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Question about rental property in high end, gated communities

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Katrina Lazenby

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Georgia
We have friends who built a second home in a gated community in Park City, UT., last year. Their neighborhood has restrictive covenants against renting the homes for short stays of a few nights, but the language is vague. Someone just completed a very large home in the community and had an open house for the neighbors over Christmas... they were very bold about their plan to sell single nights as a sort of bed and breakfast deal. They displayed a book with prices for each bedroom (the rooms were named, just as in a B&B) and there was a small spa (two treatment rooms) on one floor. The husband of this duo is a developer and the wife is a chiropractor. They plan to live in the house most of the summer. The neighbors are now guessing that the wife will offer chiropractic services in the "spa," and will probably offer massage service as well.

My friends asked me (a lowly registered appraiser in Georgia, with no experience in vacation property or in the state of Utah) whether or not having rental properties in a gated community of second homes would adversely affect values. Naturally, I suspect the answer is yes, but have no real reason for it except that I was taught that rental properties should not comprise more than 20% of the total number of homes in a community (gated or not). However, this is mostly a second home area where many people do rent out for the part of the ski season they themselves will miss.

Could anyone direct me towards a reference source of information about this? Our friends and their homeowner faction are trying to draw up specific rental guidelines and want some rationale/ justification for doing what they plan to do---not to include in the covenant, but to help convince other homeowners. They're looking for general information, which they may need to back up later with a written opinion from a local appraiser.

I'd be very appreciative if anyone knows of a specific book, text, site, etc. that addresses this issue, even if only peripherally. To reiterate, I'm not doing an appraisal on their property (not qualified or licensed in their state) but just want to pass along some sources for them to read on their own or take to their attorney.

If anyone out there appraises in Park City and is qualified to act as a consultant on this I would be happy to forward any names, as it may be necessary for them to hire someone if it looks like a battle is on the horizon.

Thanks in advance...
 

Joyce Potts

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Florida
There really isn't one. But I'd check with any local Realtory who specializes in high-end properties. Sotherby's, etc.
 

Elliott

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Apr 23, 2002
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Certified General Appraiser
State
Oregon
Katrina said, I was taught that rental properties should not comprise more than 20% of the total number of homes in a community (gated or not).

Why 20%? I'd think to maximize value, a single family, gated community
would not want any rentals.

I don't know about Park City, but I've had a second home in a ski area for
20 years, we had a timber broker build a new home and his plan was
to 'rent' on a weekly basis. He was ostracized at a HOA meeting by one
of the old goats of the community, the guy never rented his house or
attend another HOA meeting.

Every state has different laws on home occupation, but I've noticed that
hair dressers get away with a lot of advertising and are sometimes
allowed in single family zones. I've occasionally run into a massage
table where the HO works out of their house, but not with outside
advertising. 'B&B' I'd think would be fighting words in a gated
community. Its not so much a value issue (of course it has a
negative affect on the neighborhood's homogeneity), but a call to
the HOA to lawyer up.
 

Non Sequitur

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Louisiana
HOA covenants aside, I'm not sure about Georgia but in my area B&Bs are heavily restricted. The licensing process is a bear. Even if the B&B is allowed by zoning the HOA should be able to block a business license or since the community is gated restrict access.
 

Mike Kennedy

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Sep 28, 2003
Professional Status
Certified Residential Appraiser
State
New York
http://www.parkcity.org/government/codesandpolicies/title_15_c_14.html

Have your friends drive down to City Hall and meet with the Chief Building & Zoning Enforcement Officer. :)


The Planning Director, City Engineer, or Chief Building Official, under the supervision of the City Manager or the Mayor, in the absence of the City Manager, shall determine when violations exist,

15-14-2. OCCUPANCY PERMIT.

Land, Buildings, or premises in any Zoning District shall hereafter be used only for a purpose permitted in such a district and in accordance with the appropriate regulations.

A Certificate of Occupancy shall be issued by the Building Official to the effect that the Use, Building, or premises conform to provisions of this and all related ordinances, regulations, and requirements prior to occupancy, for any Building erected, enlarged or altered structurally for the occupancy or Use of any land. Such a certificate is needed whenever Use or character of any Building or land is to be changed.


