Letter to the editor: Apply demand pricing to the short-term rental license problem | SummitDaily.com

Letter to the editor: Apply demand pricing to the short-term rental license problem

Ken Bell

I’ve never been a fan of public policy that creates winner/loser scenarios. The current proposal to limit the number of short-term rental licenses falls short on effectiveness and fairness. Consider an alternative solution to mandated license limits. Policymakers have the opportunity to fund housing initiatives while removing themselves from the center of the fairness debate.

Demand pricing of short-term rental licenses can:

  • Avoid winner/loser scenarios
  • Effectively target the ratio of short-term rentals to long-term rentals
  • Create funds and balance incentives needed to solve the housing problem
  • Minimize or avoid the endless exemption argument to follow
  • Allow access to all at market price

The price is the problem and the solution.

Short-term rental licenses, or options to make money in the booming rental market, are seriously undervalued. For the license fee of $325, an owner of a large home may generate significant revenue. Introduce license limits and the value skyrockets. Hoarding of cheap options has begun, and the natural rate of attrition will slow dramatically.

Rather than a low, fixed price, the price should be a function of potential income per property. Buyers of licenses set prices to guests and are in the best position to pass through expenses if appropriate.

If all benefactors of the local lodging industry are included, a significant increase in revenue will likely result, which may be used to offset the cost of housing initiatives and incentivize long-term rentals. A zero net sum tax through incentives for long-term rentals would be preferable; however, modest housing initiatives where government help is more effective than private help should be considered.

Demand problems are often best solved with market solutions.

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