A judge in Hancock County has ruled in favor of Bar Harbor in a lawsuit filed by a local real estate agent against the town over weekly vacation rental restrictions that voters approved 18 months ago.
With the court decision, the town can continue to ban the transfer of certain weekly rental licenses to new owners when the rental properties are sold. The ban is aimed at reducing the number of non-owner occupied weekly rental properties in Bar Harbor.
Sarah Gilbert, interim town manager for Bar Harbor, said that the town is happy with Justice Robert Murray’s ruling, which upholds the will of more than 1,200 local residents who voted in favor of the restrictions.
“This decision keeps in place the town’s regulations concerning vacation rentals, which are necessary to help preserve affordable year-round housing in our community,” Gilbert said.
The restrictions approved by local voters in fall 2021 created two categories for weekly rentals: those that are owner-occupied and those that aren’t. The new rules, which 60 percent of local voters endorsed, also capped weekly rentals that are not owner-occupied at 9 percent of all dwelling units in town.
At the time of the vote, the town calculated that roughly 25 percent of all local dwelling units were not owner-occupied and were being rented out by the week. To get that figure down to the 9 percent cap, voters also banned transferability of non-owner occupied weekly rental licenses to new owners when a property is sold, until the town-wide limit of 9 percent is met.
The initiative was aimed at reducing the impact of the weekly vacation market on the availability of year-round housing on Mount Desert Island, where demand from commercial investors have caused home prices to soar and made affordable housing hard to come by. Municipal officials on the island repeatedly have warned that local residents are being priced out and people who work on MDI increasingly have to live off-island and commute greater distances to get to their jobs.
Erica Brooks, a local real estate agent who recently had served on the Planning Board, objected to the restrictions, saying they infringed on property owners’ rights and would unfairly reduce the resale value of such dwelling units.
Following the Nov. 2, 2021 vote, Brooks and Victoria Smith sued the town, arguing that the measure should have been required to meet a two-thirds approval threshold by voters before it was adopted by the town.
At issue in the lawsuit was a provision in the town’s code that requires the Planning Board to vote on whether to recommend or oppose proposed changes to the land use rules.
At the time of the vote, the code specified that if the Planning Board recommended a change to the land use ordinance, only a simple majority was needed by voters for town approval. If the board recommended that voters reject a proposed change, then a two-thirds majority by voters was needed for the town to adopt it.
The two-thirds majority requirement for changes opposed by the Planning Board later was repealed by voters last fall.
But when the board voted, prior to the 2021 referendum, on what to recommend for the weekly rental measures, there was not a majority either for or against. Only four members were present at the board vote, and it was evenly split 2-2.
Brooks and Smith argued in court that this means the board did not recommend passage of the new restrictions, and that a subsequent two-thirds majority therefore was needed by voters for the town to adopt the restrictions.
The town’s counter-argument was that the two-thirds majority was needed only when the board voted to recommend against a proposal, which the 2-2 tie failed to do.
In his decision, Murray sided with the town. He said that because the town code requires a recommendation from the Planning Board but is silent on how to interpret a tie vote by the board, the “common sense” approach is to have a simple majority of voters to determine the outcome of the referendum.
Murray said that requiring a majority of the board to favor a proposed rule change in order for it to be subsequently approved by a simple majority of voters could lead to “an absurd outcome.” If that were the case, the non-recommendation of a tie vote — or even the lack of a vote for any recommendation — could arguably prevent a town-wide vote on any proposed land use change that might be widely popular among voters.
“Such a result would be unreasonable and contrary to democratic principles,” Murray wrote.
Brooks and Smith said that they were disappointed with the judge’s decision and are considering a possible appeal.
“Homeownership and property owner rights are incredibly important to us and we will continue to work with our legal team to ensure the process is fair and just,” they said. “Doing things the correct way and standing up for property owner rights have always been our motivation.”