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Short-term leases behind debate in Walworth County

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Kevin Hoffman
October 17, 2010
— Regulating short-term rentals has become a Rubik's cube for Walworth County government—every twist and turn is accompanied by new snags and headaches.

Walworth County is among several in the state that requires landlords to rent their homes for no less than 30 days unless they have proper zoning and licensure. That hasn't prevented some homeowners from skirting those restrictions, leasing properties to hoards of tourists that sometimes disrupt quiet neighborhoods.


For at least 10 years, a fault line has divided residents wanting to protect their quality of life and those who want the practice legalized and taxed. Everyone agrees change is needed, but finding middle ground has been difficult.


"The property owners that are gaining the largest amount of income are flagrantly thumbing their nose at the rest of societal community," county board Supervisor Dave Weber said. "I believe it needs to be recognized and regulated."


The most recent effort to legalize short-term rentals and tax visitors fell flat last month at the county zoning agency.


Short-term rentals remain illegal, but because enforcing the ordinance is so difficult, unwanted guests likely will continue to pack small homes in residential areas.


Nobody has presented a solution that's gained universal support.


"We're going to continue to move forward," Weber said. "The whole state is changing radically and rapidly with the use of computer advertising on the Internet. It's bringing this issue to the forefront, in my judgment."


Enforcing the law


Walworth County was seventh in the state last year in tourism spending, totaling $370.5 million.


Residents expect crowds, but allowing short-term rentals in residential neighborhoods lures the wrong type, said Thomas Laughlin of Lake Geneva.


Laughlin said a Chicago man bought a home on his quiet street and immediately began renting to large groups. The parties there resulted in several police visits, and the landlord eventually was taken to court, he said.


"The local minority compares us to Door County," Laughlin said. "We're nothing like Door County in that we're a residential community, not a tourism community. It's as simple as looking at the children in our school systems. All this is very disruptive to the fabric of any neighborhood."


Landlords caught illegally renting homes risk jail time and fines. The difficulty is catching them, and that's what frustrates residents.


Barney Brugger, building and zoning administrator for Lake Geneva, said most tourists are quiet. It's when parties get out of control or several cars are lined up at one house that city officials get suspicious.


Homeowners against legalizing short rentals want the current ordinance enforced. But most violators visit during the weekend, when zoning officers don't work.


Walworth County Board Supervisor Nancy Russell said most people are afraid to confront tenants on their own for fear of retaliation.


"My constituents are overwhelmingly against this," she said. "People who have lived in a community for a long time have property rights, and those are worth something. If all the sudden people can move into a neighborhood and buy up houses and rent them out on a short term, that devalues my experience and maybe my property."


A call for change


Cass Kordecki of Geneva Township is a strong advocate for amending the zoning restrictions. She's working on an economic impact report to communicate exactly what it could bring to the county.


The maximum room tax municipalities can levy in Wisconsin is 8 percent. Kordecki said based on the home rentals advertised this week, unincorporated towns are missing out on taxes of more than $10,000.


"That's just the tip of the iceberg," she said. "We're throwing away what appears to be at least $100,000 a year in revenue."


When the issue was presented to the county zoning agency earlier this year, letters were sent to all unincorporated municipalities asking for their input. Delavan, Linn and East Troy were on board.


Weber wanted to outline what a new ordinance would look like, but his efforts never progressed that far. Proponents of change said an ordinance allowing short-term rentals would have provided some of the oversight residents are asking for.


Weber considered proposing that adjoining property owners would have to sign-off on a home becoming a short-term rental unit. Short-term rentals already are subject to state inspections, and violations put their license at risk.


Licensing is part of the problem. Only a bed and breakfast or other home with proper zoning can rent for less than 30 days. Weber said that's forced several owners to advertise their home on the Internet as a monthly rental, but behind closed doors they allow tenants to commit to a shorter time frame.


Part of the idea in amending the ordinance is landlords would quit circumventing the law and get the proper license.


Kordecki said supporters proposed creating an ad hoc committee to draft an ordinance. It would have included an opponent of the rentals, a motel representative and a county board supervisor among others. The idea was rejected.


"Some of the officials opposed to this are inflexible to even sitting down and looking at an option," she said. "If you enforce state regulations and get appropriate licensing, it's unlikely that they're going to have problematic areas."


There are other benefits too, Kordecki said. Empty homes would be occupied more often, and landlord and tenant behavior would be more transparent. Kordecki created lakegenevahomerental.com to raise awareness about the issue.


Short-term rental has become a multi-billion dollar industry across the country. For many homeowners, it's a way to recoup property taxes on homes they don't occupy year-round.


But now that efforts to amend the ordinance were defeated, some are regrouping to gather support. Others want the issue to disappear.


"I just feel that the zoning agency has spoken," Russell said. "They made their decision, and I'd really like to put it to rest."



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