URGENT * URGENT * URGENT * URGENT
City residents seek Moratorium on Short-tern Rentals (STRs) and withdrawal of legislation on Accessory Dwelling units (ADU) and Proposed Duplex construction in R2 zoning districts.
Re: Citizen Concerns Regarding Pending STR, ADU and Duplex Legislation (0-15-25) (0- 18-25) and (0-17-25)
Annapolis has a short-term rental (STR) crisis provoked by mass tourism, which is not anywhere resolved despite enforcement provisions in place and the recent hiring of one personnel to track STRs City-wide. The depth is stunning, and it will take a few years to get the crisis under control even if policy makers are serious about that objective. The mass tourism and market economics behind the Annapolis STR crisis undermines any housing policy innovation attempted by City policymakers. The STR crisis is not limited to the Annapolis Historic District but exists throughout the City.
A recent citizen audit of Charles Street showed 60% of the Street are STRs, legal and illegal, and at least one home is renting for $1500 nightly. Real estate agents openly tout the income potential of these properties to investors. Consider that a short-term rental license is only $400 and there are no meaningful financial deterrents for non-compliance. We believe illegal STRs are at a much greater number than suggested in City reporting. We can offer work papers related to the Charles Street audit and believe further street audits need to be undertaken.
The incentives for illegal STRs, just on the numbers alone, is simply staggering. The crisis is real, and the current City approach is inadequate and needs a major reform. For this reason, a moratorium on any new STR licenses is the only sensible path until robust enforcement and better policies stabilize affected neighborhoods. [1]
It appears that Annapolis is on a ruinous path if the policy goal is stable and affordable neighborhoods. The failure of the City to enforce STR policies for years is a major contributor to the crisis and that status exists today. In the 2023 City Manager report on STRs, it was noted that auditing/verification was periodic and that enforcement was only complaint driven. This continuing approach will not protect neighborhoods.
To now also add new Duplex and ADU legislation into the mix of this highly toxic situation that also permits STRs, investor conversions, and non-owner-occupied investor situations is unwise, even if infrastructure, density, schools, parking and traffic were accounted for favorably, which is not the case for the Duplex or ADU bills. Given the Annapolis housing under-capacity is estimated to be very modest, with an aging and declining population, allowing over 800 Duplexes and unlimited ADUs at a grossly outlier house size of 1200 sq. ft. seems to be a significant housing misjudgment.
The current STR legislation to impose a 10% block-face cap and few other safeguards is not a “good start” because the City Planner has advised it will not alleviate the STR crisis in high density areas. It has insufficient provisions for enforcement and no deterrent penalties, and the bill simply does not address the skewed STR economic incentives. Instead of a good start, policy makers should work towards the “right start” under the umbrella a time-limited moratorium on new STRs and with parallel efforts to implement robust overt enforcement on all stakeholders including the those most benefitting. This is what other cities are doing. Annapolis is taking an incredibly weak and indifferent approach that does not recognize the seriousness of the STR issue, and these modest efforts will prove ineffective for safeguarding neighborhoods.
Allowing the opportunity for increased STRs and uncoordinated investor-owned housing will not advance affordable housing or manage mass tourism. The Duplex and ADU bills as drafted are not solutions but exacerbations of the STR crisis that is undermining neighborhoods and will fail to promote affordable housing. These Bills could be improved but there appears to be little appetite for public engagement or compromise by its sponsors. Rhetoric about NIMBY cannot disguise these legislative efforts are not well put together for the goals intended and may have huge negative consequences for City neighborhoods targeted. Our Annapolis neighborhoods should not be an experiment.
At the recent October 3rd Rules Committee meeting, it was noted that Annapolis has a 2040 Comprehensive Plan that is not coordinated with the Duplex and ADU initiatives and the same is true for County housing developments just immediately outside the City limits. This approach does not seem sensible.
It was noted at the hearing by the Alderman sponsoring the ADU bill and supporting the Duplex bill that his neighbor rehabbed his home to make it worth $450,000 but if the neighbor could have done a Duplex it would be worth $630,000 and presumably have an income potential. So, what does that example have to do with affordable housing in stable neighborhoods, especially if the Duplex is rented as a STR? The most recent housing report (2023) noted that the City of Annapolis priorities should be public housing and lower income housing policies and the Duplex and ADU bills serve neither critical interest.
This white paper submission is citizen-generated and offers input on some of the concerns identified and what some other cities are doing that may be more effective. We do not see the concerns and factors assessed by other cities with mass tourism or housing objectives in any of the current legislative reports, the language of the bills or in discussions with its sponsors. Suggesting these bills have “gentle” or incremental density impacts is not true or what residents are experiencing or will experience if unguarded development moves forward. With no safeguards, you can be sure the 800+ Duplexes and unlimited 1200 sq ft ADUs will be snapped up by investors who do not live in Annapolis or contribute to neighborhoods and have no financial or other deterrent to breaking the law.
