Cape Charles and the STR Debate

Cape Charles, Virginia – The Town of Cape Charles finds itself at a crossroads as it endeavors to strike a delicate balance between the needs of its full-time residents and the burgeoning presence of short-term tourist vacation rentals.

Cape Charles and Northampton County have steadily seeded and grown a robust tourist economy. No industry was vital enough to sustain the town or the county. The railroad that built this town was receding into a vanishing point, leaving just Bayshore Concrete as the major, yet limited industrial driver.

The decision was made, both politically and culturally, to exploit the hidden gem we call the Shore, and turn it into a tourist destination.

No place along the Eastern seaboard has been more successful in transitioning from an industrial base to a tourism base than the Town of Cape Charles. The boarded-up houses and storefronts are a thing of the past—this is wholly due to the influx of tourists. Cape Charles boasts a rich tapestry of history, culture, and natural beauty, making it an increasingly popular destination for travelers seeking relaxation and rejuvenation. It is truly a top vacation spot for families.

Amidst this allure, however, lies a pressing concern: the impact of short-term vacation rentals on the fabric of the community.

A tourist economy needs tourists, and tourists need a place to stay—enter short-term (vacation) rentals.

For many residents, the influx of vacation rentals brings benefits and challenges. These rentals serve as an economic lifeline, injecting vital tourism dollars into local businesses and supporting the livelihoods of residents who depend on the hospitality industry. Moreover, they offer visitors a glimpse into the town’s unique charm, fostering a sense of connection and appreciation for Cape Charles.

Conversely, concerns have arisen regarding the potential strain on housing availability and affordability, as some properties are converted into vacation rentals, limiting options for full-time residents. Additionally, the issues of noise, parking congestion, and transient populations have sparked debates over the town’s identity and livability.

The complaints of full-time residents are real—however, the concrete material reality is that you now live in a tourist destination, and there may be no way to put the genie back in the bottle, no way to recapture little lost Gloria or the quiet town of 20 years ago.

Some full-time residents are lobbying for a proactive approach that includes initiatives such as zoning regulations, occupancy limits, noise ordinances, and taxation policies aimed at mitigating STRs. Some residents want a moratorium on new STRs, while others want a hard cap on actual numbers.

That may not be that easy, or even possible. The Virginia General Assembly has limited local governments’ power over the Short-Term Rental industry.

SB 544, introduced by Sen. Lamont Bagby, D-Richmond, prevents localities from implementing certain new short-term rental requirements. However, it would not overturn requirements already in place (Cape Charles currently does not have an ordinance for STRs). Specifically, the bill says that no local ordinance enacted after December 31, 2023, shall require that a special exception, special use permit, or conditional use permit be obtained for a residential dwelling being deployed as a short-term rental.

While not 100% sure about all of the implications, it appears that SB 544 erodes the ability of localities to regulate and address any potential impacts from the operation of short-term rentals, and places STRs in a “by right” status. A more thorough and accurate interpretation of the law is welcomed in the comments section.

Note: Virginia Senate Bill 544 (SB 544) passed the House of Delegates by a vote of 52 to 38 on February 29, 2024, and the Senate on February 9, 2024 by a vote of 25 to 15. The bill was signed into law on April 17, 2024.

The STR debate generally splits into two camps: those who want the government to regulate the STR industry, and those who want to let the free market shake things out.

Those in favor of government control argue that regulation is necessary to address potential negative elements associated with short-term rentals, such as noise disturbances, parking issues, and impacts on housing availability and affordability. They want the Town Council to establish and enforce zoning regulations, occupancy limits, safety standards, and taxation policies to ensure that short-term rentals operate responsibly and contribute to the well-being of the community—they want the government to actively work to maintain the character of the town.

Advocates for free market control contend that excessive government regulation can stifle innovation, entrepreneurship, and economic growth. They argue that market forces, driven by supply and demand dynamics, are better equipped to determine the optimal distribution of short-term rental properties, allowing for greater flexibility and responsiveness to consumer preferences. In a free market system, owners manage their property as they see fit, fostering competition and innovation while maximizing economic efficiency.

The worry for some residents is that, while some STR owners have worked to become part of the town, can residents trust the market and business to always act in the community’s best interest?

Last week’s meeting on STRs exposed the open wound that has been festering in Cape Charles. As the town navigates this nuanced terrain, the quest for equilibrium between residents’ needs and the allure of short-term vacation rentals seems more difficult as the Town continues to grow and flourish economically (largely due to tourism).

Finding common ground may prove to be very difficult.

The town council is getting squeezed and has the unenviable task of eventually having to do something. Whatever it chooses will certainly be wrong for somebody, that much is certain.

The phrase “the path to salvation is narrow and as difficult to walk as the razor’s edge” (kṣurasya dhārā) is an apt metaphor for the town council’s task.

Then again, maybe Cool Hand Luke may be more appropriate, “Sometimes Nothing can be a real cool hand”.

Let us hope the Town Council has the wisdom to choose the best bad option.