Ketchikan’s housing crisis could cost the community a generation, planning director says

""
Buildings line Front Street in Ketchikan on October 22, 2022. (Eric Stone/KRBD)southeas

Ketchikan’s elected leaders need to decide what future they want for the community. That was one message delivered to the Ketchikan Gateway Borough Assembly on Monday by Planning Director Richard Harney.

“What is it that we want to export out of this community?” he asked. “Do we just want to export the memories and the experiences of the visitors that come here? And that’s fine, if that’s what we want to do. But if that’s what our main focus is, the visitor industry, we’re also going to be exporting our children.”

The remarks came during a discussion of short-term rentals in Ketchikan and their impact on the community’s housing shortage.

nationwide study in 2020 found that increases in the number of units listed on the short-term rental service Airbnb corresponded with hikes in rents and home prices. A separate study in Los Angeles found that short-term rental services like Airbnb and VRBO distort the housing market by taking long-term rentals off the market and displacing residents of affordable homes.

The specific impact of short-term rentals on Ketchikan’s housing market is not clear, though Harney said the problem is especially pronounced in communities that serve as tourist destinations.

But one thing is clear: housing is tough to find and expensive in Ketchikan. And Harney said because of that, only one of his five children might stick around.

“I know at least one assembly member, two assembly members — their children are no longer living in this community,” he said. “They can’t afford to live here. They can’t afford to work here.”

The Ketchikan Gateway Borough doesn’t have firm data on the number of short term rentals in the community. But Harney said that based on rough, back-of-the-envelope estimates from various sources, it’s likely that about 250 of Ketchikan’s homes are listed as vacation rentals during the summer tourism season. And Harney said he can’t blame people for taking advantage of the opportunity.

He used his own home as an example. Citing data from the short-term rental analytics site AirDNA, Harney said he could make about $20,000 a year renting out his family home through a service like Airbnb or VRBO.

“What this is telling me is that I should move to another community, and I should rent my house as a VRBO that’ll pay my mortgage on this property, and also the mortgage or at least a portion of the mortgage somewhere else,” he said. “As a community member, that bothers me.”

He called on the assembly to take concrete steps to assess the impact of short-term rentals on Ketchikan’s economy.

And he offered a few options. The borough could pay a consultant to study the problem or try to collect the data itself. The assembly advanced a measure last month that would require owners of short-term rental properties to register for a free permit at the borough.

But Harney said an amendment included in the measure that would require owners to register just once instead of each year would hamper the effort.

“It kind of defeats the whole purpose,” he said. “Because we can’t track it from year to year, we can’t see where the increase in number is happening, or decrease, or where they’re located, where they’re being relocated, whether or not somebody stops from having one, starts one up that type of thing. If it’s a one time thing, it’s a snapshot in time.”

As a third option, Harney said the Alaska Municipal League was “actively pursuing” a contract with a software company to track vacation rentals around the state in an effort to ensure they’re paying taxes.

“So they will scour Airbnb, VRBO and any of these other other websites that are out there, and they will look for it, and they will then actively let us know who or the community know who’s operating VRBO or a short-term rental,” he said.

Housing is increasingly a problem for Southeast Alaska businesses — the economic development group Southeast Conference identified it as a top issue hampering business growth in a recent report.

Assembly member Jaimie Palmer works in the tourism industry. She highlighted the impacts the housing crunch has on the business environment.

“The regional issue around that is immense, because we can’t have a robust tourism industry if we can’t house workers,” she said. “It’s a double edged sword. Everybody wants to have this robust industry, but where do we put them?”

But assembly members didn’t appear to express a consensus about the best way forward.

Assembly member Judith McQuerry said she’d like to see the borough more aggressively pursue unscrupulous owners who don’t pay hotel or sales taxes on their properties.

“I think it behooves us to crack down on the cheaters and make life as easy as possible for the good guys,” she said.

Assembly member Jeremy Bynum said he would not support any measures that impose fees or penalties on short-term rental owners who abide by borough code.

“We don’t want to interfere with … private property ownership, in my opinion,” he said. “Also, these are providing housing for industries that we want.”

He said the borough should focus the “majority of (its) efforts” on opening up land for housing development.

Assembly member Grant EchoHawk supported the Planning Department’s pursuit of more data, saying it was important to pursue all available avenues to get more housing on the market.

“There’s a lot of moving parts here. This is just one section. So what I don’t want us to do is … to in any way, discount this conversation and just say, well, while we need to focus on these other things,” he said. “We also need to focus on those other things — plus this.”

He also suggested changing the borough’s zoning code to encourage more housing development.

Ketchikan’s Borough Assembly is scheduled to consider a package of reforms aimed at addressing the short-term rental market on Monday. But borough officials are encouraging the assembly to vote down the package and wait until its annual policy meeting in January to discuss the issue in more detail.

Like what you just read? KTOO news stories are member supported. Support your community news source today. Donate to KTOO.

Read next

Site notifications
Update notification options
Subscribe to notifications