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Two Anchorage Assembly members are proposing a new city licensing program for short-term and vacation rental units, including houses, apartments and bedrooms rented via online booking platforms Airbnb and Vrbo.
The proposal from members Randy Sulte and Meg Zaletel comes as the municipality grapples with a housing shortage, sharply rising rental rates and home prices and a dearth of affordable and low-income housing.
The measure would not impose limits on the number of Airbnbs and other vacation rentals. Rather, a city permitting program would help the city gather information critical to understanding the impact of short-term rentals on Anchorage’s housing supply, and to better ensure the units are safe and well-managed, Sulte and Zaletel said. Many other U.S. cities have instituted short-term rental licensing and enforcement of health and safety rules.
“It’s a very simple, essentially, permitting process at this point,” Sulte said.
[Alaska rents just saw their highest increase in over a decade]
The primary goal of the measure is to first gather data, he added.
“We need to start with figuring out how many current short-term rentals there are in Anchorage and who they’re owned by and how many (rentals) people tend to have. Are they owned by our neighbors? Are they owned by corporations? We don’t have all of the specific information,” Zaletel said.
Then, the city can evaluate its next steps, she said.
“We need to figure out: Is it a problem? If it is, how big is it? And then, possible things to think about to address that as a facet of a housing crisis,” Zaletel said.
“We’d like free market to essentially take care of itself, and we’re kind of seeing some of that now. And then the other piece is, it gives us a slightly bigger stick for people that don’t manage their Airbnb well,” Sulte said.
Some cities facing housing crises in the Lower 48 and in other countries have gone further than the Anchorage proposal, implementing laws that aim to rein in burgeoning short-term rental markets. Some have added rules limiting the number of units a person or company can own and rent out for short-term use. Others have set rules on the total number of vacation rentals allowed in an area, have implemented new taxes or have banned them altogether.
What the proposal would do
The ordinance would define a short-term rental as a unit rented to any person for less than 30 consecutive days. Anyone running a short-term rental in the municipality would be required to have a city license starting May 1, 2024. Licenses would be renewable and last for two years, costing an annual fee of $400 per short-term rental unit, according to the proposal.
All but $50 of that fee could be waived if the short-term rental unit is part of the owner’s primary residence, or if the owner has rented it to an individual for a total of more than 180 days of the preceding 12 months. That’s meant to encourage people to put short-term units back into the long-term rental market, Sulte said.
The fee would also be waived for active-duty military service members permanently stationed in the municipality but called to temporary duty elsewhere, according to the measure
The licensing costs would pay for the administration of the new city program, and are not meant to create a new revenue stream for the city, Sulte said.
The proposal would place some limits on what structures can be used for short-term rentals: Sleeping areas for guests must be in a finished living space — so no sheds, garages or closets. Short-term rentals couldn’t be in commercial or industrial spaces, nor would they be allowed in recreational vehicles like vans or RVs. (The measure would not restrict a person from renting out a working vehicle on car rental apps like Turo or Outdoorsy.)
The measure would set a maximum overnight capacity of two adults per bedroom, plus two per unit, and only two adults per studio unit. Those restrictions would not apply to supervised minors.
Owners would be required to have a minimum property liability insurance of $500,000, which could be through a rental platform. They’d have to give a 24-hour contact to the city, a “responsible manager” who could be reached in an emergency and be physically present at the rental within one hour. The owner or manager would also need to be available 24/7 to respond in one hour to issues and complaints about the unit’s condition by guests.
That piece is important, especially when it comes to companies that may own short-term rentals, Zaletel said.
“We learned that a little bit the hard way through alcohol licenses in Midtown; that if a big corporation held the license and didn’t have a local contact, you didn’t have anyone local to deal with problems. So I think that’s a great feature,” she said.
Owners or property managers also would be prohibited from preparing and serving meals to guests. They’d be responsible for ensuring the unit meets city safety standards and that parking, trash disposal and noise levels are in compliance with city code. The municipal clerk and city officials such as code enforcement officers would be allowed to inspect the rental.
The ordinance would set out three fines: A ticket for renting a unit without a license would come with a penalty of $300 per each night of renting; $300 for an advertising violation; and $75 for a manager or owner failing to respond within one hour.
The city clerk could choose to suspend a license for 30 days or revoke a license if the owner violates conditions of the license approval or the rules in the measure.
A growing debate
In recent years, community concerns over impacts of Airbnbs and other vacation rentals have grown. Those came to the forefront during debate over a now-stalled, controversial housing project in Girdwood, which faced strong opposition from residents. They said Girdwood’s acute housing crisis has been driven by a huge proportion of second homes and vacation rentals in the area. Many called for limits to short-term rentals and inclusion of affordable housing in the Holtan Hills housing development.
Earlier this year, Anchorage loosened its rules for accessory dwelling units like backyard cottages or above-garage studios and expanded where they can be built. Those changes were made to help spur development of more housing units, but also raised concerns that the loosened rules could instead lead to more short-term rentals.
Sulte and Zaletel said there are complex pieces to consider when it comes to regulating Airbnbs and other vacation rentals in Anchorage.
Alaska has a large tourism industry as well as many itinerant workers like locum tenens doctors and traveling nurses, Zaletel said.
“All of these things are are factors to think about. A lot of visiting professionals use short-term rentals. So I think getting the information is a great place to start. And from there, we can start to evaluate what makes sense,” she said.
Recent reports on economic trends from the Alaska Department of Labor and Workforce Development have cited rising short-term vacation rentals as one of several reasons for low vacancy rates and Alaska’s tight housing market.
Sulte, who represents South Anchorage, including Girdwood, said when he began pursuing a measure soon after his 2022 election, believing that short-term rentals were a significant part of Anchorage’s housing problem, removing stock from the market and inflating housing costs.
Now, he’s not sure that’s really a significant issue for most of the municipality, except in Girdwood, he said.
“I think we’re seeing as as prices go up, and maybe travel drops a little bit. The Airbnb market gets more competitive, people are going to find that they can’t make it work. And they’re going to have to convert these to a long-term rental,” Sulte said.
The ordinance is set for introduction on Tuesday, but it will likely be several weeks before the Assembly votes. After getting feedback from the public and other members, the sponsors may put forward another version.