The five-year delay of a ban on existing short-term rental units in residential areas of Normal might have been a wise move by the town.
On May 20, a federal judge granted a temporary restraining order against imposing a ban on short-term rentals by the Chicago suburb of Glen Ellyn. That ban was due to take effect on a much shorter time frame than Normal’s ordinance.
The judge granted the order based, in part, on potential economic harm to property owners.
Most short-term rental property in Normal — Airbnbs, Vrbos and others — will have to shut down by 2030. The Normal Town Council on Monday voted to prohibit short-term rentals in R1 and R2 single-family residential and mixed-residence neighborhoods.
The five-year delay until the ban goes into effect is an effort, said city manager Pam Reece, to acknowledge that owners have money tied up in their properties and may have made improvements to make them attractive to short-term renters.
“Council adopted a five-year amortization, which hopefully helps a property owner recoup some of their investment. Those that have the case for a longer period of time, maybe five years isn't enough, they will have an opportunity to appeal the five-year duration and lay out the case on why they need a longer time,” said Reece.
Reece said building permits filed between 2019 and 2024 on that type of building showed a big range in the value of improvements. She said 79%, though, averaged less than $20,000 per property.
Some owners complained to the council they were not included in the discussion about the new ordinance. During a WGLT interview, Reece said the reason for that is even under previous ordinances, short-term rentals weren’t supposed to happen.
“There's a general conflict between an Airbnb or a Vrbo use of a property which can really be related to using a dwelling unit for a hospitality industry purpose. That's definitely a business. The town's current zoning code prohibits that type of use,” said Reece. “That's the baseline that just doesn't change through conversations with property owners.”
Reece said complaints from neighbors of some short-term rental properties related to the type of use, traffic, noise, partying, and so on.
The council amended the ordinance before passage to include an exemption for owner-occupied, short-term rental properties, under the presumption that owners on site can better monitor guest conduct. That was an idea that surfaced months ago, when the potential for a ban emerged.
Yet, staff did not recommend it to the council.
“You may have noticed Monday night, there's certainly no unanimity among my seven elected officials. So, my job as a city manager is to present them a recommended ordinance to review and consider," said Reece. "But I really didn't know where they were going to land. I feel like staff did a good job of presenting council an ordinance, allowing them an opportunity to find a ground where a majority of them could agree.”
Even owner-occupied, short-term rental properties can be considered business that technically could be argued doesn't meet the zoning code.
“We'll have to work through that honestly and figure out how to make that work,” said Reece.
The town had other goals as well.
Reducing the number of short-term rental properties could put those properties into the pool of longer-term rental or even owner-occupied residences.
“The average price for the period 2019-2024 is about $170,000. That tends to fall in the area that we keep referring to as the missing middle, the kind of homes where people maybe can afford to buy, maybe a first-time home buyer and the like. Part of our concern also was how to preserve this range of housing stock,” said Reece.
The city of Peoria approved a 1,500-foot buffer to prevent concentrations of short-term rental properties. Reece said if the Normal council had done something similar, only three existing businesses would remain.
With the new ordinance in Normal, there will be 17 remaining short-term rental businesses; 49 others will have to end operations.
