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Caught in the middle with a Napa vacation rental
Friday, March 14, 2008
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I didn’t always have such a dim view of landlords.

It only started in my Berkeley days, when I asked the landlord permission to upgrade a washroom into a third bedroom. I wired, sheet-rocked, painted and installed new electrical. I could even lay in bed and flip a switch turning on the lights and starting the coffee pot. After I finished I showed the landlord my handiwork. He was impressed.
The very next month, he raised the rent. I was shocked and insulted. His explanation was that even though I paid for all the improvements, the house was worth more now and deserved a higher return. If I didn’t like it, I could move.

From then on I was skeptical of the claims of landlords that they only provided a service. In reality, the tenant largely pays for the owners’ mortgages. Every few years, the landlord might cash out or refinance out at a handsome profit. Then the rent would go up to pay for the buy-out in the form of a new, higher mortgage.
Now I am on the other side. I rent out a small apartment to a low-income family at a below-market rate. I try to be a humane, caring landlord. When my wife and I had burned our mortgage, we decided to borrow on our home, buy another and rent it out on a daily basis to visitors who would rather rent a whole house than a tiny box of a room in the big, overpriced hotel. The rents could pay for the expense of holding the property, unlike a monthly rental. The city was allowing people to do so under a business license and was happy to collect the hotel tax.

There are about 44 vacation homes operating legitimately in Napa. So we planned to do the same. We mortgaged our house and bought an abandoned, derelict of a home in Alta Heights. It was a real fire hazard. We completely renovated it, and it is now the belle of the block. The neighbors are happy the homeless are not camping out next to them.
Suddenly, in January, the city stopped issuing business licenses for vacation rentals without public notice, discussion or debate. Apparently, a developer who couldn’t sell his condos wanted to change his 25-unit development into vacation rentals — a kind of hotel operation in a residential area. That made the city tighten up the reins.

As an advocate of housing for the people who live here, and to keep housing within city limits and not out in the ag areas, I support the city in trying to maintain available housing for our local residents. If too many houses are pulled out of the rental market and used for tourists, it will increase housing prices generally and, most importantly, increase rents due to scarcity. Also, too many cars going in and out of a house and loud parties — especially if they are next door to you — can be a real problem. However, I feel a very limited number of houses for tourists could be a reasonable alternative to the big hotel experience. Condos shouldn’t be allowed to convert to glorified hotels or vacation rentals and be taken off the market. It should be no more than a handful and shouldn’t impact housing prices or rents of in Napa. Some quiet neighborhoods wouldn’t want all that new traffic and strangers coming in and out.

We have a responsibility not just to enrich ourselves but also to enrich the community in which we invest. I may have to change my vacation rental plans. Rows of real estate agents and investors are anticipating, even eager, for an answer to the question of how many vacation rentals will be permitted, where they may be located, and how they impact zoning and the neighborhoods. In fairness to those of us caught in the middle, there should be public notice that the practice of granting business licenses for vacation houses are to be stopped.

(Stephens lives in Napa.)
5 comment(s)

bornin74 wrote on Mar 14, 2008 8:18 AM:

" John,
Looks like you are flip flopping on both sides of the fence. Would you still be writing this letter if your house was already "included" in the selct few?. Go ask one of our esteemed city council how her house was included in this exclusive club?. Sounds like you may be a little late on the band wagon, and not being part of the "in crowd" is going to cost you....

I have an idea, go down and contribute LOTS of your hard earned money to some of their coffers, and I just would bet, that your home will be MAGICALLY included..... Otherwise rent the darn thing out. Houses in Alta Heights are HIGHLY desirable, and listing your home for a long term rental in the right places will attract maximum value. You could rent that place out right now for $1800 a month minimum and people would be scrambling to get it.
I know if I was a neighbor of one of these "vacation homes" I would be very upset. I don't want to see different people coming and going on my street constantly. Every weekend some new person comes to move in, drives home drunk down my street at the end of every day of wine tasting, parties in the backyard like it's "1999" and then goes away only for another group to come in the next weekend.
Too bad the market wasn't better, you could "flip" that house for a nice profit, then buy another, flip it again, and son on. NOW there is long term income!!!!. "

common sense wrote on Mar 14, 2008 8:35 AM:

" Small government. The Founding Fathers had good reasons for pushing this concept. "

Dwayne wrote on Mar 14, 2008 9:17 AM:

" The neighborhood homeowners near proposed vacation rentals should be be able to approve or disapprove a commercial operation. I have kids and dogs and neighbors that watch out for each other, and I don't want one of those vacation rentals next door to me, muddying the water of an otherwise friendly group of people who all know each other. Landlords facing complaints can simply stave off repercussions by saying that the renters will be gone in a few days. That simply isn't playing fair. "

northbaylocal wrote on Mar 15, 2008 5:27 PM:

" I think there may be an unnecessary amount of anxiety about vacation rentals. First, it's clear that there are going to be a limited number of them. If there are problems they can and should be shut down. Frankly, I expect there are far more problems for neighborhoods from longer term tenants. How many of us have lived near a rental house where the folks have no sense of ownership so they don't maintain the yards and home, park numerous cars on the property and party loadly. This goes on day in and day out because you have the same problem neighbor and it's difficult to evict them for being a nuisance. On the other hand vacation rentals frequently are only occupied on weekends, the occupants are out seeing our beautiful valley, shopping in our stores, visiting our wineries and eating in our restaurants. Most of these folks love staying in a home with a kitchen and living room than staying in a small room in a hotel. I truly believe there are very few complaints about the actual operation of the vacation rentals. If there are a number of complaints about a particular one it should be shut down.

I don't think neighbors should have veto rights about having a vacation rental -- but I do think their concerns should be taken into account if there are problems. Let's experiment with a limited number of vacation rentals -- they bring in taxes for the city, they bring quality tourists to our valley, and they let some home owners hold on to their property in a terrible housing market. "

interested wrote on Mar 20, 2008 2:30 PM:

" This is quite interesting I have owned vacation rental property I have rented it and I have lived next door to a “vacation” rental for short-term visitors next to a hospital. Napa County is one of the first areas I have encountered that discourages it. Cape Cod has 100s and 100s of vacation rentals. The San Juan Islands, Tahoe, France, Colorado, do also. They offer accommodations that families find much more desirable than a motel where cooking meals and keeping track of the kids is difficult. Property owners are renting out their homes and usually spend some time there themselves. They are very motivated to rent to tenants who will respect it. Most vacation renters are a cut above and in my experience most owned their home and knew how to care for property unlike usual tenants. The property is vacant most of the year, no matter how aggressively it is marketed (it can usually break even being vacant 75% of the time) and any sensitive neighbors will be treated to total silence. I have rented a number of properties, as I have young kids and it is much easier for traveling. It has enabled me to travel with my family when I could not have otherwise done so. There really is no issue here other than the desire of bed and breakfast owners to keep the competition down. "

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