When “Old Town Lunenburg” received its UNESCO World Heritage Site designation in 1995, people anticipated an increase in tourism based partly on the charm of its working waterfront and historic areas. Changes to both have been resisted until this summer when the Town of Lunenburg began grappling with change on both a micro and macro level. The Heritage Site designation was expected to boost the number of visitors but nobody could have foreseen what effects the rise of Airbnb and other short-term private rental schemes would bring.
Neither did the province. Lunenburg Town Council has been crafting a letter to outline the town’s concerns, which it wants the provincial government to consider as it drafts new regulations governing the private online rental sector.
“It’s not a question of banning, but how best to regulate what’s happening,” said Mayor Rachel Bailey at a council meeting last week. “Short-term rentals aren’t all bad. But the fact we are a small town with a significant number popping up in our residential areas is certainly impacting the social fabric of the community.”
The town of 2,200 requested and received a report on short-term rentals prepared by the South Shore Housing Action Coalition. Data from July 2019 showed there are now 105 active listings. That’s a 54% increase from the first three months of 2019 and a 41% increase over the same (April-June) period last year.
“What is most concerning to me is the year over year increase in short-term rentals, which is growing at an alarming rate,” the mayor said during the open portion of the last Town Council meeting. “People are telling me, ‘This is not what I signed up for.’ This is a residential area. We expect it to be a residential area and not a hotel strip.”
The Housing Coalition used data from an application called “AirDND Market Minder,” which extracts information from both the Airbnb and HomeAway platforms. The Coalition reports short-term stay operators are making on average $1,724 a month — or $178 each night, including the cleaning fee. Those averages more than double in August, when units rent for $187 a night or $4,055 a month.
That doesn’t include tax, because Nova Scotia has no agreement with HomeAway or Airbnb for collecting HST. The occupancy rate among short-term rentals in the town of Lunenburg fluctuates from a low of 29% in January to a high of 87% in August. Fifteen percent of the listings are available year-round.
The South Shore Housing Action Coalition, which has been a vocal advocate for more affordable housing in the town, had this to say in the report prepared for the town of Lunenburg:
The rapid growth of the Short-term Accommodation (STA) market in our region is a contributing factor to the housing crisis in our region. While the growth of this market has benefited the tourism industry, it has also put pressure on the already strained rental housing market. While we don’t know the extent to which properties that were once available as market rentals are being converted to STAs, the experiences of businesses, individuals, families, and neighbourhoods indicates there has been an impact. Seasonal service industry employees are unable to find affordable accommodations; tenants are only able to sign short-term leases during the offseason and must vacate their homes as they become STAS during the summer months. The social fabric of neighbourhoods is being compromised as STAs operate next door.
Last March, the province introduced two bills which would scrap antiquated regulations governing all types of tourism accommodations and replace them with new rules. They would require some small-scale accommodations providers to register as businesses while at the same time allowing homeowners to rent rooms (or their entire house) as Airbnb hosts and pay property tax at a residential rather than commercial rate.
Defining which accommodations should be classified as businesses and which should remain residences has yet to be decided and could be the focus of some interesting discussion this fall. The new regulations are supposed to come into effect in time for the 2020 tourism season.
Consultation with municipalities and the Tourism Industry Association of Nova Scotia is already underway, according to Department of Business spokesperson Gary Andria. TIANS has so far been largely supportive of Airbnbs as a means to bring more people to the province — who will in turn spend money on goods and services. Andria says a public consultation will be announced this fall.
But in Lunenburg, short-term stays isn’t the only issue Town Council is wrestling with. In March, council received a presentation from a local company, ABCO 3-H Holdings, asking for a letter of non-objection so the company could apply to Ottawa for permission buy a portion of the seabed of Lunenburg Harbour. ABCO’s Jason Huskilson told Council the company intended to infill about three acres so it could proceed with a vaguely defined, mixed-use residential and commercial development on waterfront property it had bought adjacent to its plant at 81 Tannery Road. The company promised to work with The Town to come up with an acceptable project.
Although the council had neither received nor seen a project description, the mayor and five councillors passed a motion authorizing a letter of non-objection so ABCO could try to purchase the land from the federal government.
When word of that decision seeped out, a number of residents complained council had acted far too hastily and with too little information about a major project that could affect not only the iconic waterfront of the UNESCO World Heritage site (once featured on the Canadian one hundred dollar bill), but also impact ongoing issues related to wastewater collection and treatment in the Town.
Mayor Bailey says the town council has since rescinded that motion and that the town continues to receive legal advice behind closed doors to determine what its role should be with respect to the development proposed five months ago.
The proponents of ABCO 3-H Holdings are Jason, Michael, and Gregory Huskilson. During the summer of 2018, they bought the former ABCO Industries plant from the Eisenhauer family, which had successfully operated the company over the decades building boats, machinery, and more recently environmental clean-up equipment.
There’s an interesting connection between the two families. The CEO who ran ABCO for 27 years is Jim Eisenhauer. He also served on the Board of Directors of Emera Inc. for eight years before leaving this spring (2019) to become the lead director for Nova Scotia Power. The three brothers who bought the family business from the Eisenhauers are the three sons of retired Emera CEO and former Nova Scotia Power president Chris Huskilson. “Small world,” as they say.
The size and scope of any future development taken by ABCO 3-H on the Lunenburg Harbour has yet to be presented for public consultation or scrutiny.
How about if you own a property but don’t live in it as a primary residence (health card, phone bill, income tax) it is considered a business for tax purposes, regardless of what you use it for. So, rent out your primary residence all you want, but if you have 5 other homes, those get taxed as commercial properties, and you have to pay HST on any income derived from them.
we all ready have zoning in place for home business, B&Bs, commercial etc. It took us 5 years to get this zoning done. This was accepted by the local people and and the municipality. Stick with what we already decided on and and not give the platform people from ruling the world!!
I think Iceland has it right – you are allowed to AirBNB your primary residence (whether you own or rent, with the owner’s permission if you are a tenant) for 90 days a year without much trouble. This works well because a lot of people who live in Reykjavik have cottages or camps they use during the tourist season.
However you can’t just rent a bunch of apartments or buy a bunch of condos and use them as unregulated, untaxed hotels.