BAR HARBOR—A lawsuit brought against the town of Bar Harbor by property owners Jonathan Eno and Karen Gilfillan Eno that challenged the town’s annual $250 vacation rental registration fee has been decided in favor of the town.
The October ruling from the Business and Consumer Court found that the town was within its rights, and did not run afoul of the Maine Constitution, when it raised its vacation rental permit fee from a one-time $50 fee to an annual $250 fee.
The suit filed by the Enos disputed the fee increase on two grounds: the town did not know what its costs were at the time the fee was approved by voters, and that the fee constituted an illegal tax under the state constitution. On both counts, the court rejected the Eno’s claims, finding that the increased fee was in line with the town’s true costs – even if they were not specifically outlined to the penny at the time the increase was made.
According to court documents, the Enos first applied to the town to permit their home as a vacation rental in 2017. At the time, the cost was a one-time $50 fee. The Enos currently reside in Hope and have their Bar Harbor home on the market, listed at just under $2 million. They rent it for $5,000 to $7,500 per week.
In 2018, the town, citing “an effort to address problems related to vacation rentals in Bar Harbor” had its code enforcement officer gather more information about vacation rentals. The officer met with a third-party company called Host Compliance that helped the town assess its vacation rental program based on current industry standards. Host Compliance produced a 44-page report for the town, which included “a detailed analysis of the town’s vacation rental market” and the recommendation of an annual fee, stating that $250 was in line with the national average.
Following the market research, the Town Council voted in December 2018 to increase the fee to $250 and amended the Vacation Rental Ordinance in March 2019 to make the fee an annual part of a registration process.
At the time of the increase, the town estimated that the fee would generate roughly $120,000 and, as part of the process, considered contracting with Host Compliance at a cost of $28,000. As planned, the fee increased on July 1, 2019, but the town did not enter into a contract with the company, and instead opted to manage the vacation rental program in-house. Subsequently, the town contracted with a subscription service to receive vacation rental data and analytics and chose to hire an assistant code enforcement officer.
After a review, the court decided that the town’s annual expense was somewhere between $82,000 (in a “best case scenario”) and $142,000, and that the media cost is approximately $112,706 annually.
“There is no question that the fee reasonably reflects the town’s cost of program, administration and enforcement,” wrote Judge Michael Duddy of the Business and Consumer Court. “The anticipated program revenue of $120,000 fairly approximates program costs that range from $82,712 to $142,700, and owners of vacation rentals receive all the benefits of a well-run and adequately funded VRO program that draws upon town-wide services.”
According to Town Manger Cornell Knight, the town spent $30,500 defending itself in the suit and was reimbursed $150 in court costs.
“The town studies its permit fees every year,” said Knight, “and makes sure that they are in line [with actual costs].”