LUTHERAN QUILTERS – Members of the Quilts for Comfort Group stand between pews draped with some of the 205 quilts they made, in the Sitka Lutheran Church Tuesday. The group made the quilts for five local non-profits and one in Anchorage. The remaining quilts are sent to Lutheran World Relief which distributes them to places around the world in need, such as Ukraine, as part of Personal Care Kits. Pictured are, from left, Helen Cunningham, Kathleen Brandt,Vicki Swanson, Paulla Hardy, Kim Hunter, Linda Swanson and Sue Fleming. (Sentinel Photo by James Poulson)
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Daily Sitka Sentinel
Short-Term Rentals Trending Up In Sitka
By SHANNON HAUGLAND
Sentinel Staff Writer
Sitka is on track for surpassing the old number of short-term rental and bed and breakfast permits granted in a single year, city staff said.
But it’s too early to say whether the rising number of these rentals is affecting the price or availability of long-term rentals, said Mike Scarcelli, city planning and community development director.
A Sitka house for rent waits for new tenants. (Sentinel Photo)
“We want to see if there’s a trend or connection between rental price, vacancies and the number of rentals we see operating, and the rentals we are permitting,” Scarcelli said. “There happens to be a parallel increase in prices and decreased vacancies.”
Scarcelli provides regular updates to the Sitka Planning Commission on short-term rentals and bed and breakfast permits; commission members have raised concerns in the past year about the increase in short-term rentals in Residential zones.
Short-term rentals are rentals of 14 days or fewer. They are also called “vacation rentals” generically, or under the brand name “Airbnb,” if they are advertised on the Airbnb website. Operators remit bed taxes paid by customers, with revenues dedicated to visitor marketing and services for the city. A B&B is generally a rented bedroom, with the owner or operator living in the dwelling.
Sitka currently has 73 short-term rental and B&B establishments, although 42 are in commercial, waterfront or industrial zones and don’t require a permit.
The other 31 operate with or without a conditional use permit granted by the Planning Commission. Conditions are imposed to mitigate any factors that may disrupt a neighborhood. That could include parking, noise and garbage.
In 2016, the city granted 13 permits, a sharp rise from the seven granted in 2015, two in 2014, one in 2013, seven in 2012 and two in 2011.
The trend continues in 2017, with nine short-term rental permits and one B&B permit granted in the first six months of the year.
“We’re seeing a pretty good increase if it keeps going,” Scarcelli said. “It’s still above average for the prior seven years.”
One short-term rental permit was granted at Tuesday’s Planning Commission meeting, with some commission members expressing concern that it was the third such permit granted for that particular Residential zoned street. (Scarcelli noted at the meeting that the apartment had historically operated as a bed and breakfast, so the additional short-term rental was not removing a long-term housing unit from the market.)
Scarcelli reflected on the issue of short-term rentals with the recent release of a report from the state Department of Labor about the cost of residential rentals in Sitka. He noted the estimates are preliminary only. The August issue of the Labor Department publication Alaska Economic Trends lists average rental prices (with and without utilities), and vacancy rates as of March this year.
“We keep track of this data, in looking at the long-term rentals: are short-term rentals impacting long-term rental rates?” Scarcelli said. “Just because we’re tracking it ... it doesn’t mean it’s the cause – there could be other factors.”
Scarcelli noted the addition of the Aspen Hotel, more rooms at the Sitka Hotel, and new lodges and inns in the last few years.
“That’s important because those commercial short-term rentals will offset the negative impact of residential short-term rentals,” he said.
He said he plans to update the commission on the trends twice a year.
The Labor Department survey of 345 rentals in Sitka showed the average price as $1,039, adjusted to $1,319 for utilities. A total of 26 were vacant, for a 7.5 percent vacancy rate.
The adjusted monthly rental rate was for all rentals, regardless of size. Sitka’s adjusted rental rate was just higher than Juneau’s, at $1,305, and under the rental rates for Kodiak, at $1,433; and Valdez at $1,337. Anchorage’s adjusted average rental rate was $1,269.
On the lower end of the scale were cities with higher vacancy rates, including Wrangell, with an adjusted rental rate of $944 per rental, and a vacancy rate of 12.7 percent. The Kenai Borough was also on the lower end, with $1,054 and a vacancy rate of 11.3 percent.
Broken out, apartment averages are lower, at $1,219 for Sitka; and homes are higher, at $1,632 for a single family dwelling.
In terms of the number of wage earners it takes to pay housing rental costs, Kodiak was at the top, with 1.33 wage earners needed to pay rent. Sitka ranked second among the larger communities surveyed, with 1.22. In 2000, that figure for Sitka was 1.19, and 1.20 in 2010.
In the survey of two- or three-bedroom units, Sitka was in the middle of the pack at $1,283, and $1,968, respectively.
The Economic Trends newsletter addresses Sitka specifically, saying the rental market appears to be tightening, despite the loss of 300 jobs from 2015 to 2016.
“Sitka’s vacancy rate declined by nearly a percentage point in 2017 and rents went up 7.2 percent, more than any other surveyed area,” the publication stated. “Sitka’s vacancy rate of 7.5 percent is below its 10-year average of 8.5 percent and down from 8.3 percent in 2016.”
Rent has “bounced around” for the past 10 years, from below $1,200 for several years to as high as $1,310 in 2006.
“Rents have been on an upward trend since 2014,” the publication says. “This year’s increase of nearly $90 is a large jump, but rent fell by a nearly equal amount from 2010 to 2011.”
The publication also notes, “Small areas like Sitka can be particularly sensitive to annual swings.”
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20 YEARS AGO
March 2004
Advertisement: Tea-Licious Tea House & Bakery 315 Lincoln Street Grand Opening! Freshly Baked Scones, Cakes & Pastries Innovative Salads, Soups & Sandwiches Harney & Sons Tea. Lunch * Afternoon Tea * Supper.
50 YEARS AGO
March 1974
Photo caption: National Republican Chairman George Bush takes a drink of water offered by Jan Craddick, Sitka delegate, during the Republican convention held here. Mrs. Craddick explained to Bush that the water was from Indian River, which means, according to local legend, that he will return.