Last week, Mayor Matthew Lehman and Mayor Pro-Tem Rick Wood traveled to Denver, Colo. for the Urban Land Institute conference along with MMSA CEO Rusty Gregory and Snowcreek developer Chuck Lande.
Mayor Lehman stated at last week’s Council meeting that Mammoth made a presentation at the conference, attended by some 6,000 people, entitled “Mammoth on the Brink.” The presentation, to various developers and financiers, may become a model for other cities who face dire economic circumstances, he said.
So nice that we can provide leadership to other bankrupt communities.
Now if we could only provide leadership to our own.
Leadership lesson #1. When you’re bankrupt, never send just one representative to a conference when you can pay for two.
The Weinhuff report
Second homeowner Jeffry Weinhuff, CEO of Inflection Point Capital (Laguna Beach) in his real life, presented a report entitled “Regulating Single-Family Rentals as a Realistic Revenue Opportunity for the Town of Mammoth Lakes” at the Oct. 18 Council meeting.
Weinhuff claimed that even if Mammoth limited the legalization of short-term single family home rentals to “resort areas,” the Town could realize as much as a $3.5 million spike in T.O.T. (Transient Occupancy Tax) revenue by just legalizing rentals in resort areas – not throughout town.
Mayor Pro-Tem Wood likened it to “getting a $25,000 report for free.”
Leadership lesson #2. Apparently, if you print up a PowerPoint presentation and toss out a bunch of optimistic numbers, Mammoth’s Town Council thinks it’s worth $25,000. Never mind whether the information is peer-reviewed or accurate, what self-interest might be reflected in the report, and what the author’s background may be.
Editor’s note: To be fair, it does appear that Weinhuff put some time into the report. In a phone interview, Weinhuff said he worked on it with his daughter and it took about two weeks. He also said he has 30 years experience as an investment banker and has done hundreds of deals based on financial projections, so obviously he finds his calculations realistic. When asked if he rents a home illegally in Mammoth, Weinhuff coyly replied, “I don’t rent illegally, but my family does.”
Of the information presented in Weinhuff’s $25,000 report (some of which was borrowed from a study just completed in Aspen) this is what stood out:
-95% of Colorado ski towns allow short-term rentals
-Weinhuff contends that a home is a different product type appealing to a different visitor segment. “Vail finds that hotel suites average 3.1 guests per unit, condos 6.1 guests and vacation rental homes average 9.8 visitors per unit, creating a range of capacity attractive to all potential renters.”
-Mt. Crested Butte features the only comparable resort Transient Occupancy Tax rate higher than Mammoth’s at 13.5%.
-Big Bear reported 2011 T.O.T from home rentals as representing 57% of its total TOT collection.
Weinhuff listed 627 potential homes in Mammoth which lie within a limited resort overlay that would include:
303 homes between Canyon and the Village, 277 homes in the Majestic Pines area between Canyon and Eagle, 23 at Hidden Valley, 24 at Bridges, 11 already legally zoned at Lodestar.
If just a quarter of these homes rented at 36% nightly occupancy at $500/night, that would generate about $1.34 million in TOT, affirmed the report.
At the last Council meeting, Assistant Town Manager MMMartinez guessed the Town might realize a $500,000 bump in TOT revenue for legalizing single family home rentals.
A recent report from HomeAway, Inc. – the world’s largest online marketplace for vacation rentals, got media coverage in the Sept. 20, 2012 edition of the New York Times.
Vacation rental owners generate an average of $26,000/year in income.
43 percent of owners use the income generated from their vacation rental almost like they would a salary.
47 percent of owners also report using their rental income to help pay the mortgage on the property.
More than six in 10 owners (65 percent) say they decided to rent their homes to travelers to cover some or all of their expenses and another 23 percent started renting with the intent to turn a profit.
I have heard some disagreement between Mammoth Reservations’ Lanie Somers and home rental advocate David Page regarding how much the Town should charge homeowners to obtain a business license in the event such a practice is legalized.
Somers suggested a $15,000/year license fee for single family homes that sleep four, with the price scaling higher for larger homes that sleep more people. People have to put skin in the game, said Somers.
When I spoke to Page, the number he tossed out for starters was $500.
“The business license fee has to be reasonable … at a level where there is buy-in,” he said.
But why would anyone buy in if they’ve been getting away with it until now and keeping 100% of the proceeds? The Sheet asked Weinhuff.
“Once a cheater, always a cheater is not relevant here,” replied Weinhuff. “If you could do it legally and advertise and promote it [one’s property], people would embrace it,” he said.
As Cheryl Witherill observed, however, “If someone’s doing it illegally [renting their home], their primary interest is money, not the guest experience … Not knowing your neighbors is one thing, but having them change every three to four days is another matter,” she added.
Page contends everybody stands to benefit from this. “Quality of life? I love the idea of all these neighborhoods with integrity. But in other areas we’ve got a whole bunch of empty properties, many bank-owned … We can hope it [the market] comes back and we get suddenly Mayberry …” Page doesn’t think that’s realistic.
Somers says if we legalize home rentals, it will depress condominium prices and we could suddenly start to see failures in that sector with far-reaching consequences. “If there are enough failures, how does that affect HOAs?” she said.
Eastman on police
In a sit-down interview with Councilman John Eastman a few weeks ago, he explained his rationale for the decision to make deep cuts to the Police Department budget. “It was an easy place to go to because the numbers were big … and there were not many positions in other departments available [as the other departments had already been significantly thinned].”
Eastman added that he would support a lift or resort tax to support marketing and commercial air service.