A 2024 proposal to issue permits for short-term rentals and to cap their number at 1 percent of the housing stock in Southold Town could soon go before the community for a public hearing, as the town works to regulate an industry the town believes generates $25 million in revenue for property owners here each year.
Short-term rentals of less than 14 days have been illegal in Southold Town since 2015, but the town has since found the ban difficult to enforce.
Pictured Above, Right to Left: Mike Verity, Mara Cerezo, John Stype, Ben Johnson, Brian Mealy, Leslie Weisman and Kate Stevens at the Jan. 29 code committee meeting.
In 2024, the Southold Town Board convened a Short-Term Rental Task Force, which recommended the town change the definition of short-term rentals to fewer than 30 days and allow permits to be awarded through a lottery.
The town has since begun using new software, Rentalscape by Deckard Technologies, which enables it to know the length and price of rentals booked on short-term rental websites, and find out in real time when short-term tenants are arriving and leaving the properties, enabling town code enforcement officers to better document and issue citations for the illegal use.
Town officials say this software will be crucial to its enforcement of the new code when it is adopted.
The Southold Town Board got a first look at the proposed code at a Jan. 29 code committee meeting.
“The way we look at it is, it’s really a quality of life issue,” Deputy Town Supervisor John Stype, who chaired the task force, told the Town Board at the code committee meeting. “We’re concerned with the people who live here full-time and their particular quality of life.”
He added that rapidly declining enrollment in local schools has been driven in part by a real estate market inflated by speculation.
“The cost of homes makes it harder and harder for local people to stay here,” he said. “That’s what we should be concerned with.”
Mr. Stype was joined in the presentation by Town Planner Mara Cerezo, Chief Building Inspector Mike Verity, Zoning Board Chair Leslie Weisman and Assistant Town Attorney Ben Johnson, who is drafting the code.
Mr. Stype said the soonest the town could realistically implement the code would be January of 2027 — town staff and the board are still working on a draft of the code, which would then have to be put before the public at hearings.
What’s Being Proposed?
While the general outline of the code would be much as described by the task force back in 2024, the presenters asked the Town Board to weigh in Jan. 29 on three key points — whether to allow the town to grant permits to “owner-operators” for whom the house was not a primary residence, whether to allow hardship exemptions for people who need the income to stay in their homes, and whether the cap should be allocated on a hamlet-by-hamlet basis or townwide.
If a cap was instated, permit applications would be entered into a lottery.
The task force had also recommended the town limit the permits to one per person. Properties owned by corporate entities would be eligible if it is the only permit sought by any owner, shareholder or partner of the entity. When the task force made its report in 2024, it found that 40 out of 960 active short-term rental listings in Southold Town (including Greenport Village) were listed by just four property management companies.
At the Jan. 29 code committee meeting, Ms. Cerezo provided data to lay out what the 1 percent cap would look like. Of the 13,770 residential properties in the town, the short-term rental data company AirDNA shows that 985 were being used as short-term rentals as of August of 2024. If 1 percent of homes in each hamlet could be used as short term rentals, only 125 total short-term rentals would be allowed in town — an 87.3 percent reduction in these rentals townwide.
There was one caveat — AirDNA’s data aggregates Greenport Village with Greenport West, which is outside the village but has the same zip code. The village would not be included in the law because Greenport has its own zoning and recently adopted its own short-term rental permitting process. The aggregate data showed 293 rentals in all of Greenport.
“Existing short-term rentals greatly exceed the cap, by a significant amount in every hamlet,” she said. “What is right for Southold? There is no single perfect model out there.”
She gave examples of several different communities around the country that set varying caps.
“The cap levels have very geographic nuances,” she said. “I’m putting 1 percent out there as something for you to chew on.”
The Town Board agreed to chew on that proposal.
If the 1 percent cap was instated per hamlet, said Ms. Cerezo, based on the number of housing units in each hamlet, 36 short-term rentals would be allowed in Southold, 24 in Mattituck, 20 in Cutchogue, 13 in Greenport West, nine in East Marion, eight in Orient, seven in Laurel, five in Peconic and three in New Suffolk.
“The goal is to establish scattered sites, so there’s a percentage in each hamlet. Then it seems to be equitable,” said Ms. Weisman, the ZBA chair. “Scattered is always better than clustered.”
AirDNA didn’t have data on Fishers Island, where Fishers Island Town Board member Kate Stevens said “there is no hospitality function. It’s an odd situation.” She added that on this remote island, residents will share or loan their homes to visitors, often family members, on an informal basis, for events like weddings.
“Historically, Fishers Island has been exempt from this code because it’s so remote,” said Mr. Johnson, the Assistant Town Attorney drafting the code.
Hardships, Cabbages, Cruises & Primary Homes
Mr. Johnson pointed out that courts have found against municipalities that require a short-term rental be in a primary residence, as originally recommended by the task force, because if someone splits their time between two houses in two different states, it could violate interstate commerce provisions in the Commerce Clause of the U.S. Constitution.
He recommended the town instead require an “operator,” who could be someone other than the owner who is “available to respond to a complaint within 60 minutes.”
“You can have an owner be there, but you can also have an operator, much like a property manager,” he said.
Board members said they were in favor of allowing operators, but they were skeptical of allowing the town to grant hardship exemptions.
“I’m not sure how we’d set up a framework for that,” said Town Supervisor Al Krupski. “Would we measure their lifestyle, if they’re taking three cruises a year?… I’m not sure how you judge that. At what threshold do you say ‘you can’t have a hamburger tonight. You’ve gotta eat a cabbage.'”
Town Government Liaison Officer Gwynn Schroeder, who has been involved with implementing the town’s Community Housing Plan with Community Development Project Supervisor Andrea Menjivar, said the town is encouraging people to rent accessory dwelling units on their properties on a long-term basis, which would be helpful to people who are experiencing true financial hardships.
“We didn’t want ADUs to be used for short-term rentals,” she said.
“People could still make income out of renting affordably,” added Ms. Menjivar, adding that even market rate rentals help the housing crisis. “We want to incentivize renting year-round.”
Councilwoman Anne Smith asked to discuss how the town will enforce this proposal, but Mr. Stype said that was a large conversation for a future code committee meeting.
“If you’re not going to enforce it, it’s going to be worthless. Enforcement is a big key,” said Mr. Stype.
Penalties for property owners in the draft code range from $3,000 to $10,000 (or the 30 day rental rate, whichever is greater), or by imprisonment of up to 15 days for a first offense, and from $5,000 to $20,000 for a second offense within five years. Tenants could also be fined up to $1,000.
The current number of rental permits issued for year-round and seasonal rentals (of greater than 14 days) also speaks to problems with enforcement, said Mr. Verity, the Chief Building Inspector.
He said that when the town instated a two-year rental permit process in 2019, his office received about 1,000 applications for permits. Of those, he said, about half of the applications couldn’t be approved because of illegal construction on the properties or because they lacked certificates of existing use (for houses built before the town first began zoning in the 1950s). He said that there are currently 1,413 rental permits in town and “600 still pending.”
“Our total residential uses are more than 13,000 — if we have that many properties in town and only have 1,400 rentals, do the math. That’s not the real number,” he said.
Councilman Brian Mealy asked where members of the public can turn to air their concerns and questions about this proposal.
Mr. Krupski said they can contact the Town Supervisor’s office. The phone number there is 631.765.1889.
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