The Predator Ridge golf course and residences in Vernon, B.C.Gord Wylie/Predator Ridge Gold Resort
When B.C. said last October that it was going to bring in some of the toughest restrictions on short-term vacation rentals in North America, the owners of a prominent Okanagan resort complex had a moment of panic.
The Predator Ridge Resort, built on a former ranch near Vernon, opened in 1991 building condos and houses that were aimed at sales to permanent residents. Nine years later, it started including short-term vacation-destined units, some of them large homes, some cottages, some units in a hotel-like building called The Lodge.
The City of Vernon had enacted a special zoning for the property that included these short-term rentals as a permitted use.
But it looked as if the new provincial legislation wouldn’t allow for that, eliminating the possibility of using the 145 units – out of 900 on the property – as vacation rentals.
“We were caught in the middle of booking for the summer” says Brad Pelletier, senior vice-president for resort owner Wesbild Okanagan, noting that a million dollars worth of bookings were on the line when suddenly everything was wobbling.
Local politicians, including the mayor and the NDP MLA for the area, Harwinder Sandhu, were also alarmed at the thought of taking out a major component of the local tourism industry. The Okanagan region had already seen noticeable declines in visitors after several summers where large forest fires either resulted in evacuations or large areas blanketed with haze.
However, after emergency meetings that Ms. Sandhu helped organize with provincial housing-ministry staff before the regulations went into effect May 1, both local politicians and Predator Ridge management were able to make the case that the resort was an “unintended target,” says Mr. Pelletier.
In the end, the legislation was tweaked in order to keep Predator Ridge and others like it – not many, but a handful scattered around the province – able to continue functioning as is. They had to follow certain rules. All bookings and cleaning had to be done through the central resort and the units needed to maintain some kind of front desk and staff.
Now the Predator Ridge model is one that other cities and companies are interested in, as both groups try to figure out how to navigate the new tourism world where building new full-service hotels is less attractive for investors.
As Mr. Pelletier notes, “the economics of stand-alone hotels are so difficult these days.” And hotels themselves have become less attractive to many travellers participating in the current global tourism explosion, especially for those wanting a more home-like experience or enough room for large groups.
And so short-term rentals – frequently financed one investor unit at a time – have become vital amenities in many cities where tourism is central to the economy. At the same time, they have often been a destructive force, meaning the loss of potential housing for locals while putting small hotels in places never designed for them.
Vernon Mayor Victor Cumming says that he thinks his city has found the balance needed to get the benefits and avoid the negatives. It comes thanks to the special resort zoning the city created combined with B.C.’s new rules designed to keep vacation rentals out of regular residential zones.
The province’s system doesn’t allow any rentals for less than three months, which is different from the 30-day minimum in most other jurisdictions trying to regulate them. The new regime also requires registration with a provincial site, making the rules some of the strictest in the U.S. and Canada, according to platforms like Airbnb.
Mr. Cumming said the proliferation of short-term rentals in residential subdivisions had turned into a serious issue, despite Vernon seeing itself partially as a resort town.
“There was a large number of homes that were being purchased by outside investors and then used commercially. It was a nightmare. Multiple families would stay. The owners would not be around and shenanigans would happen any day of the week. The neighbours were not getting sleep,” Mr. Cumming said.
The city tried fining owners for noise violations or other infractions but, said Mr. Cumming, but “they just treated the fines as the cost of doing business.” On top of that, the owners were paying only residential taxes, not commercial taxes as the rentals in resort areas were doing.
But Vernon does want some accommodation for vacationers beyond hotels.
Besides Predator Ridge, the city has a few other housing complexes that also exist in special resort-oriented zones, buildings like Vita Resorts, a mix of short- and long-term residents, or The Strand Lakeside.
Mr. Cuming said that people living at those projects year-round don’t complain about the vacationers because they knew it was the arrangement from the start – and often they like the mix and chance to meet new people.
“They say ‘I know what I’ve got. That’s the social chemistry of the property I purchased,’” he said.
Mr. Canning said he feels like Vernon is benefitting now because it got smart a long time ago about how tourism was changing.
“The province recognized we’re ahead 30 years on this.”
At least one other city nearby looks at the Vernon situation with some envy.
Nearby Penticton, in the heart of Okanagan wine country, tried to get a partial exemption from the province’s vacation-rental rules as well. But since it didn’t have any resort zones already designated, the city was turned down.
Mayor Julius Bloomfield said that’s going to be hard on the area.
“We’re not a dedicated tourist resort like some others in B.C., but we are a tourist town,” he said.
(B.C. has designated 14 cities as resort towns and said that group is exempt from the new vacation-rental rules. Some, such as Tofino and Osoyoos, have chosen to opt into the provincial registry system and regulations anyway.)
“I’m concerned there won’t be enough accommodation to the style tourists now want and demand. It’s obvious some tourists don’t want a hotel room.”
Mr. Bloomfield was dismayed when one builder halted his plans for a vacation-rental project as a result of the B.C. changes. Now he’s hopeful about a new application to convert a former motel into vacation rentals. That’s legal since the property is already zoned commercial.
He is hopeful a model will develop to accommodate the desire for apartment-like vacation rentals. Some 113 kilometres away, Mr. Cumming thinks that model will be like Vernon’s.
“I think we’ll see, in the next 36 months, the development of that type of product. Predator Ridge was just ahead of it.”
As it has turned out in B.C., a few other places were also ahead of the game. Near Comox, another popular vacation spot on Vancouver Island, a resort called the Beach House at Saratoga has also been permitted to keep operating its short-term vacation rentals under the provincial rules. Like Predator Ridge, that resort also benefitted from special resort zoning. Its rules require that owners be out of their units and have them available for rent six months of the year.
The development has proven popular both summer and winter with a ski hill nearby and the ocean almost next door, says Robert Cracknell, a managing partner at Iris Properties, which manages the Beach House units.
Before the provincial rule changes, that company was managing about 120 units, including the Beach House ones, for short-term rentals.
Mr. Cracknell acknowledged it’s been a struggle to adapt the single units that area owned here and there throughout various cities by investors. There are few workarounds for those to allow them to be operated the way they were previously.
Instead, his company is pursuing ways to develop a market for the minimum 90-day rentals.
The strategy is to find organizations who need to put up staff or temporary workers on a regular basis – film companies, providers of private travel nurses, short-term contractors – and get that company or institution to rent a unit long-term so that it can be rotated to workers as needed.
Mr. Cracknell said a lot of investors are looking for other new ways to serve that short-term-rental market but they’re struggling because they’d need a commercial property in a desirable location.
Some are exploring the opportunities still available under the provincial legislation.
It allows people to rent out laneway homes and basement suites anywhere in the province, as long as the city itself doesn’t have any rules prohibiting it. (Vancouver does not allow that type of vacation rental, saying only principal residences can be rented out, either when the owner is out of town or is willing to rent a bedroom inside their home while they’re living there.)
He believes that, as the sector evolves, more professional management will also help the general public become more accepting of short-term rentals. His company has started using various kinds of technologies – one is a noise-monitoring device stalled right in rental units – to ensure that vacation properties don’t become disruptive to others.
But, as he looks at how everything is evolving across Canada and the U.S. as everyone adapts to the new tourism, the demand for short-term rentals is not going to go away. He regularly talks to city mayors and tourism boards that are anxious to get more of it for their tourism-driven economies.
And he sees the Predator Ridge or Beach House model as among the most promising.
“Cities should zone for it. That would be huge,” said Mr. Cracknell.