Cape set to rule on a ‘cottage’ industry

CAPE ELIZABETH — Usually, a town might encourage a cottage industry. But when the industry in question is the unregulated rental of cottages – and a few mansions to boot – there’s somewhat less enthusiasm to encouraging the entrepreneurial spirit.

The issue of so-called short-term rentals has simmered in Cape Elizabeth since last September – drawing upward of 30 people to each early morning meeting of the town’s ordinance committee. Now, it’s about to hit the front burner.

On Friday, the three-member committee, made up of town councilors James Walsh, Dave Sherman and Katharine Ray, is expected to vote on rules regulating the short-term rental of homes in the town’s residential zones. As usual, that session will take place at 8 a.m., at the town office. If the draft up for review passes muster, it would move to the full council and a public hearing – not that the public hasn’t had plenty to say already.

Complaints began flooding into the town office over the summer, primarily from neighbors of a home on Sea Barn Road that was rented out for weddings, creating noise, clogging the narrow street and frustrating neighbors. In other cases, homes in quiet beachfront locations were said to have turned into party palaces gang-rented by college kids.

But given the one-two punch of a down economy and climbing assessments – one homeowner claimed a recent $300,000 hike – some property owners in Cape Elizabeth have turned to the freewheeling Internet for a do-it-yourself solution. On Monday, the website homeway.com listed 24 residential properties in Cape Elizabeth offered for rent by their owners, ranging from a one-bedroom saltbox on Shore Road said to sleep four at $1,000 per week, to a seven-bed, seven-bath, 8,000-square-foot oceanfront mansion priced at $11,000 for a seven-night stay of up to 14 guests.

In September, when the ordinance committee began tackling the issue of what to do about these properties, Town Planner Maureen O’Meara compiled a list of 35 homes advertised for short-term rental. Even so, there was no way of knowing if that was a comprehensive list. That, says Town Manager Michael McGovern, is part of the problem.

“We have a certain responsibility to know what’s happening out there,” he said, in a recent interview. “For example, if someone is regularly advertising a house that has nine bedrooms and sleeps 22, at what point do you want to make sure the exits are marked?

"Alternately, I don't think anyone objects when someone next door has a family wedding," said McGovern. "But if that kind of thing starts happening next door to you every weekend, you have to begin to scratch your head and ask, at what point does this become a business?"

As drafted, the new zoning rules would require that anyone renting out a home obtain an as-yet-to-be created “Short-Term Rental Form,” which cannot be issued without an on-site visit from the town’s code enforcement officer.

Once the town declares the property up to snuff, certain limits would apply. Perhaps most onerous to those who have listed their homes through the summer season, rentals would be limited to two weeks in any single month from May 1 to Oct. 31, if the owner is not on-site or residing on an adjacent lot, or if the lot is less than 30,000 square feet. In addition, no more than 12 guests would be permitted at any one time.

Other rules would restrict parking and limit the number of guests based on the size of a property’s septic system.

Based on recent meetings, the committee may add more tweaks on Friday. Permit fees are still on the table, as are further limitations. And while Walsh has called the two-week-per-month limit a “huge economic burden,” Sherman has suggested the rules under consideration can easily give way to simply declaring any regularly rented home to be a bed and breakfast.

That would seem to suit Lawson Road resident Frank Luongo, who said at a Jan. 11 meeting that the very fact the town has taken up the issue only serves to “legitimize something [that’s] illegal” by virtue of the fact that it’s not already permitted.

Luongo’s Lawson Road neighbors have also chimed in. David Volin said he fears the entire Cape Elizabeth coast could give way to rental properties, prompting Jeff Croft to suggest home values could plummet throughout the town.

Meanwhile, nobody yet seems confident in the town’s ability to police the zoning rule effectively, if adopted. A number of residents report collecting photographic evidence on their neighbors.