We identify recommendations on how to better manage STRs and improve the Duplex and ADU legislative initiatives. But, one overarching observation is compelling: these legislative initiatives are premature and not developed sufficiently to warrant legislative consideration at this time.
City officials should put out the fire on the STR crisis first and then work towards a comprehensive housing policy with true public engagement that also includes public housing and lower-income housing needs. For this reason, focusing government policy energy on STRs, and withdrawing the Duplex and ADU bills currently pending a new Mayor and City Council in just a few months, is a very sensible legislative path that best promotes the public interest.
[1] A time-limited moratorium is well within the City’s legal authority by its Charter powers and its City Code powers to act for public safety and welfare. Moratoriums by resolution or ordinance have occurred before (e.g. R-55-23 for STRs). The City recently enacted via R-10-24 a temporary 9-month moratorium on cannabis business applications for nine months, citing the need for time to enact thoughtful zoning and regulations to protect public health, safety, and welfare. Our neighborhoods deserve this same level of support. A moratorium also allows the new Mayoral administration and City Council the opportunity to participate in developing a coordinated housing policy.Summary of Citizen Concerns Related to STR Potential for Duplexes and ADUs.
Loss of Long-Term Housing: Duplexes and ADUs are frequently converted to STRs by investors, reducing the supply of long-term rentals for residents and driving up rents. The current legislative initiatives have no protection in this regard and no incentives to deter illegal STRs given the financial incentives.
Neighborhood Disruption: High STR concentrations lead to frequent turnover, noise, parking shortages, and a loss of community engagement, especially in historic or tourist-heavy neighborhoods. This leads to community instability, increased absentee ownership, and potential declines in property maintenance.
Affordability Challenges: STR conversions contribute to housing shortages and rising rents, particularly where local regulations are weak or unenforced.
Gentrification and Displacement: Overbuilding and unregulated STRs can accelerate gentrification, push out long-term residents and alter neighborhood character.
Infrastructure Strain: Increased density from duplexes and ADUs, especially if converted to STRs, can overload local infrastructure (water, sewer, roads, parking), leading to service degradation or costly upgrades. There are no parking requirements in these legislative initiatives and that is a mistake. Many neighborhood streets do not have many garages or driveways, so allowing an expansion in addition to unregulated visitor parking creates pretty difficult situations. We do not see any infrastructure capacity analysis in the city record.
Regulatory and Enforcement Challenges: Cities often struggle to enforce STR regulations. Without strong enforcement, illegal STRs proliferate, further reducing affordable housing and destabilizing neighborhoods.
Speculative Investment: Investors may buy up duplexes and ADUs for STR use, driving speculative development and potentially leaving units vacant if demand shifts. This will drive up housing values and prices in a way that impedes affordable housing goals.
Impact on Local Economy: While STRs can boost tourism revenue, they may also undermine local workforce housing, making it harder for essential workers to live near their jobs. It is also unclear is there has been any assessment of how the STR capacity, legal and illegal, impacts the hotel industry locally, since these components compete to some degree.
Infrastructure Costs: Overbuilding and increased STR activity can necessitate costly upgrades to water, sewer, roads, and parking infrastructure, straining city budgets. Annapolis infrastructure (water, sewer, roads, schools) is already near capacity. Adding more units than needed could strain these systems, leading to service degradation or costly upgrades. No infrastructure assessment is in the City reports. Align zoning reforms with infrastructure capacity, focusing upgrades where demand is highest and certifying capacity before up-zoning. This has not been done at all and is a legal deficiency in addition to a policy concern.
School Capacity: Hundreds of more units is how many students and how will that impact be accommodated? No assessment is in the City reports.
Mismatch with Housing Need: There are many housing reports and most focus on Anne Arundel County with no particularization to Annapolis. The City’s housing analysis shows modest needs for housing, and much of that is focused on lower income or public housing. The Duplex and ADU bills enable up to 872 new duplex units in R2 zoning currently not allowed since 1970 and allows ADUs to be short term rentals up to house size, 1200 sq ft., an outlier size. This raises the question of whether the City Council is legislating an oversupply of homes not really needed, while not addressing public and lower income housing as recommended for priority. This could lead to vacant units, depressed property values, or speculative development that doesn’t match actual community needs. Housing policy innovation should focus on public housing and lower income housing and not commercializing established neighborhoods.
Affordability and Market Effects: Developers may build higher-end luxury duplexes to maximize profit, rather than affordable units, which could fail to address the needs of lower-income residents and essential workers. This has happened in the City and in the County already so there is no reason to be confident that will not happen with increased Duplexes and super-sized ADUs.
Fiscal Responsibility: Building more units than needed could lead to inefficient use of city resources, especially if infrastructure upgrades are required for units that may remain vacant. Annapolis does not have a coordinated housing policy. In fact, it has no housing policy at all despite many reports. Residents and neighborhoods are left in the dark on development projects in the City and in the County nearby.
Long-Term Uncertainty: If population growth slows or demand shifts, the city could be left with excess housing and underutilized infrastructure. The lack of urban planning, including a comprehensive housing plan, creates huge vulnerabilities and fails to achieve the stated goals of stabilizing neighborhoods with affordable housing.
