Changes

Special Committee of the Whole meeting sees STA issues return

Another Special Committee of the Whole meeting Monday evening brought with it a lot of discussion surrounding changes to short-term accommodation licensing and bylaws.

On July 7 at a Special Committee of the Whole meeting, staff brought forward a report containing draft revisions of the STA Licencing By-law, the Comprehensive Zoning By-law, and the Administrative Penalties Bylaw. At the July 12 council meeting, Council spoke to the rationale for deferring the decisions of the report from Planning regarding density provisions and zoning changes and the necessity to pass the By-law at the same time as the STA By-law changes.

Council directed staff to return to a special Committee of the Whole meeting after investigating six recommended changes to the STA Licencing By-law including higher fines and penalties, stronger restrictions on unlicensed operators, reducing the 180-day limit for partial primary residence STA to 45 to 60 days, allowing primary residences with secondary units to operate year round, flexibility for commercial properties and removing natural persons restrictions and the complete removal of secondary residence STAs.

Mike Amos made a deputation and presented some opinions of the Licensed Short- Term Accommodators of Prince Edward County. He said there was some ambiguity around grandfathered rights and the eligibility requirements. “It appears in some cases the fines and fees have this punitive nature as it applies to secondary owners which we would like to explore with you,” said Amos. He also worried that some of the bylaw changes suggested with respect to primary residences would lead to further erosion of long-term rental stock.

Amos questioned why the fine schedule for unlicenced STAs was not based on the number of bedrooms in the unit. “With a onebedroom STA I can earn 50 per cent more than with a long-term tenant. With a four-bedroom I can earn four times as much. I don’t think a $2,000 fine is going to discourage anyone who is going to make $80,000 next year from their rental,” said Amos.

Ultimately, Amos wanted to see Council stop punishing secondary residence STA owners. “They rose to a challenge to provide much needed accommodations for the hospitality and tourist sector when no other options were available. They weren’t breaking a law at the time. They are not breaking a law now because they are grandfathered,” said Amos.

Anthony Lemke, who owns a number of commercial properties in Wellington, cautioned that there can be many different ownership formats on those properties, such as limited partnerships and joint ownership. “In commercial zones I question the logic behind having single shareholder corporations. I think we all agree that STAs are businesses and that’s the whole point of the regulations; to try and ensure that businesses in residential zones are somehow figured out. In commercial zones there is hopefully a little more freedom that’s allowed,” said Lemke, who also pointed out there aren’t the same limits on ice cream shops, galleries or hotels.

President of the Licensed Accommodators of Prince Edward County Davelle Morrison agreed with Lemke. “The benefit of the commercial ownership is that it does allow more than one person to own the property. For some people, they are trying to make home ownership more affordable. One way to do that is to own the property amongst a number of people versus one person,” said Morrison. “I’d hate to see that commercial zoning change so that only one person can be licensed under a corporation.”

A lot of the discussion circled around the fines for unlicenced operators. Staff had suggested a tiered system that would see a first offense fine start at $5,000 and cap out in the third tier at $10,000.

Councillor Brad Nieman asked if fining unlicenced operators per bedroom had been looked at, as some multiple bedroom STAs have the opportunity to create more revenue.

Arryn McNichol. Director of Corporate and Legislative Services, said that the reason staff went with the tiered system is that it is administratively easier to deal with and easier to manage. “We have three different tiers and do have the ability to charge $50,000 if we so choose. If you have someone making $80,000 and it’s an egregious violation, we have the opportunity to charge more,” said McNichol.

That caused Nieman to ask if the fine can be added to the property owner’s taxes if they don’t pay. McNichol said they could, and that staff are implementing a processs where after 60 days of non-payment, the fine will be added onto the tax bill.

Councillor Janice Maynard thought the fines were too low. “I think the initial fines for operating without a licence are actually too low. If you have a reasonably nice STA where you are getting $5,000 plus a week, maybe you get a couple weeks in before you get caught. They will just use this as a cost of doing business,” she said. Maynard suggested the fines start at $10,000. “Everyone has had plenty of opportunity. There is no excuse to be operating without a licence, period,” she added.

Councillor Phil St-Jean agreed. “There is no excuse for someone to not have a licence at this point in time. If they don’t, they need to be shut down and fined. End of story,” he said.

A motion was carried which will see the first offence fine of $10,000, second offence fine of $15,000 and third offence fine of $20,000.

Commercial STA ownership where a natural person is that corporation’s sole share holder, director or executive was also a hot topic. Councillor John Hirsch put forth a motion that would see a licence be given to a corporation, regardless of the number of shareholders or directors.

Director of Community Services, Programs and Initiatives Emily Cowan told Council staff was trying to strike a balance on helping with housing stock and trying to ensure that people aren’t able to own a multitude of secondary residence STAs. “When the original bylaws were first being created in 2017 and 2018, there wasn’t this housing crisis that is happening now. Mixed-use properties such as residences above commercial properties can provide attainable housing as they are close to amenities. However, allowing STAs in commercial zones helps to advance the goals of happy neighbourhoods because the activity is occurring on likely a Main Street or an active area.”

Councillor Maynard told the Horeshoe she was in favour of what staff had presented. “What we don’t want to see is corporations with multiple shareholders buying up our valuable commercial properties because they can now make more money on them operating an STA than operating a more traditional type of commercial enterprises. What is going to happen to the small stores, garages, whatever that are now below if these STAs are now more valuable than the commercial property?” asked Maynard.

CAO Marcia Wallace reminded Vouncil that the motions being discussed weren’t actually staff’s recommendations. “You saw staff’s recommendation in the July report. This is us trying to respond to the areas where you asked for more information, more exploration and different outcomes,” said Wallace.

Hirsch’s motion passed.

The most contentious topic was surrounding whether only grandfathered secondary residence STAs may be issued a licence or may renew a licence. This would mean no new licences would be granted for secondary residence STAs. Councillor Kate MacNaughton reminded Council that this was exactly what it embarked upon two years ago. “I see this as the only choice that we can undertake,” said MacNaughton.

Councillor Phil Prinzen disagreed. “Everybody has probably heard and seen that tourism is down this year. I think we have a bad taste in our mouths from the two COVID years. I also worry about the cautions from staff,” said Prinzen.

CAO Wallace also noted that there are 74 applications for secondary residence grandfathered STAs that haven’t been processed. “Every application that we have received, including those in process and the 74 that we never processed because of the conversation of a pause will be treated as potentially grandfathered. They will be evaluated under our current rules. Those will be considered and moved through the process,” said Wallace.

The vote was called on the motion and it passed. CAO Wallace told Council that because this option was chosen, there needed to be an Official Plan amendment and a Zoning amendment which could be municipally initiated but requires public notice, meaning it could not be ratified at the next council meeting, but likely later in September or October.

This caused Councillor Bill Roberts to ask for a reconsideration. “That’s cutting it awful close getting to October, maybe November. More than everything else, we resolved to get this done in this council,” said Roberts.

Councillor Jamie Forrester questioned why Council would reconsider its decision. “I guess I am actually hearing that a decision we made and thought was right and because it is difficult, that we are actually going to change our vote because it is a difficult decision. This is not new information,” said Forrester.The motion for a reconsideration lost. The decision will move to the September 7 Planning Meeting, meaning it can be ratified by Council on September 13.