Housing

Sitka is cracking down on short-term rentals run by non-resident owners.

The Sitka Assembly voted 5-0 Tuesday to adopt new rules that require vacation rental owners to live on the same property for at least six months a year. And all permits for short-term rentals will sunset when a property changes hands.

Short-term rentals are most often run by property owners through vacation rental sites like Airbnb and VRBO. Since 2017, the number of permitted short-term rentals in Sitka has nearly doubled, prompting community concerns about the impact on Sitka’s already tight housing market.

Operating short-term rentals in a residential zone requires a conditional use permit from the city’s planning commission. Under the updated rules, new applicants must occupy the property for at least 180 days a year in to secure a short-term rental permit from the city. Additionally, all short-term rental permits will sunset when a property is sold. And it cleans up city code to define a short-term rental as any property rented for fewer than 30 days.

Former city administrator Keith Brady now owns a real estate business in Sitka. He urged the assembly to hold off on the code changes and look for other ways to discourage non-residents from buying Sitka properties and turning them into short-term rentals.

“One idea is to increase our property taxes, but give exemptions to those who…live here who are residents of Sitka,” Brady said. “We do have a housing crisis. Trust me, I hear it. I have a lot of people on my list looking for rentals, looking to buy. But I don’t think this is the right way to go about doing it.”

So how much are short-term rentals actually impacting Sitka’s housing market? The answer isn’t so simple. Earlier this month, the Alaska Department of Labor listed Sitka as the community with the second highest number of short-term rentals in the state. But it also showed Sitka has the state’s highest vacancy rate for long-term rentals. Planning Commission member Wendy Alderson voiced support for the ordinance and challenged that data, saying it’s collected at a time of year when the rental market is in a seasonal transition.

“I don’t know if you fill out the rental survey, if any of you have rentals. I do. And interestingly enough, when you fill out that residential rental survey, it specifies ‘Check if vacant the week of March 11.’ So you have to have a vacant rental the week of March 11 in order to check “vacant,’” said Alderson.

“To me, I’ve always thought that that indicates that, you know, it’s a shoulder season, and short-term rentals are usually empty the week of early spring. And if you haven’t filled your place seasonally, and you’re turning it over and waiting for short-term rentals, it’s going to indicate that you have a vacant rental, which I’ve always thought indicates that it’s it’s a false number.”

This spring, Alderson supported a measure to put a temporary moratorium on short-term rental permits. But the freeze narrowly failed at the assembly table. So the assembly went back to the drawing board, and held a town hall to get community input. The idea for new restrictions on short-term rental permits sprung from that meeting.

Assembly member Kevin Mosher noted that the process to get Tuesday’s ordinance to a final vote had been long and public. And even though some questioned whether there was enough data to demonstrate the impact of short-term rentals on Sitka’s housing market, he said they couldn’t afford to wait to do something.

“If we wait till we have all this 100% concrete data, it’s going to be too late. Especially a place like Sitka, where we don’t have other places to live,” Mosher said. “We are in a housing crisis. And this is the beginning step and trying to help find solutions.”

Assembly member Dave Miller, however, was conflicted.

“This is that decision that I’m sure whichever way I vote, I’m gonna lose, I’ll say, friendship.,” he said. “Because people feel pretty strong about this.”

Ketchikan residents still remember the moment when Sarah Palin said on national TV, “thanks but no thanks for that bridge to nowhere.”

The bridge would have linked the Southeast Alaska town with neighboring Gravina Island, home to the city airport and flat land now seen as needed for affordable housing.

“When you mention Sarah Palin, it’s the first thing people think about,” said Jeremy Bynum, a member of the Ketchikan Gateway Borough and candidate for state House, about the bridge.

“It’s synonymous,” he said.

Palin’s speech was 14 years ago, but as she seeks a full term in the U.S. House of Representatives, that action and others from her time as governor and a Republican vice presidential candidate have overshadowed her campaign for U.S. House.

Polling indicates support for Palin has barely budged since the start of her campaign, and the number of Alaskans who disapprove of her — about 60% of registered voters — has also remained steady.

On Thursday, Palin and fellow Republican Nick Begich appeared at a U.S. House candidate forum in Ketchikan. In an Aug. 16 special election, the pair split Alaska’s Republican votes, helping Democratic candidate Mary Peltola win the race. Peltola was sworn in this week and did not attend the forum.

All three, and Libertarian candidate Chris Bye, are seeking a full two-year House term in the Nov. 8 general election.

