If you’re thinking about purchasing an investment property to use as a vacation rental within the Bend city limits, take note: As of April 15, the number of potential properties you have to choose from just decreased significantly, while the process to establish your legal status as a vacation rental just became more complicated and the cost to maintain your vacation-rental status just increased significantly. You can also expect a lot more scrutiny directed your way, not just from your neighbors but from the City of Bend.

Why? Earlier this month, the Bend City Council, prompted by some very vocal complaints of residents of two westside Bend neighborhoods, revised its policy about overnight rentals, instituting a number of new requirements, fees, and policies, and establishing a density limit on the number of what it has now dubbed “short-term rentals” (previously known as “vacation-home rentals”).

What exactly qualifies as a “short-term” rental (STR), as defined by the City of Bend? “Any dwelling unit or portion of a dwelling unit rented fewer than 30 days per tenant. This term includes whole-house rentals, as well as the rental of up to two individual rooms in a house while the owner is present.”

Moving forward, not only will you need a land-use  permit to legally operate a short-term rental (which verifies that the property site meets City standards), but you’ll also need a license (which governs how the rental is managed).

Two types of STR land-use applications have been created: “Type I” and “Type II.”  Which type of permit a particular property requires depends upon three things: the zoning district of the property; the number of days per year you intend to rent a property as a STR; and whether you rent only a portion of your house while you are present there.

Short-term rentals (STRs) within Commercial zoning districts, Mixed Use Employment zones and the Mixed Use Riverfront zone (within the Old Mill District boundary) will require a Type I Permit. These properties are exempt from any density limit; however, they will be required to have a Short-term rental Operating License.

Short-term rentals within Mount Bachelor Village and Courtyards at Broken Top Lots 1-8 and Lots 21 -32 are exempt from obtaining an STR Permit and are exempt from density limits, but will require an annual operating license.

Short Term Rentals that are available for rent fewer than 29 days total per year will require a Type I permit and are exempt from density limits, but are limited to no more than four rental periods per calendar year.

Owner-occupied STRs will require s a Type I application and are exempt from density limits. These are defined as the owner living on site, with up to two rooms rented to overnight guests for fewer than 30 consecutive days, and the owner must be present during the overnight rental period.

Type I permits don’t require public notice; Type II do. The application fee for a Type I permit is about one-third the cost of a Type II permit.

The fee that has been quoted for the more-common Type II Permit application is $1,749 (compared to the previous land-use application fee of $454); meanwhile, getting that permit approved may take up to 120 days. Another key change: The permit will run with the owner and not with the land (as is typical). That means that any sale or transfer of the property (with limited exceptions) renders the permit void.

In addition, the following items must be submitted with the permit application:

  •  A floor plan identifying the number of bedrooms proposed for use
  • A diagram and/or photo of the premises showing the number, location and dimensions of the designated on-site and abutting on-street parking spaces required (one parking space per bedroom is required; and 50 percent of required parking can be on-street if the neighborhood allows parking on both sides of the street).
  • Consent to inspection of the property

Now, About that Density Limit
Except for the exemptions listed above, there must be at least 250 feet of separation between any two properties permitted as Short-Term Rentals. Distance is measured radially from the subject property’s boundary.

This requirement alone will mean that many potential buyers hoping to buy a property in Bend’s prime vacation-rental territory — near downtown or the Old Mill — will be out of luck. In the future, vacationers hoping to find a rental near the most popular tourist destinations in Bend will also have a tougher time finding accommodations.
To maintain their STR status, all permitted short-term rental owners must provide sufficient proof that the property was rented for at least one night during a 12-month period. Even for those properties with “grandfathered” permits, abandonment of use is grounds for losing a permit.

When you sell or transfer your property, the land use approval will end. The new owner will have 60 days from the closing date of the sale to apply for and receive a new operating license.

The operating-license program goes into effect on July 3. After July 2, you must apply for an annual operating license within 60 days of receiving final land-use approval before operating as a Short Term Rental. Based on preliminary budget figures and anticipated number of license applications, the annual fee for the license is anticipated to be between $200 and $300.

Failure to renew that annual license is grounds for revocation, as well as failure to pay the required Transient Room Taxes.  A third notice of an offense (noise, parting, nuisance issues) will be grounds for revocation.

If you’d like to learn all the details about the new STR requirements,  here’s Ordinance NS-2240 in its entirety.

For questions about the land-use permitting requirements, contact the Planning Division at (541) 388-5580 ext 3. For questions about the licensing program, contact Lorelei Williams, Program Coordinator, at (541) 323-8565 or lwilliams@bendoregon.gov.

About the Author
Lisa Broadwater, GRI, CDPE, is a Central Oregon-based real estate professional who specializes in listing and selling homes, especially in Sisters, Tumalo, Bend and Redmond.