One town struggles with housing issues

Londonderry debates rules on short-term rentals and takes a broader look at methods to prevent young people and workers from being priced out of their own community

LONDONDERRY — Short-term rentals (STRs), like those listed on websites like Airbnb and VRBO, are adversely affecting the housing market. That's according to the town's "Housing Needs Assessment and Strategy" report, published in April.

The report acknowledges that, while not solely responsible, STRs have contributed to rising housing prices and a decline in the availability of long-term rental housing.

There are more than 300 active short-term rentals in the Londonderry area, an increase of 62% over the past three years, as reported in the needs assessment.

The Selectboard is considering a short-term rental ordinance that would limit the number of STRs a property owner can have.

At the Sept. 18 Selectboard meeting, William Sinsigalli of South Londonderry explained that his neighbor is in the process of subdividing his property with the goal of developing several short-term rentals.

"These 'Airbnb farms' are not appropriate for a neighborhood, or the town," Sinsigalli said. He suggested that the board include language in the ordinance "to show we're trying to put in place some limits on ownership, how many units are appropriate."

Meeting participants agreed that the town's ordinance language requiring STR owners to register their properties with the town and pay a yearly registration fee would be a good first step in understanding their impact.

Many Vermont towns are grappling with how to regulate STRs. At least 20 towns have talked about new rules in the past year, Seven Days reported last month.

One town, Chester, requires STR owners to register with the town, pay a registration fee, and abide by state health and safety regulations. The town is using this registry as a way to collect information on short-term rentals in town.

The town has put a six-month moratorium on new short-term rentals whose owners don't live on the property. Beginning Oct. 1, this "pause" is intended to give the town time to consider how and whether to move from a registry to regulating STRs, according to Town Planner Preston Bristow.

Seven STRs operate in the Stone Village area of Chester.

"The biggest driver of concern is that the Stone Village would be hollowed out," Bristow said.

Burlington's short-term rental ordinance, enacted in 2022, goes further than Chester's.

Not only do STR owners have to register and pay a 9% tax, but short-term rental units in Burlington must also be on the same lot as the owner's primary residence, with some exceptions.

The new ordinance also includes enforcement measures not included in the previous law.

A revolving door

Acknowledging the tension between welcoming tourism and preserving neighborhood character and livability - one purpose of Londonderry's STR ordinance - Melissa Brown, a member of the Selectboard, said that "what we can't forget is that this town, and all the mountain towns, have a history of seasonal rentals. We're in the ski business."

"But it's changed," Brown continued.

"It used to be somebody would rent for an entire season. They became part of the community. They became your neighbors. You actually looked forward to them coming back year after," he said.

"Now it's a revolving door," Brown said. "It's a different person almost every night, and there are no connections being made."

The Selectboard asked community members to consult with a lawyer and bring suggestions for ordinance language to their next meeting.

Regulating STRs is one part of Londonderry's larger discussion about housing.

According to the town's housing needs assessment, Londonderry "faces an immediate need for new, improved, and alternative housing for up to 315 households."

That number, the report said, includes "nearly 190 households that are struggling with housing expenses and nearly 50 workforce households that are absent from the town because of the lack of attainable housing."

Addressing that challenge is the charge of the town's Housing Commission, which was formed to guide the town through implementation of 19 strategies outlined in the report.

Commission members, who first met on Sept. 14, recognize their task is not easy.

"It seems like an intractable problem," said Paul Abraham, one of seven members of the commission, in a recent interview with The Commons. "It's a Gordian knot, and we aren't Alexander with a sword to just cut it."

'There are no longer any quarter-million dollar houses'

Like many Vermont towns, Londonderry is facing a housing crisis that is multifaceted and complex.

One fundamental problem: As is the case in larger areas, housing prices there have increased at a much faster rate than income.

"There are no longer any quarter million dollar houses," said Abraham. The median home sales price in Londonderry in 2022 was $414,500, a 67% increase from 2016.

With a stagnant median household income of $65,166 (compared to the state's median of $68,916), the typical Londonderry resident could afford a home with a maximum sales price of $257,600 and not be "housing cost-burdened," i.e., paying more than 30% of their income on housing.

As the result of the "affordability gap" - the $156,949 difference - this "missing middle" housing is what's needed in town, Abraham noted.

Londonderry, home to Magic Mountain and not far from Stratton Mountain Resort, is nonetheless relatively affordable compared to other resort communities. For these reasons, it attracts seasonal residents, who occupy four out of 10 housing units in the town.

According to the town needs assessment, from 2010 to 2020, the number of rentals and homes for seasonal residents increased by nearly 32%.

That leap has upset the balance between seasonal housing and housing that is available and affordable to local households and workers.

Tourism drives the local economy, but many businesses report that they are unable to attract and retain workers due to the lack of housing. As a result, businesses are open for fewer hours, limiting their offerings or moving towards a seasonal approach. Most workers in Londonderry commute from outside the community.

Like what the state is doing to address the homelessness crisis, Stratton Mountain Resort is addressing its employee housing problem by contracting with local motels. According to the Manchester Journal, in the past two years, Stratton Mountain has housed seasonal employees in the Econo Lodge and the Chalet Motel, a Travelodge in Manchester.

