OCEAN CITY — Ocean City officials this week approved a stopgap measure for the R-1 single-family residential neighborhood issue, but it appears with a new season quickly approaching at least some of the rental cows have left the barn.
Resort officials have been wrestling with the issue of vacation rentals in some of Ocean City’s quieter, single-family home neighborhoods for two years. The issue came to a head two summers ago when property owners from the Mallard Island neighborhood complained of the noise, parking problems, trash and occasional crime associated with short-term vacation rentals in their otherwise quiet community.
Early last summer, the Mayor and Council tabled a decision on the creation of a new R-1A zoning designation that would to some degree insulate quiet neighborhoods from vacation rentals, vowing to revisit the issue during the comprehensive plan process. In the meantime, the Mayor and Council voted last fall to move forward with a more stringent rental application process in its R-1 district in an effort to ease enforcement efforts and increase awareness about the rental license requirements.
The new rental applications would come with additional information required such as the number of bedrooms and the maximum occupancy allowed. The application would also identify the rental agent or Realtor renting the properties and advise them of the requirements regarding the number of unrelated persons allowed, for example.
The Mayor and Council approved the new rental application process as early as last September. In March, the city’s elected officials approved a resolution creating a new R-1 district rental license fee along with a graduated fine system for those found not in compliance.
The Mayor and Council revisited the issue during a work session on Tuesday to further tweak the R-1 rental license fee and fine schedule, but learned many of the rental property license applications for the 2016 season had already been received under the old fee schedule. Planning and Community Development Director Bill Neville told the council on Tuesday about 50 rental license applications had already been returned out of the 175 anticipated rental properties in the R-1 District. He explained the department was hoping to recapture some of the renewals already received and apply the appropriate fees and collect the requisite information, but some had been processed and would likely slip through the cracks.
“We are catching up,” he said. “We have a strategy for the renewal process. We’re tagging the existing renewals in an effort to get them back and the information is going out with the new applications. However, we may have a time when some renewals are paying last year’s fees.”
However, some on the council were taken aback somewhat with the information the new license applications had not gone out to the anticipated renewals already. Councilman Tony DeLuca said the Mayor and Council last September gave direction to proceed with the new rental application.
“My concern is this, last year we made a decision, 7-0, to put this out,” he said. “All of these changes were brought to us as a fix to an issue, a big issue. These are first steps on a big issue that we really need to attack.”
DeLuca said he appreciated the effort to recapture some of the R-1 rental applications that had already been returned, but voiced concern nearly a third had come back under the old application program.
“It’s nice that we’re going to collect the money, but I would like to see us somehow, at least with the 125 we haven’t yet received, to get this new application with all of the appropriate information,” he said. “If you receive anything after today, that application doesn’t matter. You have to get this application.”
With the calendar turning to April this week, DeLuca said he was under the impression the new application process had already gone into effect and stressed the time is now to move forward with it.
“We really need to attack this right now,” he said. “This is the beginning of the season and we need to fix this problem we failed to enforce.”
DeLuca told the department to begin strictly enforcing the new R-1 rental application now before more renewals slipped through the cracks.
“Don’t issue the license if you don’t have this new application,” he said. “It’s as simple as that. We really have a window here to fix this and we need to take action right now.”
As new R-1 rental applications come in, they will 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.
From the beginning, Councilman Wayne Hartman has said the proposed enforcement plan lacked the teeth to be effective because of the 10-day grace period before any fines are levied. Hartman on Tuesday continued to hammer home the point many rental property owners would bypass the application process until they got caught because there was no incentive under the existing proposal to enforcement it. He likened the situation to a business found operating without a business license.
“Where does the notification and the 10-day grace period come in?” he said. “If we had a business operating without a business license, we would shut them down, right? I don’t see the difference.”
License Inspector Mike Sherman explained there were rare instances when businesses were found operating without a business license from the town and they were generally given a short grace period. Council President Lloyd Martin said the town’s business license was closely tied to the various county and state licenses and permits and a checks and balances system would prevent them from operating without a license.
Hartman continued to reiterate his point about operating a business without a license was akin to renting a property without a business license because of the grace period.
“Again, there is no reason to buy the license if there is no penalty until you get caught,” he said. “It’s the same thing with the rental license. I don’t understand our position of giving them the courtesy of a grace period. There is no incentive to get the license before you get caught because of that grace period.”
Councilman Dennis Dare said the R-1 rental application process appeared to achieve the short-term goal of addressing the issue, but warned it would only work if the renters themselves were aware of the capacity ratings for the units.
“I would like to see the rental license posted in the units,” he said. “A three bedroom unit might have a maximum occupancy of six people. The town knows what it is supposed to be, the agent knows what it’s supposed to be, but the people occupying the rental might not know. The renters need to know what the maximum occupancy is.”
After considerable debate, the council voted unanimously to immediately implement the new R-1 application process and the associated fees and enforcement policies although they will likely revisit the issue in the future.