When retired Coast Guard Chief Judy Pallagi moved into her Westport home six years ago, she got to know her neighbors.

On one side was a woman who had lived there for six decades, for whom Pallagi would cook meals and fixed a beeping smoke detector. On the other was a rock band that rolled down the alley late at night and slept until noon, for whom Pallagi never ran power tools or lawnmowers in the early morning.

“Those are the kind of neighbors you want to have,” Pallagi said. “They might not do the same things you do, they might be older than you or younger than you, but nonetheless, they’re still neighbors.”

In the years since Pallagi’s move, her neighbors were replaced by a revolving door of tourists visiting to enjoy the beach and small town fishing feel.

Pallagi’s house is now “surrounded” by short-term rentals.

“If you have enough short-term rentals, there is no more community,” Pallagi said. “I can’t go next door, borrow a cup of sugar or an egg. I can’t say, ‘hey can you watch the ladder for me, I’m going on the roof.’ I don’t have that neighbor kind of stuff.”

“That’s what I moved to Westport for, and that’s what people want to come out here for, but we’re losing it. It’s not there anymore,” she said.

Pallagi looked for a way out. She examined a map of Westport, searching for a neighborhood without vacation rentals. She found that didn’t exist: the city permitted transient dwellings in all residential areas, where similar scenes were playing out.

Pallagi was one of many residents who took the issue to the city council, and in recent months, the debate over how, and if, Westport should regulate vacation rentals has sunk deep into the bones of Westport, aggravating the city’s growing pains.

For years the conversation has reached far beyond Westport into neighborhoods across the country. Opponents say letting short-term rentals run rampant will add a nuisance to neighborhoods that are zoned residential, and force out locals by limiting long-term housing supply; those on the other side of the coin, especially in vacation-oriented areas, say short-term rentals are a critical tool for enticing visitors and essential for those whose livelihoods depend on the tourism-based economy.

Since 2006 Westport city code has included stipulations that limit occupancy and parking allocations for short-term rentals, but residents said their enforcement was lacking. In interviews with The Daily World and at city council meetings, residents reported speeding cars, overparked lots, loud parties and other general nuisances in their neighborhoods.

Mary Boley and Rebecca Blair, who live on Pheasant Run Drive and have been vocal at city council meetings, said they installed speed bumps on their private, gravel road in attempts to slow vacationers racing to the end of the street.

“There are children, grandchildren, pets, and you’re putting them at risk by driving 35 miles per hour,” Blair said.

The council agreed in August to sharpen enforcement measures for rental rules, including $500 fines, misdemeanor offenses and suspended licenses for rental managers in violation.

But another part of the ordinance proposed by the planning commission divided the city council, and was eventually voted down: a 5% cap on the proportion of short term rentals in residential zones, a 10% cap for “ocean beach residential” zones, and a 10% cap for the city as a whole — room for an additional 65 short-term rentals city wide.

Since 2022 the city has issued 14 new short-term rental licenses, and another 32 are pending.

While much of the heartache comes from homeowners in residential zones with a growing number of rentals, that’s not where the majority of rentals are located.

Councilor Troy Meyers, who has tracked the distribution of rentals throughout the city, found that out of 165 registered short-term rental units in Westport, 56 lie in residential zones, and the rest of them are in the mixed-use tourist commercial zone, which would not be subject to zone-specific restrictions, but still subject to the city-wide cap.

Residents of Cohasset Beach, an oceanfront housing development, argued for an exemption to short-term rental restrictions because their neighborhood covenants already address the issue. Other developments, such as the Westport By the Sea condo complex, were built specifically to host short-term rentals. (That structure hasn’t freed it from arising short term-rental problems. According to Meyers, who lives at the complex, renters sometimes leave doors unlocked after their stay, leaving vacant units and facilities open to the public and in some cases subject to theft.)

During a public hearing in August, councilors Rose Jensen and Louis Summers argued the issue was pressing and the regulations be pushed through given the length of time the planning commission had already spent drafting them.

“We worked for over a year to get this done and when we turned it over to the planning commission, they’re the ones that looked at the caps, they’re the ones that figured out what the buffer zones should be, they’re the ones that did all of this,” Jensen told the council.

