Chelan argues broad STR cap would be largely symbolic under current zoning

CHELAN — The City of Chelan formally defended its current short-term rental framework during a May 26 city council meeting, arguing that a broad citywide cap on STRs would likely do little to address housing affordability concerns under the city’s existing zoning structure.

The discussion came in response to multiple letters submitted by the Residents’ Coalition of Chelan County, or RC3, which has urged the city to consider stronger restrictions on short-term rentals and reevaluate long-term growth patterns tied to tourism development.

Community Development Director John Ajax presented the city’s official response during an administrative report to council, outlining why staff does not currently support a citywide STR cap while also acknowledging that future restrictions in specific residential areas could still be considered.

“I don’t think a short-term rental cap is going to result in the desired effect,” Ajax told council.

Ajax said the city’s existing STR regulations were intentionally designed to direct vacation lodging activity into tourism-oriented and commercially zoned areas rather than traditional residential neighborhoods. Because many of those zones already allow lodging uses such as hotels, resorts and other transient accommodations, he argued that prohibiting STR licenses alone would not necessarily prevent tourism-oriented development from continuing.

“You can build a hotel in TA,” Ajax said, referring to the city’s Tourist Accommodation zoning areas.

Ajax repeatedly distinguished between what he described as “purpose-built” tourism developments and the conversion of existing neighborhood housing into vacation rentals.

He said many of the city’s largest concentrations of STRs, including developments like The Lookout, Grandview and resort-oriented lodging areas, were never realistically positioned to become affordable workforce housing, even if STR licensing were eliminated.

“If you were to unwind all of the short-term rentals right now, I don’t think it’s plausible that any of that’s going to go back and become affordable long-term housing for residents,” Ajax said.

At the same time, Ajax said staff does recognize concerns surrounding conversions occurring within established residential neighborhoods, particularly in areas zoned for downtown mixed use.

“We are seeing conversions in those,” he said.

Ajax indicated that targeted restrictions or caps in those areas could eventually warrant discussion, especially where long-term rental or owner-occupied housing stock is being displaced.

The presentation followed months of public comment from RC3 members and other residents concerned about tourism growth, traffic congestion, neighborhood impacts and housing affordability.

During public comment, Chelan resident Lynette Grandy urged the city to consider a moratorium on additional STRs while the city completes ongoing comprehensive plan updates and transportation planning work.

Grandy argued that the city’s downtown mixed-use zoning has allowed vacation rentals to spread into what were once traditional family neighborhoods.

“The whole area should be capped,” Grandy said while displaying a handmade map identifying areas where STRs are currently permitted.

Grandy also raised concerns about traffic congestion, wildfire risk, parking pressure, noise, second-home ownership and long-term impacts on community character.

Brian Patterson, regional vice president for RC3’s Lake Chelan chapter, said the coalition intends to broaden public involvement around future land use and tourism policy discussions.

“It has become clear that regardless of the amount of justification we provide for an overall STR cap, such technical justification alone will not change the city’s current position,” Patterson said.

Patterson said the coalition plans to focus more heavily on public outreach and participation in the city’s ongoing comprehensive planning process.

“We will instead invest our time communicating with Chelan residents and encouraging the public to have its voice heard,” he said.

Ajax also addressed comparisons between Chelan and nearby communities such as Leavenworth, which is frequently cited in local STR debates.

According to Ajax, Leavenworth still accommodates substantial amounts of transient lodging, but much of it occurs through commercial lodging allowances rather than the type of STR licensing system Chelan uses.

Removing Chelan’s STR licensing provisions altogether, he argued, would not necessarily eliminate tourism lodging in areas already zoned to allow it.

Council members did not take action on the issue during the meeting, though several acknowledged the complexity of balancing tourism, housing and future growth.

Council Member Tim Hollingsworth said he appreciated the depth of staff’s analysis and cautioned against pursuing policies without fully understanding their consequences.

“I want to make sure we’re not jumping on solutions that may have the wrong impact or no impact,” Hollingsworth said.

The broader discussion comes as Chelan continues work on its comprehensive plan update, including long-range planning related to housing, transportation and future development patterns.

Andrew Simpson: 509-433-7626 or andrew@ward.media