Select Board asks town manager to explore rental inventory as neighboring communities revisit STR policies.

The Bar Harbor Story is generously sponsored by First National Wealth Management.

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SOUTHWEST HARBOR—The goal the town’s Select Board gave its town manager was clear, August 11: Find out what the town has to do procedurally to inventory its rentals, both long-term and short-term.

The directive came after a short-term rental discussion at the Select Board meeting led by members of the town’s Sustainability Committee as well as Select Board member Natasha Johnson.

“I was getting very nervous because, um, I noticed the other day that the town of Tremont is conducting a survey for everybody asking about thoughts, theories, opinions on short term rentals,” Johnson said.

At the same time, she was worried about the impact of actions in nearby towns on Southwest Harbor.

“My personal feeling without any actual data to back it up other than my personal observations is that I feel that when Bar Harbor started implementing their ordinance for their short-term rentals, I really believe that the rest of the surrounding communities felt the ripple effect of that ordinance that pushed potential people that wanted to use that as a source of income or as a business,” she said.

Bar Harbor adopted a short-term rental ordinance in 2021. It categorizes rentals as primary residences of owners who are renting and non-primary residences. The short-term rentals that are not owner occupied as primary residences are capped.

“I feel like we have been unprepared for the amount of increased short-term rentals within those communities,” Johnson said. “So in light of seeing Tremont looking at it again and knowing that Ellsworth is kind of working on something as well maybe, it made me very nervous. I don’t want the town of Southwest Harbor to get the short end of the stick as far as where we are.”

Trenton’s planning board is discussing short-term rentals, August 12, as well. In 2024, with a vote of 134 to 72, Mount Desert voters rejected legislation to license short-term rentals, seasonal rentals, and vacation rentals.

“There’s lots of feelings about it,” a member of the Southwest Harbor Sustainability work group on housing said during the Select Board meeting, August 10.

Much like in neighboring Tremont, some Southwest Harbor Select Board members said they’d like to know just how many short-term rentals were in the town.

”Certainly the knowledge is necessary to find out the extent of that problem,” Select Board Chair Dan Norwood said.

At a recent Tremont Select Board meeting, Select Board Vice Chair McKenzie Jewett asked if the town of Tremont knew approximately how many STRs they had in town, Town Manager Jesse Dunbar believes it is around 329. The total number of dwellings currently in Tremont, according to Dunbar, is somewhere around 1,200. So, in theory, a quarter of the town’s housing stock is currently STRs.

On May 13, 2024 Tremont voters had decided not to support a proposed short-term rental (STR) licensing ordinance by two votes, with 118 yes votes and 120 no votes.

Now, because of new state legislation, the Tremont Select Board is thinking about trying again, but this time the ordinance will be more narrowly focused on avoiding the potential possibilities for more short-term rentals provided by LD 2173, An Act to Update the Laws Regarding Housing Developments and Accessory Dwelling Units.

The law was approved by Governor Janet Mills and enacted on April 16, 2026, and gives Maine municipalities until July 1, 2027 to come into compliance.

LD 2173 amends and clarifies portions of LD 1829, An Act to Build Housing for Maine Families and Attract Workers to Maine Businesses by Amending the Laws Governing Housing Density. LD 1829 was approved by Governor Mills and enacted on June 20, 2025.

Towns with no governing ordinance in place for STRs are susceptible to unfettered and potentially enormous growth in short-term rental units.

LD 2173 requires municipalities to allow three dwelling units on a lot “in which residential uses are allowed” or four dwelling units on a lot that is “in a designated growth area, as identified in a comprehensive plan.”

In Southwest Harbor, Tuesday evening, the board members stressed that registration rather than regulation was a focus of the discussion and a first step in any potential change.

They directed Town Manager Karen Reddersen to confirm if they need an ordinance to have a rental registration and if they can just do it as a policy rather than an ordinance. And also asked her to find out if the town can impose any financial penalty for non-registration as well as to create a survey—as Tremont has done—intended to obtain information about rentals in the town.

In October, the town’s Sustainability Committee’s Working Group on Housing looked at home sales in town between September 2022 and September 2024. Only 29% of the 59 homes sold in those two years are now occupied year round. And then, 26% of the year-round homes that were purchased became seasonal. Approximately 15 of the homes sold are short-term rentals, the group believes.

“An increased number of short-term seasonal vacation rentals appear to be reducing supply of year-round rentals and ownership opportunities that MDI residents can afford,” the committee’s report said.

Southwest Harbor is not alone. According to a housing analysis by Bar Harbor in 2020, Hancock County had 24,116 year-round occupied homes and 14,493 seasonal homes. The same report found that Mount Desert had the most seasonal housing, then Bar Harbor. Some of these homes aren’t weatherized for all seasons, but many are.

Part of the worry is that homes that MDI workers earning that median income might be able to afford aren’t available, and affordable year-round rentals are in short supply.

A lack of buildable land on Mount Desert Island, zoning rules, cost of materials, lack of tradespeople and contractors to meet demand, and market prices keeping out median income families and those earning less than median income have all been cited as issues for new residential builds.

Aging housing stock, people staying in homes longer as they age, short-term rentals, and second homes have all been mentioned as compounding components to the overall housing issue in the area.

The median rent in all of Hancock County was $1,061. That’s an increase of 34% between 2014 and 2024. The vacancy rate in the county is 6.7%. The renter cost burden rate is 51%.

The state defines cost burden as “a household is considered cost burdened when 30% or more of household income is spent on gross housing costs (can apply to renters or homeowners).”

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