Summers agreed.

“It’s about time the council make a stand and go forward with it,” he said.

A month earlier, Summers had proposed a temporary moratorium on new short-term rentals within the city. He stated he wasn’t against short-term rentals, but that the city should halt their growth while drafting the proper regulations. The city of Port Angeles took a similar measure for the same reason in June, enacting a six-month ban on new rentals in residential zones. The ski resort town of Aspen, Colorado enacted a year-long moratorium on short-term rentals in 2021.

At a meeting with high public turnout, residents voiced both support for and opposition to a moratorium, which ultimately failed.

In a later discussion, Summers, a former crab boat captain, compared short-term rental caps to crab licenses, mentioning that moratoriums were enacted on new commercial fishing licenses because of pressure on existing fishermen.

“Every kind of license there is, there’s a moratorium,” Summers told the council. “You are gonna hurt people, yes. You can’t please everybody. But I don’t want to live in a neighborhood with Airbnbs all around me and I’m in the middle of it. I don’t want that.”

Airbnb is a short-term rental management company.

Summers continued, “I want Westport to be a family town, a town where people can afford to buy and live here,” he said, mentioning that property values have risen dramatically in recent years.

“Who can afford these houses around here? It ain’t the local fisherman. It ain’t the local cannery workers. It’s all gonna be out of town people, and we’re gonna force our local people out of here. That might not have anything to do with Airbnbs, but that’s what’s happening to Westport.”

Housing crunch

Summers was referring to a major concern of many over short-term rentals: housing affordability and availability. Some say houses listed as Airbnbs or VRBOs, another management company, are one less house that could’ve been bought or rented long term by local workers.

Some research, like a 2019 study from the Harvard Business Review, supports the notion that as the number of short-term rentals increase, as does the price of housing, and the number of affordable housing units decrease.

In recent years, Westport’s housing prices have grown at a faster rate than the rest of the county, according to Kevin Spivey, owner of Spivey Realty Group, which serves Westport. Following the market surge of the pandemic, home prices in Western Washington are down about 3% over the last year, but in Westport have continued to grow by 7%.

The average home price in Westport is $325,000, more than $30,000 higher than the Grays Harbor County average.

Spivey said many of the recent short-term rental additions were bought as second homes and rented to vacationers when not in use in order to offset the down payment and holding costs on their investment. That ability, in addition to making an urbanite’s income in many cases, gives outside buyers more leeway to jump on new listings as they become available.

“Locals are increasingly forced to rent in a market with not enough rentals or be lucky enough to buy something off market or from within the family,” Spivey said.

Housing is a challenge for employers and their workers. Cindy Perry, who owns the Pine Tree Bar and Grill in Westport, said many of her 12 employees struggled to find a place to stay when they were hired, with four of them solving the problem by becoming roommates.

According to the real estate company Zillow, the median rental price for this month in Westport is about $1,300 per month — cheaper than the average for October 2022 — with four listings available.

Mike Cloverdale, who has run Westport’s Windermere office since the 1990s, acknowledged that short-term rentals contribute to increased housing prices. But they aren’t the driving factor in Westport’s tight market. The real culprit, he said, is lack of inventory — high materials costs have slowed housing construction to the point where 30% of existing property lots in Westport have houses on them. He said allowing more short-term rentals will entice people to build houses that could, even if starting out as a vacation rental, eventually end up on the permanent housing market.

And the lack of accommodations in Westport goes beyond local renters or buyers. Tourists are also hard pressed to find a place to stay.

A tourist town without lodging

Cloverdale grew up in Westport in the 1960s and ‘70s. At 14 years old he worked at a restaurant on the marina front, cracking eggs and frying sausage for groggy fishermen as they attempted to sober up before boarding the charter boats. By the late 70s, Cloverdale recalled, there were close to 300 charter boats in the marina.

It was a major era of Westport tourism.

“If you wanted to catch a salmon in the ‘50s, ‘60s, and ‘70s and you didn’t want to go all the way to Alaska, you came to Westport,” he said.

