Vacation Rental Owner challenges commissioners on short term rentals

(Editor’s Note: After the following letter was received by NCW Media (WBJ), on Tuesday, December 29, the Chelan County Commissioners voted to create a 90-day Short Term Rental (STR) Taskforce to study the issue and report back to the Board. Director of Community Development,  Jim Brown,  said he has received more than 400 new comments since the previous December meeting on the STR subject. Existing county regulations will be enforced until the task force has returned its report and advice. The moratorium on new rentals will not be extended until the commission gives the public proper notice. The moratorium issue is scheduled for discussion and a vote on Tuesday, January 12 at 10:30 a.m. Chelan County Commissioner Tiffany Gering will be replacing Doug England for that meeting as the newly elected commissioner representing the Manson/Chelan area.)

I hope this letter finds you well. As Vacation Rental owners, we need you to understand that 99% of us mean no harm, we mean no ill will, we are simply trying to run a business and like any business owner we have done everything that we ever thought that we needed to do to be legal, law abiding and therefore successful. We actively set out to find a property where the area had a long-standing history of legally and successfully operating vacation rentals.

When I bought my first place in 2007 I had never heard of VRBO… Airbnb didn’t exist, the only thing that did exist at that time, that I knew of, was Destination Leavenworth, a company that had been in operation for quite a while and which had been managing vacation rentals for some time. When I began my business, I went to the county and asked if I needed a license or a conditional use permit or any other variance and I was told, “No.”

I successfully operated that Vacation Rental for seven years before I even considered buying another property, in those seven years I did not hear, not even one single time, that Vacation Rentals were illegal or were even a problem. 

The next property that I bought in 2014 was a Bed and Breakfast on Icicle Road, formerly called Prusik Peak BNB. Being that it was a BNB I again went to the county to see if I needed any special licensing to turn it from a BNB to an unoccupied Vacation Rental. I was again told, by a county clerk, that I didn’t need to submit any paperwork or request any licensing. 

Three years after that I bought yet another former Vacation Rental on Cedar Brae Road formerly called the "Lakeview Inn". I again went to the county to see if there was anything I needed to do to continue to operate it as a Vacation Rental (license transfer, etc.) but I was again told that I didn’t need to do anything. I merely needed to follow existing county code, pay my taxes, etc.

So now with three successful Vacation Rentals I felt that if I really leaned up my finances that I could leave my job as a financial advisor, move to Leavenworth and not have to work in corporate America anymore. So, I bought another property, poured a large portion of my life savings into it and settled into the area.

At no time did anyone say that what I was doing was illegal. Every property that I bought was in an area that had other existing vacation rentals in my proximity. I kept my guests in line with rules and with contracts. If neighbors had issues, which were super few and far between, I immediately jumped in to correct them.

I paid my taxes. You graciously accepted these tax payments for years and years.

I know this story sounds boring to you, our County Commissioners, because you've heard it a thousand times and I know that after a while they all start to sound the same, but this story matters to me and it matters to Vacation Rental Owners, people who have risked their financial futures to start a capital intensive business such as this, because your decisions and your choices have the potential to ruin not just our lives but the lives of so many others.

The fact of the matter remains. Vacation Rentals have not been the problem that you've stated them to be. The complaints that have come in have been few and far between and have come from just a couple of problem properties. The problem has been that you were never bothered to enforce existing codes, you never bothered to regulate or limit vacation rentals or long-term rentals or perhaps even homeowners. You waited and waited and happily collected our taxes and spent those tax dollars for years and now it appears that even though you continue to collect these taxes you are still running a budget shortfall in the county and have had to dip into a special reserve fund. How much worse is the county budget about to get when you eliminate the 150 million dollars that Vacation Rentals generate either directly or by proxy? This doesn't even mention the millions you are going to have to spend on one major lawsuit plus the hundreds of additional individual suits. Vacation Rentals have been the sole bright spot during Covid-19 as families have felt safe leaving their home bubble to come to their Vacation Rental bubble. It's the one thing that's helped to maintain their sanity, just simply being able to stare at four new, different walls.

That said, if you eliminate Vacation Rentals to the depth and breadth that you plan to you are only going to face decreased revenues to deal with ever growing budgets. As you are forced to lay off employees and cut programs you have to understand that this too is going to fall on your shoulders.

