Ocean City Planning Rental License Fee Increase; $500 Fine For No License Likely

Ocean City Planning Rental License Fee Increase; $500 Fine For No License Likely
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OCEAN CITY — Ocean City officials moved forward this week with a stopgap measure of sorts for the larger R-1A single-family neighborhood rental issue, but not before adding some teeth to the proposed rental license application process.

Throughout the last year, town officials have been wrestling with the issue of vacation rentals in Ocean City’s quieter single-family home neighborhoods. The issue came to a head last summer when property owners in at least one residential neighborhood complained of the noise, parking problems, trash and often crime in their otherwise quiet communities.

Earlier this summer, the Mayor and Council tabled a decision on the creation of a new R-1A zoning designation that would insulate some quiet neighborhoods from vacation rentals, vowing to revisit the issue during the upcoming comprehensive plan process. In the meantime, town officials are moving forward with a more stringent rental application process in its R-1 districts in an effort to ease enforcement efforts and increase awareness about the rental license requirements.

During Tuesday’s work session, the council reviewed the proposed rental application in the R-1 zones. Among the changes in the R-1 rental application process will be additional information such as the number of bedrooms. The application would also identify the rental agent or Realtor renting the properties and advise them of the requirements regarding occupancy and the number of unrelated persons allowed, for example.

In addition, as new R-1 rental applications come in, they would be forwarded to the Planning and Building Inspection departments for review and inspection. During the first year of implementation, a letter would be sent to all R-1 rental property owners informing them of the occupancy requirements including no more than four unrelated persons in the residence during the lodging period.

The proposal also includes an increase from the current $116 per rental application to $166 to help offset the cost of increased enforcement and inspection. In addition, a master list of all R-1 rental applications would be placed on the town’s website via a link that would direct them to a GIS map, which will display the property owner, the address and the rental application.
“That would give us an extra sets of eyes and ears out there,” said License Inspector Mike Sherman. “If someone thinks their neighbor is renting, they can pull up the map and see if they have a license.”

Some on the council questioned defining rental property’s occupancy limitations by number of rooms or square footage or water and sewer capacity.

“Why is residency not based on single family,” said Councilmember Mary Knight. “My question is: why is it based on the number of bedrooms and not as a single-family residence?”

Zoning Administrator Blaine Smith explained the courts have held that an extended family could include grandparents, parents, their kids, another sibling and his wife with their kids etc. Basing the occupancy on the number of rooms, or number of fixtures, for example, would clear up any legal ambiguity.

“Legally, I don’t know if we could say no more than eight people in a single-family residence,” he said. “When you use the square footage of bedrooms or water or sewer capacity, or what we call life safety measures, it’s stronger from a legal standpoint.”

Under the proposed changes, a rental property owner found to be renting his or her property without a license would have a 10-day grace period to obtain the license or face a $500 fine. If a second offense was discovered and a license hadn’t been acquired, the fine would go up to $1,000.

‘More Tools In The Tool Box’

Councilman Wayne Hartman said there was no hammer on the enforcement side for property owners who don’t acquire the license.

“If I get caught, I have 10 days to get the rental license,” he said. “What I’m saying is there is no incentive to get the license until you get caught.”

Hartman said under the proposal as written, many property owners would bypass the rental application process because there was no real incentive to do so.

“If you’re a gambling person, you probably have a 50-50 chance of not getting caught,” he said. “I’d like to see a minimum of a $500 fine when someone is caught renting without a license.”

In essence, if someone rented a property without a license and got caught, the individual would have 10 days to acquire the license or face a $500 fine for a first offense. However, Hartman made a motion for a $500 fine immediately after getting caught renting without a license and a 10-day period in which to obtain the license. If a property owner didn’t obtain a license within 10 days of getting caught, he or she would face an additional $1,000 fine.

While receptive to the idea, some of Hartman’s colleagues expressed concern about giving property owners who rent their properties without a license a little more leeway.

“I believe in due process,” said Council President Lloyd Martin. “What if someone bought a home 10 years ago and never rented it, but a sudden change a decade later forced them to rent it for a variety of reasons, maybe a change in life, the death of a loved one or financial concerns. They might not know the rental license requirement and face an immediate $500 fine.”

Smith agreed there could be extenuating circumstances under which a property owner might not be aware of the requirements. He said existing property owners would be made aware of the rental license requirement through a variety of sources including the annual newsletter and the town’s website, for example. New property owners would be made aware of the requirements at the time of purchase.
“You have to have fairness and due process,” he said. “This is giving us more tools in the tool box and the hope is it will address this endless process.”

Mayor and Acting City Manager Rick Meehan said there would be ample opportunity to educate the public on the changes.
“I think we’re moving in the right direction, but I’m a little concerned about due process and the immediate fine,” he said. “The first thing people always say is ‘I didn’t know.’ If we’re educating the property owners and letting them know up front, there is no reason for them not to comply.”

Hartman agreed, but continued to push for a change in the requirements as written.

“As this is written, there is no reason to buy a rental license in Ocean City,” he said. “When you get caught, or if you get caught, you have 10 days to fix it without facing a penalty.”

After considerable debate, the council agreed to move forward with an amended plan that included a $500 fine with a 15-day grace period to acquire the license and a $1,000 fine if the rental license was not acquired within 30 days.

While the discussion focused largely on rentals in the R-1 zones, Hartman amended the motion to extend the proposed rental application requirements to all rental properties in the resort. If the proposal is approved as a resolution, all rental property owners regardless of their zoning designations would have to comply.

R-1A Talks To Continue

Meanwhile, town officials said they have not abandoned the R-1A discussion and the proposals considered and endorsed on Tuesday were a separate issue.

“This is not in lieu of the R-1A discussion,” said Knight. “We’re still going to continue to discuss the R-1A solutions down the road.”

Meehan said the Planning and Zoning Commission was beginning to schedule work sessions on the comprehensive plan and the R-1A issue would be included.

“There are meetings being scheduled to begin our comprehensive plan process and that will be the time to address the R-1A issue comprehensively,” he said. “This isn’t something that has been put on the back burner. It does not stop the discussion on R-1A.”

About The Author: Shawn Soper

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Shawn Soper has been with The Dispatch since 2000. He began as a staff writer covering various local government beats and general stories. His current positions include managing editor and sports editor. Growing up in Baltimore before moving to Ocean City full time three decades ago, Soper graduated from Loch Raven High School in 1981 and from Towson University in 1985 with degrees in mass communications with a journalism concentration and history.