A recent check of an online rental agency listed 1,458 vacation rental properties in Islamorada. The Village Vacation Rental registration lists 257 properties. If you are an Islamorada resident and have endured some of the issues associated with vacation rentals in your neighborhood, you likely don’t need convincing that this is a serious problem.
Short-term rentals (less than a month) have been controversial for years. Decades ago, vacation rentals in Islamorada were primarily a way for folks with vacation homes to help with costs of owning a second home.
Times have changed. Now short-term rentals are in huge demand with tourists. Investors are buying up building rights for single family homes to create “private mini-hotels” using Vacation Rental licenses to compete with our existing commercial hotels and motels. It is a very lucrative business with some large “homes” that are permitted as single-family renting for more than $2,000/night with occupancy as high as 10 tenants.
A Vacation Rental according to Village code is a residential single family or multi-family residence that can be rented for less than 28 days but to a single family or family group. If the dwelling is in residential zoning, the rental must be at least seven days. In Mixed Use zoning classifications, the seven-day restriction does not apply. A Vacation Rental license is not required for rentals of 28 days or more.
When the Village approved our Comprehensive Plan Policy 1-2.1.10, Restrict Development of New Transient Units, council in fact approved a moratorium on new transient hotel and motel “rooms,” and recreational vehicle spaces, restricting them to the number that existed within the Village as of December 6, 2001. That moratorium continues today.
Single family and multifamily residences are not part of the transient cap but can be used for transient rental use as Vacation Rentals based on Comprehensive Plan Policies 1- 2.4.7 and 1-2.4.8.
The Village Vacation Rental ordinance was approved in 2003 and modified significantly in 2006. The goal that is included as part of the ordinance:
“To protect single family homes and residential neighborhoods from the adverse impacts of vacation rental uses… and to provide a reasonable period of time for the amortization of existing vacation rental uses within residential areas where the continuation of such uses are not compatible with the character of the neighborhoods.”
Approximately 25 Vacation Rentals are still “grandfathered” in residential medium zoning districts. Vacation rentals continue to be legal in residential high land use, which are typically condos; in residential low land use, where larger lot size was expected to minimize problems; and mixed use where commercial uses predominate. Many condos in Islamorada are designated residential high land use, but have their own restrictions, prohibiting rentals that are less than a month.
The Vacation Rental ordinance requires property owners to apply for a license annually. They must demonstrate each year they have a Florida 509 state public lodging license, a Monroe County occupational license and an inspection report by the Village Fire Chief.
The number of licenses that can be issued is capped at 331. As of March 29, 2021, there were 243 licensed vacation rentals in Islamorada for the current year. There are 23 additional properties that had not been licensed in 2020 and 20 properties licensed in 2020 that did not (yet) renew.
The March 29, 2021 Vacation Rental list (it’s eight pages… be patient with download)! The list is in order by address so you can see whether properties near you are properly licensed.
Well over 100 new vacation rentals have been licensed in the last two years. A significant portion of those are new single-family homes that were approved and built to replace mobile homes that were often used by local members of the workforce in the past.
When the Vacation Rental ordinance was first passed, a majority of licenses were issued for homes or condos that were used part-time by the owners, with the rentals helping to cover costs of owning a vacation home. Now, vacation rentals have become a lucrative business with entire mini-resorts created that are in competition with our hotels and motels, able to accommodate large families and groups in a “single-family home.” Examples:
And there are more mini-resorts like this on the way. Most of them got building rights from trailer parks that have been demolished.
Most of the newly-built vacation rentals are available to rent throughout the year, typically renting for $500 – $2500 per night. Many are 3 – 5 bedrooms advertising occupancy of up to 10 adults. Occupancy permitted by Village regulations is two per bedroom.
In addition to the rent paid for vacation rentals, renters also must pay the 7.5% sales tax and 5% tourist development tax. Much of the tourist development tax raised must be used for advertising and improvements to tourist facilities geared toward bringing in more tourists.
Impact on Affordable Housing
When the Vacation Rental ordinance was written, there was a provision intended to assure the least expensive homes in the community were not eligible for vacation rental licenses, with the expectation that some might therefore be utilized as long-term housing for our workforce. Dwellings in residential high or mixed use land use had to have an assessed valuation at 600% of the median income for Monroe County.
Since 2008 the Vacation Rental ordinance has been amended every two years allowing the use of the assessed valuation of vacation rentals from 2007 to offset the impact of the nationwide economic recession, which caused an unpredictable decrease in values in 2008. The median income used in the ordinance remains the current value.
License Fee Issues
Since 2003, the license fee has been $1000 per year. Policy 1-2.4.8 of the Village Comprehensive Plan states the fee is to cover the cost of enforcement of vacation rentals and any excess is to be used for affordable housing projects.
The Islamorada Finance Department determined that in the last seven years the cost of enforcement of these rentals exceeds the total license fees collected by more than $232,000. Affordable housing has not received any funds provided from the fees.
View deficit | Revenues generated are less than expenses incurred
For the year ending in September 2020, there were 49 code enforcement cases opened, with 32 of those property owners fined as a result of violations to the Vacation Rental regulations. The total fines collected are $12,425, an average of less than $400/violation. For the same time frame, enforcing vacation rental regulations cost the Village $265,679, including processing license applications as well as code enforcement efforts.
All of the citations issued for vacation rental violations were for vacation rentals advertised for properties without a license, though there are numerous other regulations that are being violated.
According to our code:
Total violation cases opened | Citations and fines issued Cases outlined in red are Vacation Rental citations.
Home Rule and Vacation Rentals
In 2011, the Florida Legislature prohibited cities from regulating short-term vacation rentals. The legislation included a provision that “grandfathered” any ordinance regulating short-term rentals prior to June 1, 2011 including Islamorada’s. Since that time, a number of cities, both “grandfathered” cities and those that did not have an ordinance in place, have experienced significant vacation rental problems.
In 2014, the Legislature passed SB 356 (Thrasher), which allows local governments to adopt ordinances specific to these rentals so they can address some of the noise, parking, trash and life-safety issues created by their proliferation in residential neighborhoods. But, SB 356 left in place existing language stating that cities cannot “prohibit” short-term rentals or regulate the duration or frequency of the rental.
Municipalities, like Islamorada, that had an ordinance in place before 2011 are still allowed to regulate the number of licenses and locations of short-term rentals, but the question remains whether these ordinances will continue to be valid if they are amended. Some city attorneys believe these ordinances are “frozen” and any future amendments would cause a loss of the “grandfathering.”
With changes in the popularity of short-term rentals in resort areas, ordinances adopted before 2011 may no longer be as effective as they once were, as circumstances may warrant added restrictions. Many places that are grandfathered are reluctant to amend the regulations to adjust to changing times out of fear of losing their existing ordinance and, with it, their Home Rule authority relating to short-term rentals.
The Vacation Rental Industry, citing overreach by local government, regularly pours millions of dollars into lobbying efforts to convince state legislators to introduce bills that severely restrict the home rule authority of local government whether grandfathered or not. In addition, there have been attempts to eliminate homeowner association restrictions.