A Southold Town task force has recommended that the town create a special permitting process for property rentals of shorter than 30 days, after several years of difficulties of managing its current law banning rentals of less than 14 days.
The group proposes the town issue permits for homeowners wishing to rent their primary residence for less than 30 days, and instate a lottery for people wishing to rent out a property they own that is not their primary residence, capping the total number of short-term rentals in non-primary residences at 1 percent of the houses in each hamlet.
Pictured Above: AirDNA’s map of short-term rentals on the North Fork on Aug. 14, 2024.
Members of the Short-Term Rental Task Force, which has been meeting since April of this year, presented their proposal to the Southold Town Board at a special meeting Aug. 13.
Here’s their full report
The task force made several findings during its research that opened town board members’ eyes to the huge impact of short term rentals on the local economy.
Town Planner Mara Cerezo, who presented the findings alongside Task Force Chairman John Stype and Planning Department Director Heather Lanza, said the task force had collected information from the short-term rental data company AirDNA, finding that more than 40 short-term rentals listed in Southold are listed by just four property management companies.
“We found they’re often converting multiple properties into short-term rentals, which transforms them into commercial properties within residential neighborhoods and disrupts the character of the community,” she said. “The short-term rental market is promoting the constant turnover of guests, which further diminishes engagement and sustainability within the community, and is going to have further implications for our local economy.”
Ms. Cerezo said AirDNA showed the average annual income for each short-term rental property in Southold Town to be $107,556. The data showed 960 active short-term rental listings in Southold Town (including within the Village of Greenport) in March of 2024, up from 730 listings in February of 2023. The March 2024 figures show that six percent of the 16,298 housing units throughout the town are actively listed as short-term rentals.
“That’s astounding,” said Town Councilman Greg Doroski. “That’s over $100 million in revenue for an illegal, or at least gray area economy. That really points to how short-term rentals are affecting the current housing situation.”
The task force reviewed case law and codes in other similar towns in the process of drafting its recommendations.
Assistant Town Attorney Ben Johnson said some key takeaways from the case law are that the town should avoid setting strict residency requirements for owners of short-term rental properties, “which could have constitutional implications,” although much of that case law was from the federal fifth circuit, in southern states.
“I believe that would turn out differently in New York,” he said, where “you’re not entitled to have the most beneficial use of your property.”
He said the best way to avoid constitutional challenges would be to “regulate the use, not the user.”
Southold Town enacted its current short-term rental regulations in the summer of 2015, banning rentals of less than 14 days. The town checks for compliance only if there’s a complaint, said Ms. Lanza.
Once the town receives the complaint, said Mr. Johnson, a code enforcement officer must find the renters and get them to sign an affidavit saying they don’t live in the town, including information on the duration and price of the rental. He said this affidavit is “rather difficult” to obtain.
The town currently requires a rental permit, which is good for two years, for all other rentals — the permit doesn’t address the duration of the rental, other than to say it must be for 14 days or more, said Ms. Lanza. Property rental listings are required to display the permit number.
Ms. Lanza said there are currently 1,000 active rental permits in the town, with another 500 to 1,000 pending due to issues with the properties’ certificates of occupancy.
Ms. Cerazo said the task force explored several potential solutions, including restricting short-term rentals to primary residences, capping the number of short-term rentals town-wide, limiting the number of rentals per individual, banning short-term rentals entirely or keeping the code as it reads now.
The group landed on a combined strategy that would create a special permitting process for rentals of shorter than 30 days, allowing an uncapped number of permits for people wanting to rent a portion of their primary residence. The town would also create a lottery system for rental of non-primary residences, capping the number of non-primary residence rentals allowed at one percent of the housing stock in each hamlet.
Only one permit would be issued per “natural person.” Properties owned by LLCs, corporations, trusts and partnerships would be eligible if it is the only permit sought by any owner, shareholder, partner or other such member of the legal entity.
The group also recommended occupancy limits of potentially two people per bedroom, and that ‘primary residence’ be defined as the residence listed on the property owner’s federal tax return. The property owner would also be required to pay Suffolk County hotel taxes.
The properties would be subject to a life safety inspection for fire, structural integrity and health-related conditions, and a photo and floor plan of the house would need to be filed with the town. Property owners would also need to prove they meet parking requirements, have a legal water supply and sewage disposal system, provide contact information for someone who can be reached to handle emergencies 24 hours a day and document dark sky compliance and a waste management plan.
“For us to succeed with this, we need additional resources, and step one is the technology,” said Ms. Lanza. “You get the necessary software, and start learning how to use it, and assess what additional staffing you’ll need.”
Mr. Johnson said he has already heard from a company called Granicus, which is working with Suffolk County on implementing its short-term rental program, which estimates the software Southold is planning to use would cost just shy of $40,000 per year. He added that the town can structure its permit fees in such a way that they cover the cost of administering the program.
“We can charge $1,000 for the permit, based on what we expend for Granicus,” he said. “High permit fees are fine. In terms of how else it’ll affect enforcement, we need to get the tech in place before we know how many bodies we need to really regulate this.”
The next step, said members of the task force, will be to draft a request for proposals for software, and to make sure funding for the program is included in the town’s 2025 budget.
Town Supervisor Al Krupski expressed concern that lottery winners might intensify the use of their properties beyond what they’re doing now, which could negatively impact their neighborhoods.
“We would have so many less of them,” said Ms. Lanza, pointing out that 1 percent of houses is far less than the 6 percent that are on the short-term rental market now. “Owners are going to have to make a decision about what to do with the houses. They can go to summer rentals, or year-round. Can we promote the idea of year-round rentals, especially if we have the financial incentive taken away?”
Councilwoman Jill Doherty added that the intensity of short-term rentals are driven more by seasonal demand than by the property owners, and suggested the town’s Housing Commission market the idea of year-round rentals.
“My biggest takeaway is the potential for promoting more long-term rentals, getting more people into long-term rentals on the North Fork,” said Town Councilwoman Anne Smith. “I want to make sure we’re in alignment, in discussions with Riverhead and the Village of Greenport and Shelter Island, to make sure we’re seeing what their plans are.”
Mr. Stype, the chairman of the task force, said he was reminded many times during the group’s work of conversations he’d had with former long-time Councilman Bill Ruland, a Mattituck farmer who recently passed away.
“His main issue was quality of life,” said Mr. Stype. “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 doesn’t have any more meetings set up, but if you want us to help you, let us know. We’ll help you wherever you want us to go.”
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