WINCHESTER — Eighty percent of the 53 short-term rental properties in Winchester are operating illegally.
That revelation was shared Tuesday with the city’s Planning Commission during a discussion of short-term rentals — homes that offer private rooms for up to 30 days for business travelers and vacationers by advertising on online services such as Airbnb and VRBO.
Winchester allows property owners in its Central Business (B-1) and Residential Business (RB-1) districts to offer short-term rentals by right, while short-term rentals in the city’s other zoning districts are either not permitted or require a special conditional-use permit (CUP) issued by City Council. No matter where a short-term rental is located, operators must obtain a business license from the city and pay lodging taxes.
Winchester Zoning Administrator Frank Hopkins told the Planning Commission that only 10 of the 53 known short-term rentals in Winchester have obtained the required licensing and permits. The remaining 43 are operating illegally because they did not get a business license, failed to obtain a CUP, do not pay lodging taxes or all three.
The Winchester area is a popular destination for people who live within driving distance of the city. Each year, visitors spend upward of $250 million in local lodging establishments, restaurants, attractions and shops, so when the owner of an illegal short-term rental fails to pay lodging taxes and licensing fees to the city, the local government loses a portion of tourism revenues that could otherwise have been used to fund projects that benefit Winchester residents, including street and sidewalk improvements.
“They’re in some way undercutting the tourism industry because they’re not living by the same standards, they’re not paying the same taxes,” Winchester Development Services Director Shawn Hershberger told the commission.
If a property is not located in the by-right B-1 or RB-1 districts, it can be a challenge for Winchester homeowners to obtain a CUP to operate a short-term rental. A CUP application costs $500 to file and, in order for it to be approved by City Council, property owners must agree to any conditions set forth by the panel. Those conditions could dictate maximum numbers of guests, hours of operation, whether the owners have to provide additional parking, types of events that can take place — basically, any number of stipulations that could enhance or hamper a short-term rental’s chances of success. As a result, some short-term rental operators have opted to avoid the expensive and potentially frustrating approval process involved with a CUP in favor of taking their chances with operating an illegal business.
Getting a license, paying taxes and operating in compliance with city regulations is required of any business in Winchester, so officials say avoiding red tape isn’t an acceptable excuse for operating an illegal enterprise. For the 43 short-term rentals operating illegally in Winchester, it’s just a matter of time before they will have to choose between following the rules or going out of business.
“It’s my mission this year to try and get it all in compliance,” Hopkins said. “That’s my goal.”