In August, Palin had more support than Begich but less than Peltola. Under Alaska’s new ranked-choice voting system, Begich was eliminated, allowing his supporters to put their votes toward a different candidate. Half chose Peltola or no one at all, denying Palin a victory.

Polling since the election indicates the pattern is likely to repeat in November unless something changes in the race.

During the forum, Begich and Palin were mostly civil toward each other — a change from their campaigns during the special election — but Begich brought applause in the city’s civic center when he reminded attendees of the bridge.

“If we had a bridge in Ketchikan to Gravina Island, maybe we wouldn’t have such a problem with housing down here,” Begich said.

“I will tell you, you know, when you see politicians trying to score political points by canceling the projects that this community relies on, that should tell you everything about where their priorities are. It’s not with you. It’s with them,” he said.

Trevor Shaw, a local resident who formerly served in local government and unsuccessfully ran for state House, said Palin’s handling of the bridge was flawed.

“It wasn’t that it was canceled, it was how it was canceled,” he said. “We found out when the rest of the country did.”

He recalls Palin telling the local chamber of commerce, weeks before her speech, that she supported the bridge.

The Gravina Island Bridge was a priority of former Congressman Don Young, who earmarked millions of dollars in the federal budget for it, only to see Palin reject the money.

Begich and Palin, seeking to hold the office Young once held, both said they oppose earmarks and would not use them.

“Absolutely not,” Palin said. “Earmarks are a problem in Congress. It leads to the crony capitalism, to the favoritism, to the corruption in Washington, D.C., where politicians are trying to bring home the bacon to serve the constituents in order to get reelected and reelected.”

Earmarks by former Alaska officials, including Young and former U.S. Sen. Ted Stevens, built many projects in rural Alaska, and the Ketchikan audience appeared uncomfortable with the positions of Begich and Palin on the issue.

Attendees of Southeast Conference, a regional gathering of political and business leaders, said housing and child care are among their top needs, and Gravina Island is seen as a place where housing can be built affordably in Ketchikan. Southeast Conference held Thursday’s forum.

Bynum said that local officials know the bridge is unlikely to return, but he and others said there’s still a need to get to Gravina Island, whether by ferry or bridge.

“Access is the biggest thing,” said Borough Assembly member Jaimie Palmer.

Alaska’s court system is launching an eviction diversion program aimed at resolving disputes between landlords and tenants before they end up in court.

The grant-funded initiative will provide landlords and tenants with information on things like legal assistance, mediation, financial counseling and rental assistance. The goal is to help reach an agreement both sides are satisfied with, and for people to avoid spending time and money going to court to plead their case in front of a judge.

David Nesbett, with the state’s Third Judicial District in Anchorage, is one of those judges.

Nesbett says, like a lot of things, the COVID-19 pandemic has changed the nature of how eviction proceedings are working, and not for the better.

But Nesbett also says there’s always the constraint of not having enough time in court to reach agreements. Sitting in an Anchorage courtroom recently, Nesbett said that’s a problem he thinks an eviction diversion program could help alleviate.

Listen:

The following transcript has been lightly edited for clarity.

David Nesbett: The court’s very mindful of what kind of impact this has on the general community. And this often affects some of the most vulnerable members of our community. And I would say that the Alaska court system is among the frontrunners in the nation for providing a lot of resources to people. And so, pre-COVID, when a lot of people would come to the courtroom, they’d be able to negotiate a lot of these cases in the hallways and in the side gallery and so on. Especially now, when far more people are on the phone, that kind of communication does not occur as often. And so we’re doing a lot of that on the bench. This program not only provides free legal advice, it also provides a structured environment for people to get together and discuss their case. And very often they can reach agreements outside of court.

When parties enter into an agreement voluntarily, they are far more likely to follow through with the agreement. For landlords, that means that people will either move out, and they agree to move out, they’ll agree to get current with their rent, they’ll agree to make concessions. All of that is to the benefit of the landlord not having to go through a forcible eviction. For the tenant, they can avoid getting something on their record that would prevent them from either getting subsidized housing or rental assistance, or future rental opportunities can be diminished by getting something on their record like that. That can negatively affect them. Getting people together in a structured environment to allow them to discuss these things is an enormous benefit to all parties involved.

Casey Grove: But would an eviction diversion program really — and I think this is where people are going to go with this — would it really help keep people in their homes?

David Nesbett: It could. Absolutely it could. In a lot of cases we reach agreements where the landlord, given the opportunity and facing what’s going on in the case, the landlord will allow the tenant an additional opportunity to get current on their rent. Just that little reprieve will often give people a chance to get back on their feet, a chance to get their first paycheck from their new job. It allows people to stay in their residences, and it makes a huge difference. And, ultimately, it’s better for the landlord to have stable housing and stable tenancy.

