DEADWOOD Several Black Hills communities have revisited their short-term rental ordinances since the COVID-19 pandemic spurred a surge in visitors looking for their own private space.
In Rapid City, Airbnb listings have shot up by 75% in the past three years, according to Elevate Rapid City.
That growth is contributing to the housing shortage. And while the short-term rental industry represents a business opportunity for local property owners, the patchwork of local policy can complicate matters.
South Dakota law provides for licensing of short-term rental properties that comply with various health and safety requirements, but awareness and enforcement of these regulations is limited.
As a Rapid City advisory committee considers municipal regulations, some are looking to other communities in the region for ideas on regulation and the true impact of short-term rentals on the local housing market.
Deadwood first began regulating vacation home rentals 30 years ago. Demand has only grown since then.
Deadwood, being a National Historic Landmark, has a lot of visitors come to town. We have about 3 1/2 to 4 million visits a year. And with that, were a town of around 1,300 people,” said Kevin Kuchenbecker, the planning and zoning administrator as well as the historic preservation officer for the City of Deadwood.
In 2023, a task force revisited Deadwood’s approach to short-term rentals. The city matches its short-term rental property definitions to the states and requires conditional use permits to operate within the city limits. Deadwood also introduced a 200-foot buffer between short-term rental properties to avoid too many in one neighborhood.
To date, we have nearly 40 short term rentals throughout the community. And, they are 100% compliant,” said Kuchenbecker. “We have a software program that does third-party monitoring, so we can see when somebody leases a property or advertises it on Vrbo or Airbnb. And so we on a regular basis monitor the use of those properties as well.
Vacation rentals exacerbate another challenge. Basic geography and proximity to federal forest land make additional housing development in the Black Hills a challenge.
Emma Garvin, executive director of the Lead-Deadwood Economic Development Corp., said a 2022 housing study for the area anticipated up to 6% population growth. That would require up to 75 housing units for workers and up to 35 for rentals.
Part of the challenge is simply finding the space to develop.
“We do have some pocketed areas of land, and certainly you can blast anything,” said Garvin. “But, you know, is that kind of development what we really want to do in this area? Its also very expensive.
In the same way the Old West shaped Deadwood, mining shaped Lead. The Homestake Mine sustained the community for more than a century. Much of the existing housing stock originated from the mining days.
Lead had the most short-term rental listings of any South Dakota community five years ago, Garvin said. Since then, many in-town units have shifted to long-term rentals or been sold to permanent residents.
“We have larger short-term rentals that are being built outside the city limits,” Garvin said. “That meant that these little short-term rental owners and littler houses in the city that could have been sold for a family housing or workforce housing just couldnt compete with that.
Luxury housing developments like Powder House Pass and Deer Mountain Village outside of town are underway, but those are less likely to meet the average residents needs. Garvin said hospitality is the No. 1 industry in Lead. Its also one of the lowest paying jobs.
Meanwhile, the first million-dollar lot sale in South Dakota was finalized in the nearby Deer Mountain development.
“I think our largest issue with workforce housing is just being able to preserve the inventory that we have, said Garvin.
Places like Hill City, Lead and Deadwood use local ordinances and zoning to ensure theres some housing stock left available for residents as the short-term rental market continues to attract visitors. But both Garvin and Kuchenbecker said it doesn’t solve the problem of affordability.
“That’s a challenge when the market is driven by people coming into the community, maybe from outside where the housing is a lot more expensive, coming here and thinking, ‘Oh, this is very affordable,’” said Kuchenbecker.
“Yet people working on Main Street may not be able to afford those. So it becomes a challenge for the community and its something that we know exists and have been working toward. But again, there are some constraints just with the environment that we have, the surrounding federal lands and the available land for development.
According to an online survey Rapid City conducted earlier this year, most residents who responded support a basic licensing and registration requirement for short-term rentals, much like the City of Lead.
It’s unclear if other regulations like Deadwood’s 200-foot buffer or conditional use permits would have the necessary support. An advisory committee is expected to make a recommendation to city council yet this spring.
How to watch ‘South Dakota Focus’
The next episode of “South Dakota Focus” airs on March 27 at 8 p.m. CDT. It can be viewed on SDPB-TV1, Facebook, YouTube and SD.net. The episode includes.
- A comparison of housing needs and policy in Hill City, Lead and Deadwood
- What Rapid City residents weigh while considering a proposed short-term rental ordinance
- What short-term rental owners hope full-time residents understand about their business
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This story was written by Jackie Hendry, host and producer of South Dakota Public Broadcasting’s “South Dakota Focus,” to preview the next show. It was produced by South Dakota News Watch, an independent, nonprofit organization. Read more stories and donate at sdnewswatch.org and sign up for an email to get stories when they’re published. Contact us at [email protected].
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