Seniors need housing, too

The aging of Londonderry's population has created what Abraham calls "over housed" seniors, who would downsize or relocate to more suitable housing that better meets their needs if such housing were available.

Almost a quarter of Londonderry's 1,919 residents are between the ages of 65 and 74, the fastest growing cohort in the town.

When this population of "empty-nesters" and retirees can't move, there's less turnover in housing and fewer housing units available for workforce and families.

High construction costs and a shortage of labor, problems felt throughout the state, also contribute to the town's lack of housing.

"I can tell you from personal experience, finding a contractor around here is really hard," said Abraham. "You're gonna wait months to get somebody to respond. Some of my neighbors have had to reach out to companies in Massachusetts who might have a bit more capacity."

Tradespeople "can't afford to live here," he said.

Housing construction in the village is also hampered by the lack of a community wastewater disposal system, which can handle higher-density development. Londonderry is one of 200 villages in the state that lack this capacity.

In 2022 the town was awarded $7.9 million from Vermont's nearly $30 million appropriated for village water and wastewater initiatives across the state. Grant funds from this program - funded by the American Rescue Plan Act - will be used for project implementation, including property acquisition and system construction.

The Village Wastewater Committee, appointed by the Selectboard, is evaluating potential locations for systems in both Londonderry and South Londonderry.

Abraham noted that siting wastewater treatment facilities can be a problem, given the location of the town center.

"Most communities in Vermont are along roads, which tend to follow the rivers. We've got limited space in fragile areas," he said.

'How do you fix a problem this complicated?'

Acknowledging that "this is a marathon, not a sprint," Abraham outlined several strategies the town is undertaking to address the housing crisis.

The Selectboard is in the process of updating the town's 2009 bylaws. According to Abraham, the revised bylaws will be consistent with the new Housing Opportunities Made for Everyone (HOME) Act, signed by Gov. Phil Scott on June 5.

This act amends the Planning & Development statute, Act 250, and other laws to enable higher density development in areas served by local sewer and water, and it allows for duplexes in areas currently zoned for single-family housing.

Allowing for the construction of this "missing middle" housing will help to close the affordability gap, according to Abraham.

Several strategies outlined in the town's needs assessment involve additional funding.

One such strategy is a voluntary deed restriction program, which typically provides a financial incentive to a property owner to sell a restriction on their property. The restriction could ensure that the property could be owned only by someone living in a predetermined location - like the town, for example.

Woodstock's Local Deeds program, established by the Woodstock Community Trust, does just that.

According to the project website, Local Deeds aims to "protect housing for families and individuals who live and work or will work in the town year-round" by paying up to 16% of the property's fair-market value in exchange for a permanent deed restriction.

The program, which is in its fundraising stage, will launch in the next few weeks, according to Jill Davies, the project leader.

Creating a local housing fund, dedicated to creating housing in town, is another strategy outlined in Londonderry's needs assessment. Such a fund could be funded by a portion of the town budget or by establishing new dedicated funding streams.

"If Londonderry does create a housing trust fund, it's possible that a grant from that fund might ultimately be combined with a "10% in Vermont" loan for a specific housing project," said Leslie Black-Plumeau, research and community relations manager with the Vermont Housing Finance Agency.

The "10% in Vermont" program allows the state treasurer's office to invest up to 10% of the state's cash deposits for economic development and job creation in the form of low-interest loans.

On Sept. 13, State Treasurer Mike Pieciak announced $55.5 million in housing investments from this fund.

"Sometimes communities use housing trust fund money to help close the gap that a local affordable housing developer is facing between the total development costs and funding sources available to the project," said Black-Plumeau. "The '10% for Vermont' funds administered by VHFA will be one of the funding sources that developers like this might use."

A plea to sell to locals

With the Selectboard addressing zoning, Londonderry's Housing Commission will focus on public education efforts, said Abraham.

Such efforts will include developing a web portal with links to housing-related resources and information to find, build, and improve housing in the community.

Public education also will involve "getting the word out to folks" to consider selling to local families as a way to improve the community.

"If the seller has five bids on the table and one of them is a local family, is that something they'd consider?" Abraham suggested.

Musing on the worst-case scenario for a town that doesn't address its housing crisis, Abraham painted a picture of a community where the next generation is priced out and can't afford to live there.

"Then it becomes a community of wealthy older folks who, in the end, have to move out because they have nobody to care for their properties," he said. "And they can't go to the local medical center because there's nobody staffing it."

"That's a dark, dystopian view, I know," Abraham continued. "It's not where we're at yet, but you can start to see it with the difficulty of getting professionals out here - electricians, plumbers, contractors, roofers."

But the market makes corrections.

"If you take an economic view of this," Abraham said, "the pendulum will swing back at some point."

He pointed to the increase in short-term rentals as an example.

"Folks that are doing STR buildouts on their properties may find themselves with a lot of empty buildings at some point in time," Abraham said. "The economics would suggest that these property owners would then do something else."

"But those economic forces take a while to come into play," he cautioned. "I don't know that we have the patience to wait for that to happen. Which is why we're trying to do the right thing here for the missing middle."

"The solution is to have endurance - to stick with it," Abraham said. "And not lose faith or confidence in folks' ability to make a difference."

This News item by Ellen Pratt was written for The Commons.

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