The Town of Woodstock’s Economic Development Commission wants to pay property owners who turn their short-term rentals into long-term housing.
The incentive program — which the Woodstock Selectboard must first approve — would use $35,000 from the town Economic Development Commission’s $303,000 budget for grants this year. Short-term rental owners would get $3,000 if they sign a one-year lease with a tenant, and $7,000 if they sign a two-year lease.
The plan, which the commission approved last week, is loosely based on a recently enacted program called Rent Local in the ski town of Big Sky, Mont. The payments there depend on the size of the rental unit and length of the lease.
The Woodstock incentives are an experiment, commission member Jon Spector said. They're aimed at making the switch worthwhile for people who own homes or apartments that would be affordable to the teachers, police officers and other workers who are priced out of the area's market now.
“We’re not trying to convert luxury housing to long-term rentals; the housing we’re trying to create is what we call workforce housing,” Spector said. “Those are not going to be houses that rent for $3,000 for a weekend.”
Big Sky’s Community Housing Trust launched its incentive program last fall and converted 21 homes into rentals for locals in its first three months, according to its website.
That number would be a boon for Woodstock, which has been working for years to come up with solutions to its affordable housing problems.
In 2019, the Woodstock Community Trust used $500,000 from a local philanthropist to buy and repair homes and sell them at below-market rates. But housing prices are so high that the program foundered after completing just three homes, said Jill Davies, who is on the board of the community trust. The trust has purchased a fourth home, she said, but can’t find anyone to renovate it. And the trust doesn't want to dislodge the existing renter because there is nowhere else to go.
“Everything has accelerated,” Davies said of housing prices.
Woodstock is a classic Vermont town with historic homes, a green, and museums and restaurants. It's popular with out-of-state visitors, and is located just a half-hour drive from Killington, Vermont’s largest ski area. As in other resort towns, the housing shortage is amplified there.
Davies estimated the town of about 3,000 residents has 50 short-term rentals, which are often found on sites such as Airbnb and VRBO. According to the Vermont Housing Finance Agency's latest Housing Needs Assessment, there are 33,000 year-round homes and camps in Windsor County, about 25 percent of which are vacation homes. Statewide, about 17 percent of homes are vacation homes, the report said.
Half of the homes in Woodstock are second homes, said Charlie Kimbell, a Democrat who represents the town in the state legislature.
"It's great for the economy in some ways, but it’s horrible for the people who are trying to live and work in Woodstock," said Kimbell, who's also running for lieutenant governor.
Woodstock is one of a few Vermont towns with regulations currently in place that try to limit the impact short-term rentals have on the housing market. Rentals must be registered with the town, and some cannot be rented more than six times a year.
Officials in Burlington worked for two years to come up with limits on short-term rentals there, and approved new rules on February 23. But Mayor Miro Weinberger vetoed the rules on March 18, saying they were too strict. Among other things, the Queen City regulations would have limited short-term rentals to the host's primary home, with exceptions for hosts renting to long-term tenants with Section 8 housing vouchers.
The Woodstock Economic Development Commission was initially created to oversee the money raised by the local 1 percent sales tax on rooms, meals and alcohol that voters approved in 2015. For a few years, the commission focused on general economic development. But these days, the priority is housing, said Davies, who leads the the commission's housing working group.
“Honestly, back then, we were thinking of making the streets look nicer and doing flower pots, which all seems so irrelevant today,” said Davies.
Some of the local tax money goes to an economic development grants program. This year's annual grant spending proposal, which the commission approved last week,includes the $35,000 for the incentive program and $25,000 for a position called “housing advisor” who would help shepherd property owners through the permitting needed to build an accessory dwelling unit, or ADU.
The grants proposal also has money set aside for ADU construction grants that would go to property owners willing to rent the units at a specified below-market rate.
Encouraging the construction of ADUs, often in owners' homes, yards, or above their garages, is a housing solution that several towns and state lawmakers are closely examining this year.
Members of the Woodstock Selectboard, who did not respond to requests for comment on Monday, are expected to discuss the spending proposals at its meeting on April 5.If the board approves the housing incentive, the commission will reach out to short-term rental owners and gauge their interest in the program, Spector said.
“We don’t know whether these incentives will be high enough, but this is taxpayer money,” Spector said. “We thought it was important that if we’re going to err, we err on the side of being too low.”
Kimbell has high hopes for the ADU program, and he, too, is curious to see if the rental incentive will prompt action.
"I don’t know, but at this point, it seems that we have to try everything," he said. "There's no one solution that is going to work."