Casey Grove: There was one particular case where, I think you even said at one point, you know, you’re going to take off your judge’s hat and put on your mediator’s hat. And you really did seem to be mediating a dispute there that had a lot of emotional components to it but really kind of boiled down to like, “How much money are you going to give me when?” Right? And I guess it sounds like what you’re saying is that an eviction diversion program would allow more time for that sort of mediation where you don’t have these constraints where you’ve got to get this number of cases done in a certain amount of time, right?

David Nesbett: Precisely. The landlord-tenant relationship is a very close relationship in many cases. And it often involves a lot of background information that has to do with the relationship of the parties. Disagreements, arguments, fights. It’s a relationship, and sometimes they don’t work out. And a lot of times parties come into the courtroom, and they want to talk about those relationships, the hardships, the background information. All of that is very compelling for the court, but it doesn’t really weigh a lot of times in the decision whether to go forward with the eviction or whether to grant the judgment in the writ. It really comes down to whether the landlord has satisfied the elements of the statute. And a diversion program will allow people to air their grievances, probably a lot more satisfactorily than they would in court, because the court often doesn’t have the time to explore those different types of grievances. It really comes down to whether the statutes have been met, whether it’s been satisfied.

Casey Grove: A lot of the sentiment that you kind of see out in public, and maybe just like on social media and stuff, around evictions is pretty anti-landlord and pro-tenant, you know, sort of pro the little guy in that situation. Do you see it like that? I mean, not that that’s your opinion, but I mean, do you see that sentiment? And, you know, what do you think about that as a judge that handles these cases?

David Nesbett: Well, I think as a judge, we try to see it as evenly balanced as possible. Because for the the tenant’s issues they have, like I mentioned earlier, they may be down on their luck, they can’t pay for some reason. You never see a tenant saying, “I don’t want to pay.” It’s usually because they can’t. But from the landlord’s perspective, I think the court’s very mindful that they have a mortgage payment, they have utilities, they have their own costs, they have their own fees. They could face foreclosure on their property. I mean, that’s not in the best interest of the community either. I would say that while there may be a sentiment out there to protect the tenant, the statute has been drafted to be evenly applied to both parties. And I think that’s the way the court looks at it. The court doesn’t decide one way or the other. There are significant community and individual interests on both sides of that. And they both need to be addressed.

Casey Grove: What’s it like when, either on the phone or, you know, face to face, you have to tell a tenant, you know, “Sorry, the boxes are all checked. This is following the statute. And, you know, unfortunately, a cop is gonna show up at your door and move you out?” What’s that like?

David Nesbett: I think it’s very, very difficult for the court. I think in many circumstances, you know, we’re human, we recognize the human toll that this takes on people. We are obligated to follow the law. And a lot of times we follow the law, knowing that our decisions are going to have a dramatic effect on one side or the other. And so when people come in, they’re often very upset. They’re often– a lot of a lot of bad things have happened to them. And then we’re going to add one more on top of that. I would say if you talk to any judge, they’re very, very mindful of the significance of their decisions and how it affects people’s lives. And it’s very, very difficult. I find it very challenging, because we have a heart. We care. We don’t want to inflict suffering on other people. But as part of our job, we’re obligated to follow the law and we have to follow the law and if that’s what the law dictates, then we do it. And that’s part of our job.

Chase Kirby recently began a job as a police officer in  Petersburg. He says the chief made it clear during the interview that housing is hard to come by here. But he wasn’t expecting it to be this hard.

Kirby has a wife, three children, six dogs and one cat. They’re all waiting back in Utah while he tries to find at least a three-bedroom house. He’s working with a realtor, and the borough is reaching out on his behalf, but nothing has opened up so far. Meanwhile, Kirby is staying in the firehouse.

“It’s not horrible,” he said, “but it’s not home.”

He says that he and his family miss each other. He’s heard that some homes may become available several months from now, but nothing is definite.

Just in the past few years, housing has become a big issue in this small fishing community. Much of the nation is experiencing a lack of affordable housing, and many people have had to move to cheaper areas with longer commutes. But like many Southeast towns, Petersburg is on an island, so commuting from out of town isn’t an option.

“The rental market is very tight,” said local real estate agent Sarah Holmgrain, “as well as the home sales market. It’s difficult to find rentals right now that can accommodate really anybody more than a person or more than a couple.”

