board reasoned in June while weighing the complaints about the Helland property.

The house didn't count as a rental property, because paying guests came for less than 30 days at a time.

Unlike a typical bed and breakfast, the owners lived off-site, and guests were on their own for breakfast.

And the house didn't count as a residential property, a boarding house or an owner-occupied house, either, according to Burlington's definitions of those terms — so the city classified it as an inn or hotel.

Burlington defines a hotel, inn or motel as "an establishment providing for a fee three or more temporary guest rooms and customary lodging services, and subject to the Vermont rooms and meals tax."

The city sent a letter to Lois Helland in May to explain that the house violated city zoning and to warn that ordinance violations could be fined up to $200 per day.

"There is concern with the health, safety and welfare of the public as adopted regulations have not been met," Burlington zoning specialist Jeanne Francis wrote in a subsequent memo about the case.

To have the house recognized legally as a hotel, the Hellands would have had to obtain a zoning permit from the city, register with the state, have safety inspections and pay rooms and meals taxes — but that's all beside the point, because the city prohibits hotels in the zoning district that includes Eastman Way.

The appeal

The Hellands filed an appeal with the Development Review Board with the help of an attorney, arguing that their house was a single-family home.

The Development Review Board upheld the notice of violation in June.

"Although the use, as described at the hearing, does not neatly fit into the definition of 'hotel, inn or motel,' the Board finds that the use most closely fits within that category," the Development Review Board wrote in a 6-1 decision that opened up the possibility of sanctions.

Ward, the city's code enforcement director, said any fines or sanctions depend on the facts of each situation. Property owners can avoid penalties by ceasing a zoning violation.

The city addressed two non-zoning issues in its investigation: It was unclear whether the Hellands had paid required state and local rooms and meals taxes. Mark Helland said the couple has paid taxes for this year and are waiting for an assessment on the previous year.

Burlington also took issue with the fact that the Hellands sometimes welcomed guests with a bottle of wine. That might have violated state liquor laws, the city noted.

The Hellands have decided not to appeal the board's decision further.

"I feel bad that we inconvenienced our neighbors and made the situation such that they felt that they had to take action against us," Mark Helland said. "It certainly wasn't our intent to bother anybody."

There needs to be some regulation on Airbnb rentals, he said, "but I think categorizing all of us as hotels is nonsensical."

Kathleen Ryan, who has hosted travelers at her home since 2012, said she has had positive experiences as a host and as a guest. The former Planning Commission member said she pays taxes to the city and the state and is unaware of any zoning issues.

The city might not classify every Airbnb rental as a hotel: Some could fall under the definition of a bed-and-breakfast, while others might need to be registered with the Code Enforcement Office as a rental property, said William Ward, code enforcement director.

"The main thing is, is it safe? And the other part is, is it an impact on the neighboring properties?" Ward said.

He advises property owners to call Burlington's Planning and Zoning Department to ask about the facts of their particular situations.

Elsewhere in Vermont, vacation rentals have played out differently. In 2012, the Vermont Supreme Court ruled that short-term rentals of a home did not clearly violate Grand Isle's bylaws. The court said the town would have to write a more specific bylaw to address any concerns.

Up late, worrying

Airbnb and similar services are controversial among Vermont bed-and-breakfast owners, some of whom worry that the websites cut into their business.

It's unfair for homeowners to rent out guest rooms, the owners say, while traditional bed-and-breakfasts have to go through layers of permitting, insurance and fees.

The website for San Francisco-based Airbnb argues that the service helps hosts make ends meet and has a positive impact on local economies. Airbnb customers stay in town longer than typical tourists, the argument goes, and they spend more money.

The issue was a hot topic at a recent meeting of the Heart of Vermont Lodging Association.

"All anybody wanted to talk about was Airbnb," said Marcia Pierce, owner of the Hidden Garden's Bed and Breakfast in Hinesburg,

Vermont has more than 600 inns, and Airbnb's impact on those businesses is "probably one of the things that keeps me up at night," said Megan Smith, Vermont commissioner of tourism and marketing, who spoke at the meeting.

One of her main goals as tourism commissioner, she said, is to increase the occupancy rates at Vermont inns and hotels by 10 percent, which would boost tax revenues and aid businesses.

"It'd just help tremendously, and Airbnb is cutting into that," Smith said.

Nevertheless, Smith recognizes that websites like Airbnb provide a good service.

She advises small bed-and-breakfast owners to list their own rooms on Airbnb — and, in their listings, to emphasize their safety inspections and licensing.

Later this month, Smith plans to attend a conference of state tourism directors that will include sharing strategies on responding to Airbnb.

More clarity?

Various Burlington departments are beginning to look more closely at how short-term rentals fit into zoning and tax categories.

"There's a whole host of questions around it," said David White, the city planning and zoning director, at a recent meeting of the Planning Commission Ordinance Committee. "We're kind of the point of the point of the spear in terms of having to deal with something like this, so that causes us to step back and say, 'We think as a community, as a city, we need to address this thing on a broader scale.'"

Committee members talked about regulating Airbnb rentals rather than prohibiting them altogether — and providing clarity so that the Development Review Board doesn't have to go through pages of legal arguments and hours of deliberation in each future case.

Some cities have struggled with Airbnb. Some of the biggest confrontations have come in New York City, where officials are cracking down on Airbnb hosts renting out non-owner-occupied apartments for less than 30 days at a time.

San Francisco, where Airbnb was founded, has taken a different approach: Airbnb now collects hotel taxes directly from customers.

Airbnb representative Nick Papas said the company works on regulations with cities everywhere.

"A number of communities around the world have embraced the sharing economy and implemented fair, progressive rules for home sharing," Papas wrote in an email.

Last week, Burlington Mayor Miro Weinberger's office asked the city attorney to investigate the legal issues about Airbnb, including what other cities have done, and report back by the end of the year.

In the meantime, the Hellands have stopped renting their home.

"It's going to be necessary for the city to look at this issue more broadly than just us, and put regulations in place that make sense," Mark Helland said as he reflected on Burlington's process. "Right now, it's pretty much an unregulated area, and that's why so many people are taking advantage of it."

Contact April Burbank at 802-660-1863 or aburbank@freepressmedia.com. Follow her on Twitter at www.twitter.com/AprilBurbank.