A Southold City Task Force has recommended that the city create a special permitting process for property rentals of less than 30 days after several years of difficulties in administering the current law that prohibits rentals of less than 14 days.
The group proposes that the city issue permits to people who want to rent their primary residence for less than 30 days and hold a lottery for people who want to rent a property that is not their primary residence, while limiting the total number of short-term rentals to 1 percent of the homes in each hamlet.
Pictured above: AirDNA map of short-term rentals on the North Fork as of August 14, 2024.
Members of the Short-Term Rental Working Group, which has been meeting since April of this year, presented their proposal to the Southold City Council at a special meeting on August 13.
The task force’s investigation uncovered several findings that opened City Council members’ eyes to the enormous impact short-term rentals have on the local economy.
City Planner Mara Cerezo, who presented the findings along with Task Force Chairman John Stype and Planning Department Director Heather Lanza, said the task force collected information from AirDNA, a short-term rental data company, and found that more than 40 short-term rentals listed in Southold were listed by just four property management companies.
“We have found that they often convert multiple properties into short-term rentals, turning them into commercial properties in residential areas and destroying the character of the community,” she said. “The short-term rental market encourages constant guest turnover, which further reduces engagement and sustainability within the community and will have further impacts on our local economy.”
Ms. Cerezo said AirDNA showed that the average annual income for each short-term rental property in Southold Town is $107,556. The data showed 960 active short-term rental listings in Southold Town (including the Village of Greenport) in March 2024, up from 730 listings in February 2023. The March 2024 figures show that six percent of the 16,298 housing units citywide are actively offered as short-term rentals.
“This is astonishing,” said City Councilman Greg Doroski. “That’s over $100 million in revenue for an illegal or at least gray economy. This clearly shows the impact short-term rentals are having on the current housing situation.”
In developing its recommendations, the task force reviewed case law and regulations in other similar cities.
Assistant City Attorney Ben Johnson said some of the key takeaways from the case law are that the city should avoid imposing strict residency requirements on owners of short-term rental properties, “which could have constitutional implications,” even though much of that case law comes from the Fifth Circuit in the Southern states.
“I think it would be different in New York,” he said, because there “you have no right to use your property to its full advantage.”
He said the best way to avoid constitutional complaints was to “regulate the use, not the user.”
Southold Town enacted its current short-term rental regulations in the summer of 2015, prohibiting rentals of less than 14 days. The town only checks for compliance if there is a complaint, Ms. Lanza said.
Once the city receives the complaint, Johnson said, a bylaw officer must track down the tenants and get them to sign an affidavit stating they do not live in the city, including information about the length and price of the rent. He said that affidavit is “pretty difficult” to obtain.
For all other rental properties, the city currently requires a rental permit that is valid for two years. The length of the rental is not specified in the permit, except that it must be at least 14 days, Ms. Lanza said. Rental offers must include the permit number.
According to Ms. Lanza, there are currently 1,000 active rental permits in the city, with another 500 to 1,000 pending due to issues with the property’s occupancy permits.
Ms. Cerazo said the task force has considered several possible solutions, including limiting short-term rentals to primary residences, capping the number of short-term rentals citywide, limiting the number of rentals per person, banning short-term rentals entirely, or keeping the ordinance in its current form.
The group agreed on a combined strategy that would establish a special permitting process for rentals of less than 30 days, granting an unlimited number of permits to people who want to rent out part of their primary residence. The city would also implement a lottery system for non-primary residence rentals and limit the number of non-primary residence rentals allowed to one percent of the housing stock in each hamlet.
Only one permit will be issued per “natural person.” Ownership of LLCs, corporations, trusts, and partnerships is permitted if it is the only permit sought by an owner, shareholder, partner, or other member of the entity.
The group also recommended limiting occupancy to a maximum of two people per bedroom and defining the “primary residence” as the residence listed on the owner’s tax return. The owner would also have to pay Suffolk County hotel taxes.
Properties would have to undergo a safety inspection for fire safety, structural integrity and health-related conditions, and a photo and floor plan of the home would have to be submitted to the city. Property owners would also have to prove they meet parking requirements, have legal water and sewer services, provide contact information of a person who can be reached 24/7 for emergencies, and document compliance with dark sky regulations and a waste management plan.
“To be successful at this, we need additional resources. And the first step is technology,” Ms. Lanza said. “You get the software you need, learn how to use it and estimate how much additional staff you need.”
Mr. Johnson said he had already heard of a company called Granicus, which is working with Suffolk County to implement its short-term rental program. It estimates that the software Southold is planning would cost just under $40,000 a year. He added that the city could structure its permit fees to cover the costs of administering the program.
“We can charge $1,000 for the permit based on what we spend on Granicus,” he said. “High permit fees are fine. As for the impact on enforcement, we need to get the technology in place before we know how many agencies we really need to regulate this.”
The next step, task force members said, will be to put out a request for proposals for software and ensure that funding for the program is included in the city’s 2025 budget.
City Councilor Al Krupski expressed his concern that lottery winners could use their properties more intensively in the future than before, which could have a negative impact on their residential area.
“We would have a lot less of it,” Ms. Lanza said, pointing out that 1 percent of homes is far less than the 6 percent currently on the short-term rental market. “The owners have to decide what to do with the homes. They can rent them out in the summer or year-round. Can we encourage the idea of year-round rentals, especially if we take away the financial incentive?”
Councilwoman Jill Doherty added that the intensity of short-term rentals is driven by seasonal demand rather than property owners, and suggested that the city’s Housing Commission should market the idea of year-round rentals.
“My main takeaway is the potential to encourage more long-term rentals and get more people renting long-term on the North Fork,” said Councilwoman Anne Smith. “I want to make sure we’re on the same page in the conversations with Riverhead and the Village of Greenport and Shelter Island to make sure we see what their plans are.”
Mr. Stype, the task force chairman, said that during the group’s work he was often reminded of conversations he had with former longtime city councilman Bill Ruland, a Mattituck farmer who recently died.
“His main concern was quality of life,” Mr. Stype said. “What is the quality of life in the town of Southold? Do you want to be like Nassau County? Do you want to be like the Hamptons? … The Short-Term Rental Task Force has no further meetings scheduled, but if you want us to help you, let us know. We’ll help you wherever you want to send us.”