At the time, a handful of motels and campgrounds hosted visitors during their stays. But when the fishing declined in the coming decades, so did the number of people coming to Westport, and demand for accommodations declined.

Across the bay, the opposite was happening. As Ocean Shores rose from the sand and attracted more development, it added large hotels and banned short-term rentals in residential zones in order to “protect the character of the city’s residential neighborhoods.”

Westport’s own tourism trend turned in the 21st century, and then shot upward when the pandemic hit in 2020 and the beaches of Westport provided an escape from lockdown.

“The pandemic did for Westport what I tried to do for 30 years, and that was to get people who lived between Seattle and Portland to come out and see what a cool place it was,” Cloverdale said.

The only problem: Westport is “a tourist town without lodging.” Some motels have burned down, become dilapidated, or were sold to seafood companies as employee housing. Westport/Grayland Chamber of Commerce Executive Director Tanya Wood said the chamber works to connect visitors with local hotels, which are “packed” during those busy times.

Cloverdale and his wife Elizabeth, started up a vacation rental management company in the early 2000s, first starting with condos and moving to houses. He said short-term rentals are key to filling Westport’s gap in lodging and getting tourists, many of whom prefer the residential experience, to spend the night in Westport, Cloverdale said.

Many people have advocated for the important role of short-term rentals at city council meetings, including multiple Westport business owners. It was a point for Perry, whose workers struggled to find housing, but their livelihood depends on out-of-towners patronizing the Pine Tree. She said short-term rentals have “saved my business.”

“If we don’t have places for them (tourists) to stay, my employees are going to be without a job — not just my employees, but employees all over Westport,” Perry said.

A ‘critical place’

According to data provided by the city of Westport, the short-term rental business brought in more than $6 million in revenue in 2022 — about $1 million more than revenue generated by hotels. All of it is subject to the city’s lodging tax, which contributes to a fund that helps market festivals and promote more tourism in the city.

More than half of the fund from 2022 — about $323,000 — came from short-term rental revenue.

And because short-term rentals — legally registered ones, anyway — and hotels are both licensed businesses, each pays an operations tax to the city of Westport, which contributes to the general fund. In 2022, the city collected about $32,200 from short-term rentals and about $27,500 from hotels and motels, according to city Treasurer Margo Tackett.

Tax revenue was part of the justification for Councilor Troy Meyers when he voted against capping rentals in residential zones.

“My overall concern here is that we don’t do something that harms all Westport residents, because if we do this wrong, we end up harming our businesses, their employees, our tax base,” Meyers said. “Right now, as I’ve said before, I feel like Westport is in kind of a critical place, and there’s a lot of stuff that is potentially going to be happening in the next few years. We would be in a much better place if those proposed projects happened than if they didn’t.”

Discussions over the city’s short-term rental policy come in tandem with propositions for historic developments. The review process is still underway for a $33 million Scottish-style “links” golf course and lodge in Westport Light State Park that boasts huge economic benefits, including $3 million of annual tax revenue for local districts, 300 ongoing jobs, and $30 million in economic impact, according to a 2022 economic impact study.

According to Cloverdale, other housing and condominium developers are waiting for the city to resolve its short-term rental policy before moving ahead with investments.

As of now that future is uncertain: The city has discussed forming a short-term rental advisory committee to address further issues, and the planning commission met in September but had not made further recommendations to the council as of Oct. 9.

Mary Boley of Pheasant Run Drive said some have misconstrued the intentions of people opposing short-term rentals.

“We don’t want to stop them,” Boley said. “We want a regulation, just to make sure they’re following all the rules, and just to get it under control before it gets out of hand.”

Melissa Huerta, city councilor and chair of the LTAC committee, said she would not be opposed to a short-term rental cap, but it would have to be “within reason.”

“It’s a good thing to have them. People come out, they enjoy Westport, it brings in the money,” Huerta said. “At the same time, we do want to have everybody live here, enjoy living here and have a great community. We’ve got to find that fine balance.”

Contact reporter Clayton Franke at 406-552-3917 or clayton.franke@thedailyworld.com.