City of Walla Walla bans new non-owner occupied VRBOs (11/17)

Vacation Rentals by Owner and Airbnb have been an important part of the Walla Walla visitor experience. In addition, they provide revenue and equity to property owners who rent out their houses as short-term transient accommodations. 

The City of Walla Walla has been wrestling with what to do about short-term rentals and finally after two years of research, workshops and resident feedback, they made their decision. On November 1, Walla Walla City Council voted in a 5-2 decision to ban any new non-occupied VRBOs, AirBnBs or the like, known in the industry collectively as short-term lodging.

What does this mean for the real estate market? 

The city estimates that 160 of the 190 plus properties currently operating as short-term lodging are non-owner occupied. These can be grandfathered IF they apply for business registration by Nov. 9 and obtain a short-term lodging permit (available after 11/20) by showing that they have been active and they have been paying the taxes. 

Going forward, they will be subject to inspections and will need to reapply annually, showing that they are collecting and remitting both sales and lodging tax to the state.  

There was a concern that with the sale of the property, it would be required to revert to its original use, however, after the city consulted with lawyers, a new owner may continue to operate it as short term lodging if desired. 

There is no ban on new owner-occupied short term lodging properties, that is, traditional bed & breakfast or a home owner offering a portion of the home for overnight stays, as long as the owner uses it as their principal residence for minimum nine months of the year. These, though, are the minority of properties, and they attracted little of the animus that residents of Palouse, Catherine and several other streets voiced during the open mike sessions with the city councillors. 

It was the concentration of properties in certain neighborhoods, especially those within walking distance to downtown and the increasing numbers of residents turning up at each meeting that finally tipped the debate to the ban. 

The irony is, of course, that short-term lodging properties are typically improved and kept up - usually above neighborhood standards. Some opponents argued that these rental properties raised housing prices out of reach of the local denizens. However, there are real concerns of safety (lack of egress, fire safety) and annoyance through noise and lack of parking available to residents that became the focal point of the complaints. 

Regulation would help with those concerns. However, council could not find a way to legally enforce density restrictions in popular neighborhoods, so instead they took the step of banning new ones. 

Some have suggested that this may become a legal issue. Perhaps - however, there appears to be sufficient precedence from other municipalities. 

For anyone considering real estate in the city of Walla Walla and thought about purchasing a future-retirement home now (while affordable), renting it out for weekend stays for a few years until actually moving here full time, this option is now off the table. 

For others, it shuts off what has been a way to purchase a second home here, use it for several weeks a year and have it carry itself by renting it out the rest of the time.  

However, it is possible to purchase these properties when they come on the market. I believe the smaller ones (3-4 bedrooms) will be in most demand. The larger properties will need a buyer with a large family or a large vision. 

Also, while this has been a contentious issue for the city of Walla Walla, the County government sees no reason to regulate these ventures. Much of the county is already in parcels large enough to prevent annoyance issues.

However, if you are buying in a developed or clustered neighborhood in the county, check to see if they have excluded short-term lodging in their CC&Rs.

For my hot sheet on properties that would make a great second home and/or legal short-term lodging property, send me a note. I update my list weekly, so you will always know what is new on market. 

Read the 11/02 Union Bulletin article here

Read 11/07 update here