The City has sole discretion in deciding whether to file a civil or criminal judicial case or pursue an administrative enforcement action for the violation of any of its ordinances or the provisions of this Code. The City may choose to file both, or one or the other. The enactment of this administrative remedy shall in no way interfere with the City's right to prosecute City ordinance violations as criminal offenses. The City may use any of the remedies available under the law including administratively, civilly and criminally. If the City chooses to file both civil and criminal charges for the same occurrence of violation, no civil penalties may be assessed, but all other remedies are available.

The provisions of this Code may be enforced by either civil or criminal actions in courts of appropriate and competent jurisdiction or by an administrative enforcement action. Action may be brought by the City, or by affected Property Owners in the manner set forth below:

(A) CRIMINAL CITATIONS. The Building Official and other designated City officials may, when there is probably cause to believe that construction has occurred in violation of this ordinance or in violation of the Park City Municipal Code, issue a citation and swear out criminal complaints against the appropriate individuals and Business entities. Specific approval from the City Council for such misdemeanor citations is not required.

(B) CIVIL ACTIONS. The City, may bring actions for civil and equitable relief, including enjoining specific land Uses and affirmative injunctions. The Building Official, Planning Director and other designated City Officials may recommend such actions at any time to the Council, or initiate an administrative enforcement action as set forth in the Park City Municipal Code, provided that no civil proceeding other than an administrative enforcement action shall be commenced without the specific authorization of the Council.

(C) THIRD PARTY ACTIONS. Individuals affected by zoning violations within Park City shall have the right to maintain private actions to enforce the Code without joining the City as a party.
(Amended by Ord. No. 06-38)

15-14-6. VIOLATIONS.

Violations of this Title are Class "C" misdemeanors, and are punishable by a fine and/or imprisonment described in the current Park City Criminal Code. The officers and directors of a corporation shall be responsible for the acts committed by that corporation. Corporations and individuals shall be responsible for the acts of their agents committed in violation of this ordinance if they had knowledge of the act committed, and the Owner of the Property and improvements made to it. Each day that a violation occurs shall constitute a separate offense.
 
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Katrina Lazenby

Thread Starter
Sophomore Member
Joined
Sep 26, 2006
Professional Status
Appraiser Trainee
State
Georgia
Thank you, all, for your replies. Elliott, the 20% figure was given as an informal ceiling; more than that, the neighborhood may be transitioning from a primarily owner-occupied majority. But, of course, that is for renters with a bona-fide residential lease and not short term vacation rentals. The other homeowners have already confronted the couple about their plans and have made it clear that they will act against the running of any business, but apparently the prospect of social ostracism does not bother the new people at all.

Mike, thank you for those citations, I should have looked them up on municode.com myself. (insert embarrassed face here) I am going to tell them that their best course of action is to hire a local appraiser out there as a consultant to work in tandem with the legal proceedings, if it comes to that.
 

Ray Miller

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Joined
Feb 20, 2002
Professional Status
Licensed Appraiser
State
Wisconsin
I have found in the past in high end recreational areas, that many of the homes are in a rental pool, where they might be rented out by the day, week, weekend, month or several months.

I have seen this in gated areas that the restrictions have said no rentals.

What kind of impack would it have, that would be hard to say with out a really indepth study of the area and what is and is not common practice of the home owenrs in the area.
 

Mike Kennedy

Elite Member
Joined
Sep 28, 2003
Professional Status
Certified Residential Appraiser
State
New York
Thank you, all, for your replies. Elliott, the 20% figure was given as an informal ceiling; more than that, the neighborhood may be transitioning from a primarily owner-occupied majority. But, of course, that is for renters with a bona-fide residential lease and not short term vacation rentals. The other homeowners have already confronted the couple about their plans and have made it clear that they will act against the running of any business, but apparently the prospect of social ostracism does not bother the new people at all.

Mike, thank you for those citations, I should have looked them up on municode.com myself. (insert embarrassed face here) I am going to tell them that their best course of action is to hire a local appraiser out there as a consultant to work in tandem with the legal proceedings, if it comes to that.


IF the current use(S) is/are in Violation of Municipal Ordinances (see prior post)

a well-publicized "March on City Hall" with Media coverage should make hiring a consultant unnecessary. Recommend bringing copies of the above post along and lodging MULTIPLE WRITTEN complaints........ and demanding the City Enforce its' Laws. Place the Liability where it belongs on City Hall.

caveat: I am not an attorney - strongly advise running ANY anticipated possible actions past one.........FIRST.
 
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