A quick online search shows two homes for sale in Petersburg and zero rentals. But 15 Airbnbs are available.

Holmgrain says that’s one area of Petersburg’s housing market that has grown.

“That’s where I think a lot of our rentals have either disappeared into,” she said, “that, or as people have developed rentals, they become Airbnbs.”

That lack of rentals limits the options for people who are trying to make a transition in their lives — whether they’re hoping to move into a situation, like Kirby with his new job, or out of one.

“If today, you had to pick up and leave, where would you go?” said Annette Bennett. They’re the director of WAVE, a nonprofit organization that offers assistance to people in Petersburg who are impacted by violence. “There just isn’t an option. And so that puts people choosing to stay in an unhealthy or unsafe space, because they’d rather do that than be homeless. And there’s also some people that choose to live in their cars, because they can’t live at home anymore.”

Another group that’s affected by the shortage is local employers. Some are having a hard time attracting essential workers. Borough Manager Steve Giesbrecht says the borough has been trying for six months to fill its Fire/EMS Director position, and several finalists have backed out citing housing as a reason.

“We can bring more workers to town,” Giesbrecht said, “but if they can’t find a place to live, then they can’t move here. So it’s gonna be very difficult to fix the lack of workforce without fixing the housing side of it.”

The borough is looking into creating additional lots that people could build houses on. However, it’s very expensive to extend roads and utilities to new areas.

“Generally what we see is by the time the infrastructure is put in place, the value of the lots is so high that people can’t afford them,” Giesbrecht said.

The borough is also interested in creative solutions. It hopes to lease units from the U.S. Coast Guard and make them available for Petersburg first responders. The Borough Assembly on August 29th held a work session on housing, and discussed possibilities like regulating airbnbs, creating tax incentives for rentals, and designating a legal camping area in town.

At the next public meeting on Sept. 6, councilmember Thomas Fine-Walsh plans to  propose an ordinance to allow for tiny homes, accessory dwellings, and multiple buildings on a single lot.

The rules governing short-term rentals in Sitka may be changing soon. When the assembly met on Tuesday, it greenlit changes that would affect new permits for short-term rentals in residential zones. But the ordinance needs to pass muster at the assembly table a second time before it can take effect.

Right now, a short-term rental is any property rented for less than 14 days, typically through sites like AirBNB and VRBO. The number of short-term rental permits in Sitka has nearly doubled since 2017, and concerns in the community have been mounting about how that’s affecting Sitka’s already tight housing market.

In March, the assembly narrowly voted down a one-year moratorium on new short-term rental permits. After the moratorium failed, some assembly and planning commission members held a town hall seeking ideas to address the impact of short-term rentals on Sitka’s housing market.

Under the proposed rules, a property would only be eligible for use as a short-term rental if it’s the applicant’s primary residence. That means the owner has to occupy the home for at least 180 days a year. Existing short-term rentals would be exempt from the new rules, with one exception. If the ordinance gets a final stamp of approval, all short-term rental permits will sunset when a property is sold, meaning they cannot be transferred to a new owner.

The planning commission approved the ordinance in a 3-1 vote on Aug. 17.

Commission member Katie Riley said it strikes a good balance between protecting residential areas and affordable housing, while allowing residents to continue to generate income on their properties through short-term rentals.

“These two restrictions, the primary residence and the sunset upon the sale of the property, were the most heavily supported throughout the community survey on short-term rentals that took place back in May of 2021, as well as the town hall that occurred this spring,” Riley said. “So we’ve seen long and enduring support for these common sense regulations. And I think that they’re going to help protect the integrity of our community in the long and short run.”

The new rules would only apply to short-term rentals in residential zones. Operating a short-term rental in a commercial zone doesn’t require a permit. The changes would not affect bed-and-breakfast permits either.

Several members of the public spoke in support of the ordinance, including Tory O’Connell Curran, who laid out statistics from a data published by the Pew Charitable Trust’s nonpartisan news organization last year. It  points to a nationwide trend of investment firms buying up homes, contributing to a housing shortage.

“Fully one quarter of all single family homes nationally were bought by investors last year,” she said. “In Alaska, there was a 37% increase last year, up to 17%. So that’s investors buying family homes not available then for families.”

Former Sitka Assembly member Richard Wein questioned whether the sunsetting of the permit made sense.

“If you have a B&B, you’ve kind of constructed your property around this type of service,” he said. “And so if you make a sale, it would be common sense and logical that the individual would be selling their business as well as their property. So I think that some of these aspects need to be considered.”

