OCEAN CITY — Ocean City officials this week approved a stopgap measure of sorts for the R-1 single-family neighborhood rental issue, but not before voicing concerns the fee and potential fines for not complying fall short of accomplishing the larger goal.
Resort officials have been wrestling with the issue of vacation rentals in Ocean City’s quieter, single-family home neighborhoods for well over a year. The issue came to a head two summers ago when property owners in the Mallard Island neighborhood on 15th Street complained of the noise, parking problems, trash and often crime in their otherwise quiet communities.
Early last 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 short-term 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.
On Monday, the council unanimously passed a resolution creating a new R-1 zoning district rental license fee, but not before raising concerns the new rental application process, complete with a $50 fee for properties in the R-1 district along with a graduated fine system for failing to obtain the necessary license in the R-1 zones fell short of accomplishing the larger goal.
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 a $50 fee, or an increase from the current $116 for 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.
The new rental application process also includes a graduated fine structure for those properties which fail to obtain the license and pay the requisite fee hike. Those that fail to obtain an R-1 rental license would face an initial fine of $500 with 15 days to comply, followed by a $1,000 fine levied if the license was not obtained from 16 days to 30 days, and a $1,000 fine for each day after 30 days the rental property is not in compliance.
The intent of the stringent fine structure is to bring rental properties within the R-1 district into compliance, but some on the council voiced concern additional fee and potential fines stopped short of achieving the larger goal or tightening the rental process in the R-1 districts. For example, when the concept was first pitched last fall, Councilman Wayne Hartman said there was no hammer on the enforcement side for property owners who don’t acquire the requisite license, essentially saying there was no incentive to get the license until a property owner got caught with the 15-day grace period. Hartman reiterated those concerns during Monday’s meeting.
“I said it before and I’ll say it again, there is no sense in having a rental license in Ocean City right now unless you get caught,” he said. “When are we going to fix that problem?”
Of course, the issue will largely boil down to the inspection process, and with just a handful of inspectors servicing the 175 rental properties in R-1 districts, many will likely bypass the rental application process and roll the dice they won’t be inspected or caught.
Zoning Administrator Blaine Smith said with the calendar soon flipping to April and another summer season quickly approaching, many rental application renewals had already gone out in advance of the new fee and fine structure outlined in the resolution before the council on Monday.
“We anticipate working with the real estate and rental offices and get the information to the 175 rental property owners,” he said. “The fees weren’t increased before the rental applications went out. The only thing we can do is capture the rental applications when they come back in and add on the $50 fee. It wasn’t passed in time for the renewals to be sent out.”
However, Smith said the staff was confident the returned rental applications could be captured and the fees applied before the advent of a new summer season.
“This is a way to show we are serious about compliance in the R-1 district,” he said. “This is a method for the upcoming season from an enforcement perspective and it’s effective immediately.”
Again, while the applications can be captured and the appropriate fees applied, it will still likely come down to enforcement.
“This resolution sets the fee, but it doesn’t change the inspection process,” he said. “Of course, we still have the not more than four unrelated people in the same rental provision, but keeping up with the names and addresses will be difficult.”
Councilmember Mary Knight asked Smith where the town was in terms of inspecting the rental properties in the R-1 district. When told just a few, she raised concern the cart was ahead of the horse somewhat in the process.
“How many of the 175 rental properties have been inspected?” she said. “So, we haven’t gone out to any of these 175 and said this one can have eight and this one can have 10?”
Knight said she could support the resolution establishing the fee and potential penalties in order to get something on the books, but expressed concern it fell short of accomplishing the larger goal of addressing vacation rentals in the single-family neighborhoods.
“I’m going to vote for this, but I don’t think it accomplishes what we wanted,” she said. “It doesn’t accomplish a more livable community.”
Knight said the longer-term rentals would likely acquire the license and pay the increased fee, but the weekly and shorter-term rentals would likely bypass the process because of the lesser chance of getting caught without one.
“I think the fines will work for the long-term rentals, but for the seven-day or shorter-term rentals, it’s not going to affect the problems of trash and noise, for example,” she said. “There is no way of ascertaining how many people are staying in a rental. I hope this is a beginning for a long-term solution but we still need to have more discussion of rentals in the R-1 district.”
After learning many of the rental application renewals had already gone out and returned and the absence of a real inspection process, Hartman said the goals were not met on the eve of a new summer season.
“The more I hear, the more disappointed I get,” he said. “We started this in November and now we’re hearing the things we had planned aren’t getting done. I was under the impression this was across the board for all rental districts.”
Councilman Dennis Dare also voiced some misgivings with the revised application and fee structure, but urged his colleagues to pass the resolution with the vow to take up the debate anew.
“We need to pass this resolution to get something done,” he said. “But, we need to get this back to a work session as soon as possible and see if there are things we can do to make this even better.”
