For generations, thousands of tourists have flocked to Old Orchard Beach each summer to stay in rented cottages and homes for their seaside vacations. But one town leader says the growing number of short-term rentals is taking away housing from year-round residents.

Town Councilor Larry Mead is concerned that too many rentals, some far from the beach, are being converted to vacation rentals and it’s impacting neighborhoods.

Most of the rental licenses approved since March – 57 of 64 – are for short-term rentals. And nearly half of those are in residential zones, Mead said.

He wanted the town to enact a temporary moratorium on all new rental licenses until the City Council can consider new rules. Councilors were preparing to vote on it Tuesday night, but Mead said he will withdraw the proposal because of fierce backlash.

“I didn’t want to see any more houses that had previously been year-round residences for residents of Old Orchard Beach being converted as we went through this process of discussing regulations,” he said. “In retrospect, what I proposed ended up being counterproductive. It clearly creates a lot of concern and fear among the community.”

He hopes to continue the conversation in council workshops with more input from residents.

Old Orchard Beach is the latest Maine town to wrestle with the impact of short-term rentals, which have become commonplace in recent years with the growth in popularity of platforms like Airbnb and VRBO.

There were 809 active short-term rentals in Old Orchard Beach as of August, up from 464 in September 2020, according to AirDNA, which tracks rental data.

The vast majority – 95% – of the rentals are the entire home, while the rest are a private rooms. Owners list their properties on Airbnb (42%), VRBO (29%) and on both platforms (29%), according to AirDNA’s data. The average annual revenue from renting those properties is just under $100,000.

“People need this revenue to survive today,” said Council Chairman Shawn O’Neill, who opposed the moratorium.

But the conversion of housing units into short-term rentals has put a spotlight on the housing crisis that is particularly acute in some of Maine’s most popular tourist destinations.

Vacation hotspots like Kennebunkport and Bar Harbor cap the number of short-term rental licenses. Portland requires rentals to be registered, caps the overall number of short-term rentals and restricts how many units in each building can be rented out.

All rental properties in Old Orchard Beach already are required to have a two-year business license that is granted after police, fire and codes enforcement sign off on the property as safe. Starting in March, those license applications also note if the property will be used as a short-term rental.

Advocates for greater regulation contend that short-term rentals take business away from hotels, drive up housing costs and create a nuisance in neighborhoods. But opponents say that attempts to limit rentals infringe on property rights and that rentals generate tax revenue and draw tourists who support the local economy.

REGULATING RENTALS 

When Mead ran for his council seat two years ago, housing topped his priority list. Since then, the council has had some discussions about rentals – including defining short-term rental in town ordinances – but has not delved into the issue as deeply as other communities.

“This has left Old Orchard Beach as sort of an outlier now among the resort communities and even more attractive to investors looking for opportunities to invest in short-term rental properties,” he said.

Mead believes it’s important to have a diverse pool of rental options for visitors, but he also wants to address concerns about how they are changing the character of neighborhoods away from the beach.

O’Neill, who has been on the council for 24 years, said he’s only received one call complaining about a short-term rental.

“I don’t think the town needs to step in,” he said. “There’s been no crisis.”

And Old Orchard Beach has long had an ordinance in place to govern rentals, he said.

“There are enough laws on the books,” O’Neill said. “If there are parking complaints, we have ordinances for that. If there are noise complaints, we have ordinances to govern that.”

Julie Bayley, who owns a business in Old Orchard Beach that manages rental properties, opposed the moratorium. She said she worried about the impact it would have on people who are currently under contract to buy properties that they intend to use as rentals.

Bayley doesn’t think the town needs more rules because it’s already ahead of other communities in inspecting rental units.

“I believe Old Orchard Beach is leading the way in doing vacation rentals,” she said. “As far as I’m concerned, they do it well.”

‘A TOURIST TOWN’

There was a standing-room only crowd in council chambers for a Sept. 19 public hearing on the moratorium. O’Neill’s frustration was clear.

“Old Orchard Beach is a tourist town and as long as I’m sitting in this chair, I’m going to do my damnedest to keep it a tourist town,” he said.

The process to discuss Mead’s proposal was a little unusual. Typically, the council begins with workshops to discuss issues before holding public hearings. They skipped that step this time.

For two and a half hours, residents – seasonal and year-round – and people who work in real estate stepped to the podium to speak. Nearly all of them opposed the moratorium and made a case for why short-term rentals are not a problem. But several people spoke about how their neighborhoods have changed.

Holly Korda said there have been issues with loud parties and trash left out for days. Cars have blocked driveways and made it difficult for emergency vehicles to get through the neighborhood on Cascade Road, about a mile from the beach.

Kathleen Shannon said that nearly all of the 10 homes in her neighborhood that have sold recently have been converted to short-term rentals. While she didn’t love the idea of a moratorium, she does want the council to talk more about the issue.

“Yes, this town is a tourist town and we are really lucky to have it. And yes, we do need to have short-term rentals or weekly rentals coming in here because we would not exist if we don’t have it,” Shannon said at the meeting. “But we also need to have enough places for people to live here year-round.”

Melissa Rioux, a Realtor, said she has sold more than 20 homes in town in the last three years and more than half are used as rentals for at least part of the year. Often, the owners have been coming to Old Orchard Beach for years and want to have a place to stay, but need the rental income to help pay their mortgage, she said.

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