HOOD RIVER — Housing in Hood River has been a hot topic for years. Many locals have competed in the vacation home rental market for decades, sometimes spending half the year in Hood River and half the year elsewhere. But how much do vacation rental spaces cut into housing options for the rest of the city? What is the best way to balance tourism and visitors while still meeting residential and agricultural demands?
In response to these layered issues, the city rewrote housing ordinances in hopes of keeping more local dwellings for long-term residents rather than vacation rentals. City council offered work sessions for public input and eventually passed Ordinance 2026 on Sept. 12, 2016. Later, Ordinance 2028 was also passed.
Prior to the adoption of Ordinance 2026, vacation home rentals were unrestricted under local zoning codes, so anyone with property in Hood River could compete in this market with the proper licensing and qualifications. The new ordinances changed short-term rental (STR) requirements to have tighter restrictions for out-of-state property owners.
Though they did allow preexisting lawful land use to continue as nonconforming use for a seven-year period that ended in 2023, and all properties were expected to “come into full compliance with the then-applicable provisions” of the ordinance.
After the seven-year mark passed, a group of out-of-state property owners, each with their own lawful vacation rental businesses, received communication from the city that their STR license would not be renewed. As a result, this group of property owners decided to sue the City of Hood River and filed a Complaint for Declaratory and Injunctive Relief June 5.
There are 10 Hood River property owners that make up the plaintiffs in Panabaker et al. vs Hood River. They claim that the city is violating the Dormant Commerce Clause of the United States Constitution, burdening interstate commerce, and setting forth policies that “intentionally discriminate in favor of local owners and against out-of-state owners.”
The plaintiffs have been managing their vacation home rental businesses lawfully for decades in Hood River, some since the 1990s and others since the mid-2000s. When they purchased their properties, there were no restrictions to STR businesses, and many made their purchase with the intent of splitting time between Hood River and other places.
For some of the plaintiffs, loss of income generated from their home vacation rental businesses since halting operation in 2023 has created financial hardship. These property owners want to continue competing in the STR market by using their home when desired and offering it to tourists and recreational visitors the other portion of the year.
So what changes are the plaintiffs objecting to?
New ordinances states that any transient rental is “only permitted when it is an accessory use to the existing and continued residential use of a dwelling as the primary residence of the property owner” or a tenant under long-term lease of 12 months or more.
Property owners must prove primary residency themselves or via their long-term tenant to run a STR and can only rent their property for 90 days per calendar year. The ordinances also redefined the types of residential rental uses into two categories: Hosted homeshares and vacation home rentals. Hosted homeshare means a transient (less than 30 days) rental of a portion of a dwelling with the homeowner present. Vacation home rental means the transient rental of an entire dwelling unit.
Further claims are made in the complaint filed by Panabaker et al., but the focus is that Hood River is imposing commercial barriers and discriminating against out-of-state people, barring them from competing in the STR market. They seek an order declaring both ordinances void and unconstitutional as well as attorney fees.
City’s intent and alternatives
The city developed Ordinances 2026 and 2028 in response to the interwoven issues that affect housing in Hood River. Before adopting the new housing codes, city council opened the floor to public hearings and work sessions to discuss the new proposal.
Plaintiffs listed public comments that led to the verbiage of restrictions in the new ordinances, claiming that the “hearings were replete with testimony complaining about out-of-state individuals owning property in Hood River and operating STRs ... [and] demonstrate [the intention] to prevent out-of-state individuals from operating STRs in Hood River.”
Between the city council work sessions on April 22 and Aug. 22, 2016, plaintiffs quoted locals explaining their struggle with community and residential zones, displacement and the housing market, affordability and outside investors. “City records show 68% of short-term rentals are owned by people who live outside of Hood River County,” John Gehrig, president of Livable Hood River, said at one work session.
Plaintiffs quoted Gehrig further: “More and more residen[ts’] homes [are being] purchased by non-residen[ts] because the current policies of the city allow anyone [to] operate short-term rentals in residential zones … This was a motivation for residen[ts] that can rally together and develop some zoning regulations to save their neighborhoods and preserve the limited housing supplies they have.”
Gehrig mentioned a compromise, like a density cap or lottery system for STRs, an idea also suggested by the city planning commission. Some of their recommendations included allowing non-owner occupied vacation rentals in residential zones with a cap and hosted homeshares in residential zones without a cap. The planning commission also recommended putting in place distance requirements for areas with clustered or dense vacation rentals.
The city expressed that transient rentals have the potential to be incompatible with residential needs and deemed it necessary to regulate dwellings listed for transient occupancy. After gathering public input, city staff proposed and adopted Ordinances 2026 and 2028 with the intended purpose of providing “reasonable and necessary regulations for the licensing of short-term rental of residential dwelling units.”
As explained in the Hood River Municipal Code, the scope of intent with these ordinance was ensuring the safety, welfare, and convenience of renters, owners, and neighboring property owners; balancing the legitimate livability concerns with the rights of property owners to use their property as they choose; helping maintain the city’s needed housing supply for residential use; recognizing the need to limit STR options to ensure compatibility, while recognizing the benefits of STRs in providing recreation and employment opportunities, as well as transitional housing and business or hospital-related short stays; and protecting the character of neighborhoods by limiting the number and concentration of full-time short-term rentals in residential zones.
The plaintiffs noted that “ample alternatives exist to achieve the City of Hood River’s legitimate government purposes for these Ordinances that do not facially discriminate against interstate commerce.”
After the June 5 complaint was filed, the city passed Ordinance 2083 on July 22 to combat the lawsuit. The amendment to the housing code stated it would go into effect immediately upon approval in response to the lawsuit “emergency.”
Policy objectives are laid out in the ordinance, explaining the STR regulations are an attempt to “preserve and where possible increase the city’s available housing for long-term tenancy” and to preserve “the neighborhood character and quality of life that result, in part, from cultural, ethnic, and economic diversity of its resident population.”
Ordinance 2083 allows property owners to obtain a long-term lessee to qualify for hosted homeshare rentals. However, a long-term tenant means property owners give up 100% of their own residency in Hood River and are unable to license as a vacation home rental since they cannot offer the “entire dwelling unit,” as stated in the plaintiffs’ complaint: “Superficially, the change makes it appear that an out of state owner can operate a vacation rental if they have a long-term tenant on the property who is local. However, by definition, that arrangement is not a Vacation Home Rental as operated by plaintiffs.”
Plaintiffs amended their complaint on July 31, claiming that this was a defense action that fell flat and Ordinance 2083 “merely doubles down on the constitutional violation.” The amended complaint reads, “… all three Ordinances now in effect (2026, 2028, and 2083) continue to exclude out-of-state owners of Vacation Home Rentals from the Hood River market, and reserve that market exclusively to in-state locals, in violation of the Dormant Commerce Clause.”
In a city council meeting later in July, City Attorney Dan Kearns mentioned Panabaker et al. vs Hood River in public session, suggesting the city follow the Santa Monica model if Ordinance 2083 did not help the situation. The Santa Monica model is a similar past case, the difference being that only hosted homeshares are allowed and all property owners require a live-in supervisor while renters occupy the space.
Representing the city of Hood River are Matthew E. Malmsheimer and Christopher G. Lundberg. Plaintiffs are represented by Heather A. Brann, Paul W. Conable, Paul M. Balmer, and Danny Newman. The lawsuit will continue to develop in coming weeks.
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