Based on the types of homes generally used as short-term rentals, it is highly unlikely that any of these properties will find themselves becoming long-term rentals or affordable housing. Vacation Rentals by their very nature rarely fall in the affordable housing category. Most homes will simply turn back into vacation homes, a few will survive as Vacation Rentals or as owner occupied Vacation Rentals, some homes in the 600k+ range will end up being sold to folks looking for a second home of their own or looking for a place to telecommute from, some may be purchased for investment and simply be sat on but very few are going to become affordable housing and many will find themselves sitting empty and this will not help your neighborhood theory. It seems that you've had every chance to create affordable housing but have not. To think that you can create affordable housing by creating an artificial housing crash, which is going to create, as a byproduct, the loss of hundreds of jobs simply doesn't make sense. If these codes are passed I will most certainly lose my livelihood and many of my independent contractors will lose theirs as well. I just don't see who you think you are going to help economically by doing this? Our county has millions of acres of open land. Surely if New York City or Chicago could take millions of dollars in tax revenue and use it to build sizeable amounts of affordable or subsidized housing Chelan County could do the same. Creating affordable housing by throwing hundreds of million dollars plus of sub million dollar vacation rentals onto the market, all at once, is not going to help one single working family of this town. Not with tens of thousands of millionaires just on the other side of the pass ready to snatch up these homes.

As far as the other economic impacts are concerned. It’s been clearly stated that your decision is going to cost Chelan County 9.5 million dollars in labor income, 314 jobs and a million dollars in sales tax and lodging tax. Less tax dollars mean layoffs, less jobs mean more unemployment benefits, but this is just the first ripple in a very wide pool of ripples and this is going to end up a double-edged sword that creates a vicious downward cycle of lost jobs and lost opportunities.

The owner of Plain Hardware and many other businesses in the Plain Area have said that they cannot make it without Vacation Rentals. Besides the businesses you won’t shut down you will hurt many others to the point that there will be layoffs, cutbacks and reduced hours. You are therefore embarking on an experiment that will most likely have dire consequences, some of which will be felt immediately and some that will be felt over time. Simply put, there is no way that you can eliminate half of the lodging in this county and in this town, a town that clearly relies heavily on tourism, which will not create an economic collapse or crisis over time.

You currently have people who can only afford their dream cabin or their retirement dream home by renting it out part of the time. Leavenworth and Chelan have always been second home towns. I may be wrong but I believe that, historically, 60% of the homes in Leavenworth and Chelan have always been second homes, so when you force these middle-class people, these strivers, these savers and investors to sell out, they will most likely be forced to sell out to people who can afford these mortgages with no problem and this too will fall on your shoulders.

This isn't about creating affordable housing and I think you know that. How many times have the high net worth used the premise of "helping the less fortunate" to push forward their own agenda? 

As a means of compromise we are in favor of the “measured regulation” that you promised to pursue in 2019, we don't know how this got so far off track from where this all began. We don’t mind that you want to eliminate the transfer of licenses, we don’t mind that you want to add a reasonable cap on the number of people that can stay in a house, we don’t mind that you would like to see some natural attrition over time, we don’t mind that you want to have better rules around noise, garbage and parking.

There is still a chance to turn this around, if we work together and take our time to do it right. There is still time to save your county and the towns contained within, to save tourism and to create some rational codes that work for everybody. We are ready to help.

There is no doubt that each side is ready for the fight. We are pretty sure that if we don't do something now that this is going to end up in the State Supreme Court and we are fairly certain that their hand is going to be forced to determine whether or not vacation rentals are going to remain legal in this state or not. We are talking about thousands of vacation rentals, tens of millions in revenue, millions of tax dollars, hundreds upon hundreds of jobs. We are talking about the destruction of dozens of small town ecosystems based on one single stroke of the pen.

For half a century we have been a Vacation town, a tourist town, a vacation rental town and for 47 of those 50 years Vacation Rentals, all things equal, have not been a problem whatsoever. Vacation Rentals are the entity that has made this town great, has helped this town and this county to grow, has provided jobs and supported businesses and has allowed entrepreneurs to not only survive but to thrive. To end it all is not sensible. There are dozens of things that we can do to make this work better for all of us and to control the numbers over time. But to think you can end this one problem and not create a thousand more is simply some of the fuzziest math I've ever been witness to. Our current hotel inventory based on its size, the demographics it caters to and so forth simply cannot support the amount of tourism this town needs in order to be able to make it. Perhaps, like Tahoe, we will tear down and rebuild or simply build dozens of hotels over time but is that what we want the character of the town to be? Do we want to be Tahoe?

Vacation Rentals add to the charm of the town not detract from it.

Let's work to bring back some sanity here. We understand that compromises need to be made. We are ready to work with you. The ball is in your court.

Kelly Kortman

Icicle Creek Investments, LLC

Managing Member

Owner / Proprietor: 

The Cabin at Eagle Creek 

The Chalet at Icicle Creek

The LakeView at Cedar Brae

The Rustic at Lake Wenatchee