Recommendations For The Current Duplex and ADU Bills
Mass tourism and STRs are common in cities with duplex/multi-family zoning “reforms.” Duplexes and other multi-family units have contributed to short-term rental (STR) issues in many U.S. cities.
Unregulated STRs in Duplexes and ADUs can significantly reduce long-term rental supply, drive up rents, disrupt neighborhoods, and strain infrastructure. Annapolis has a big illegal STR crisis and should get that under control before increasing the opportunity for more regulated and unregulated STRs. Annapolis must implement stronger enforcement, ongoing monitoring, and targeted incentives to ensure housing remains available and affordable for residents. Adopting best practices from other cities—such as owner-occupancy requirements, STR caps, permit tracking, and community engagement and deterrent enforcement- will all help balance housing growth with affordability and neighborhood stability.
Annapolis should follow other cities and limit STRs in new housing created by zoning reforms to protect long-term rental stock and community stability. The current Duplex and ADU bills have not attempted to do so. Below are recommended terms that should be standard in any legislation on these issues, if affordable housing and protecting neighborhoods are the goals.
➔ Disallow STRs for Duplexes and ADUs:
Require long-term rental use to ensure these changes meet the goal of affordable housing.
➔ Create real incentives for long-term rentals:
Offer property tax credits or reduced impact fees. In cities with loose restrictions, investors have created “mini-empires” of STRs, often using duplexes and small multi-family buildings, hollowing out communities and reducing housing options for locals. This is a prominent issue in President’s Hill and historic downtown Annapolis.
➔ Require parking:
Annapolis has no transit hub and is a destination for mass tourism that takes up residential parking to a disproportionate degree. This reality needs to be expressly acknowledged as a safeguard.
➔ Restrict STRs to owner-occupied units and cap the number of STR licenses per neighborhood:
The 10% solution in the related housing bill is inadequate unless combined with significant deterrence-oriented enforcement, similar to Charleston.
➔ Strengthen enforcement and create real deterrence for illegal STRs.
Specific STR Enforcement and Oversight Recommendations
(a) Registration and Permitting
→ Require registration and annual permits for all STRs, with regular inspections for safety and compliance. There should be no lesser occupancy standards for STRs and no lessening of standards for ADUs.
(b) Licensing Fees
→ Increase significantly the licensing fee for obtaining a STR license.
(c) Data-Sharing and Enforcement
→ Implement data-sharing agreements with STR platforms to identify illegal rentals and enforce penalties.
(d) Tracking and Monitoring
→ Track building permits, STR conversions, and rental inventory to ensure new housing is used for long-term residents.
(e) Transparency and Policy Adjustment
→ Use public dashboards to monitor impacts and adjust policies annually as needed.
(f) Proactive Auditing
→ Proactively audit streets for illegal STRs.
(g) Impose strict and significant fines for non-compliance.
→ These penalties should be substantial enough to act as a real deterrent against illegal operations and repeated violations.
(h) Whistleblower Incentives
→ Authorize incentives for whistleblowers who report illegal STR activities, with rewards paid by the non-compliant property owner. This system encourages community participation in enforcement and helps identify violations that may otherwise go unnoticed.
Regulatory Approaches From Other Cities
A comparison of short-term rental (STR) regulations, duplex impacts, and housing affordability in Boston, Savannah, and Charleston, and some California cities suggests Annapolis can and should improve its legislative initiatives. Prohibiting Duplexes and ADUs from being used as short-term rentals (STRs) will ensure units contribute to long-term housing supply and affordability. Other cities have considered these issues, and a compilation of information can be reviewed in Attachment A.
Cities that proactively manage mass tourism and short-term rentals do not exclude duplexes and ADUs from STR regulation. Strict owner-occupancy rules, managing density and numbers, prohibiting investor-owned units, proactive permitting and auditing, and strong deterrent enforcement are the features of these provisions.
Notably, on ADUs, size is regulated to assure conformance with neighborhood character, affordability, and housing needs. The Annapolis ADU bill going from 800 to 1220 sq ft is significantly outlier with no justification.
Request for Action
We hope this information and perspective is helpful as the City Council deliberates on these matters. We urge the Mayor and City Council to implement an immediate STR moratorium and undertake its own proactive City-wide street by street audit and aggressive enforcement action against illegal STRs. We urge withdrawing or staying the current Duplex and ADU bills to allow the new Mayoral administration and City Council the opportunity to develop a comprehensive and coordinated housing policy that fits Annapolis, and focuses as a priority on public and lower income housing.
Respectfully submitted,
Katie McDermott
Trudy McFall
Lisa Hillman
Marlys McDevitt
Julia Graham
Laurie Sullivan
Bill Kardash
Debra Connors
Joe Connors
Marty Insley
JD Derderian
Carl Larkin
Susan Wheatley
Winship Wheatley
John Hammond
June Larkin
John Sullivan
Patty Cousins
Amanda Fegley