Assembly members on the whole supported the ordinance, including Mayor Steven Eisenbeisz. But he still had questions, like how it would be enforced or whether local data supported it.

“My number one concern with this ordinance is data. I’ve asked for it before, to show me something that absolutely indicates that short-term rentals are a cause, or are the cause, of not having long term rentals or houses on the market,” Eisenbeisz said. “And the reason that I need that is because I’m happy to make ordinance based on fact. I’m not happy to make ordinance based off of assumptions.”

Assembly member Kevin Knox, who co-sponsored the ordinance with Kevin Mosher, said the city doesn’t have the hard numbers on how many long-term rentals have been converted to short-term rentals, and he hoped they’d do a deeper data dive in the future. But he pointed to a recent planning meeting in which three individuals who are not Sitka residents secured a short-term rental permit for a single family home they purchased earlier this summer.

“But we do have that one very solid concrete one that just happened, this last planning meeting that we can point to,” Knox said. He added that he knew one example “doesn’t mean a whole lot. But it’s, you know, it’s there. It’s happening. That was a long term rental and was pulled off, that is no longer there.”

Ultimately the assembly approved the ordinance unanimously. It will come before them again at their first meeting in September — the last opportunity for Sitkans to give public comment. If approved it will go into effect on Sept. 14.

The deputy secretary of the U.S. Department of Housing and Urban Development was in Alaska recently.

While she was here, Adrianne Todman announced more than $220 million in funding for affordable housing and development to benefit Alaska Native and American Indian communities, as well as more than $800,000 to help house Native American military veterans at risk of or experiencing homelessness.

But Todman wasn’t just here to talk money. Her trip was filled with meetings and tours in Anchorage, Wasilla and the Yukon-Kuskokwim Delta — including the villages of Napakiak and Oscarville — to learn about Alaska’s housing challenges and to see the work the department has been funding already.

Listen:

Adrianne Todman: So the Indian Housing Block Grant provides funds to the tribal councils in Alaska to build housing and to preserve the housing that they have. And I’m very proud to say that that formula, which had been flat-funded for so many years, that under the Biden administration, we were able to bump it up by 22%. And so the good folks in Alaska were able to receive $115 million just this year alone.

In addition, we have a fair amount of staff that are dedicated to tribal leaders and housing entities in the state of Alaska. I believe the HUD office there has the largest, if not one of the largest, compliments of staff dedicated solely to tribal housing.

Casey Grove: So you mentioned some of the challenges that folks told you about off the road system. Tell me more about that. What did they tell you? How was it different from one community to the next?

Adrianne Todman: You know, not too long ago, I, myself, built housing. And I was just amazed by some of the challenges that communities in Bethel, particularly those who are off the road system, really have to deal with. I mean, the concept of only having materials arrive by barge twice a year, which is an example of one of the challenges that was shared with me, is astonishing.

The fact that there’s a shortened construction season also presents its own challenges, and through all of this, it means that, you know, the time delays and the way that materials get there only contributes to the additional costs of building housing in Alaska. And so it was truly a learning experience for me, and certainly one that the other HUD members who had went with me on the trip, we’re all sort of wrapping our brain around and trying to find ways to be a resource for the families and for the individuals who are there.

Casey Grove: When you were traveling out off the road system, in some of those communities, we’ve heard that there’s crowding, that you have, you know, multi-generational families living in the same house, and that it’s just generally crowded in some places. Did you get a chance to see that? And could you comment on that?

Adrianne Todman: Yeah, you know, I was able to witness some of the overcrowding experience that’s happening. I had the opportunity to walk through both of the villages that I visited. And it’s just a reminder of how much more work we have to do. Overcrowding is usually symbolic with the lack of housing affordability, and I certainly witnessed that during my trip there.

And like I said, it only inspired me and the team to just be ever more laser-focused on ways that we can build more capacity where it’s needed, with the housing leaders in Alaska to fight for more resources for Indian Country, not just in Alaska, but across the country, and really do everything we can to lift up some of the best practices that we’re seeing happening in Alaska. And so we can sort of cross-pollinate some of those ideas and be a resource, but also bring ideas, perhaps some from the Lower 48, to our housing leaders in Alaska. Sad to say, housing affordability and housing supply is not unique to Alaska, and there’s lots of really creative things that are being done.

You know, we, the president, just a couple of months ago, released a housing supply action plan that actually has in mind some of the things that I saw and witnessed when I was there in Alaska. We’ve seen this, we have a plan to try to make improvements, and we’re going to continue to fight for resources for the families in Alaska.