- This is a production of SDPD.

- The Black Hills welcome millions of visitors a year and plenty of them stay in hotels or campgrounds.

Another option has skyrocketed in popularity.

Short-term rentals popularized through apps like Airbnb and VRBO, but a tight housing market has some locals wondering if they're too popular, how some Black Hills communities are adapting to the shift towards short-term rentals.

That's tonight's South Dakota focus.

- South Dakota Focus is made possible with help from our members.

Thank you.

And by Black Hills State University and Cody, Wyoming and Yellowstone National Park.

- The number of short-term rentals in the Rapid City area has skyrocketed in the last five years.

Earlier this month, the fledgling South Dakota Short-Term Rental Association hosted a tour, - A group of maybe a dozen of us or whatever, went around to six different properties and got to see, you know, tips and tricks and pointers and really then sat down and just visited at the end of the day and sort of one couple was talking about the supplier they used for linens and just sort of that community building.

And I think Sioux Falls is gonna do one as well.

And then I'd love to see like Aberdeen and Pierre and some of those small towns just get a core group of people together to brainstorm and ideally bring along the city officials or the county inspector.

This is kind of when people come here - From out of state, this is how they, Kristin Bennett owns a few short-term rentals in the Rapid City area, including this acreage outside of town, a former dairy farm dating back to the 1800s.

- This used to be a dairy, all of this valley, and it supplied all the milk for Rapid City back in the 1890s.

- She got her start with short-term rentals when she moved here from Britton in far northeastern South Dakota.

- I fell into short term rentals sort of accidentally.

I was telling you that I, I got this great house and I just couldn't part with it, but I moved out to the Black Hills and so began short term renting it to hunting groups and whatever and now have this place and realized there was not an association or a collaboration of short-term rental owners for the state.

Like there in 38 other states, - Bennett founded the South Dakota Short-Term Rental Association just three years ago.

It's run by volunteers with property owners across the state.

An organization is helpful considering regulations for short-term rentals vary place to place.

Nathan Derksen knows this firsthand.

He runs Bear Property Management and oversees both long and short-term rentals throughout the hills.

- It's very, very difficult in that Pennington County has their rules.

Rapid City is in the process of rules.

Custer has their rules.

Custer County has different rules.

Hill City has rules.

Lead has rules, Deadwood has rules.

Lawrence County does not have rules.

Mead County does not.

And then those that do have rules, they're all different.

And so then we're, we're a licensed fully state compliant company and we're trying to comply with the laws, but it feels like the target is constantly moving.

So we're a small local business.

We employ a lot - Of local clinics.

What I'd love is if they could statewide model, if counties and cities didn't all have to figure it out individually, how nice that would be.

Everybody could have a standard set of like, here's at least a base template and that's what state associations do.

- It makes sense, but local priorities tend to fuel a desire for localized policies.

In January, Rapid City hosted an open house to get public input on potential short-term rental regulations.

That feedback will help an advisory committee come up with a recommendation for city council.

Pat Roseland is a city counselor and member of the advisory committee.

He's heard mounting concerns over an increase of short-term rentals in the historic West Boulevard neighborhood from noise parking and garbage concerns to a shortage of starter homes for young families.

He also worries about a lack of community and neighborhoods split up by short term rentals.

- There's no neighbors to get to know and they're there for a weekend or maybe a little bit longer, but you never know who's gonna be there the next week.

And I think that's really it.

It it basically will initially start tearing a neighborhood apart if this goes on for, for a long time without restrictions or, or some sort of a licensing by the state or by the city or both.

- There's one community in particular Roseland points to for solution.

Hill City, Nate Anderson is city administrator for Hill City.

He says the original ordinance three years ago merely limited short-term rentals to a certain percentage of homes in each residential neighborhood.

- That ordinance didn't last very long and the voter, voters put an initiative through and that put a moratorium on all vacation rentals, all new vacation rentals in residential areas.

- Those with existing short-term rentals could still operate, but not if the property is sold.

- You can no longer bring a new vacation rental into a residential area.

Now we do have the downtown district, kind of where we're sitting right now that is zoned commercial.

So vacation rentals are authorized.

New con new construction are authorized in that commercial district.

So as long as it's zoned here in the downtown commercial zone.

And, and we've seen a couple of new vacation rentals have popped up individual houses as well as some buildings that that did mixed use retail on the ground floor and then vacation rentals on the second and third floors.

- That strict limit appealed to Hill City residents where housing options are limited, but that's due in part to geographic limitations.

As is the case in many Black Hills communities.

- We're surrounded by Forest Service and so we only really have so much land that can be built here and expand Hill City.

We're we're pretty constrained by the, by the forest on either side of us.

So you're not seeing a ton of new developments going up in town here.

- Hill City is just one example of how factors like geography, housing supply and local zoning policy factor into short-term rental policy.

With so many variables at play, one size does not fit all.

David Holland is another member of Rapid City's short-term rental advisory committee.

He's also president of the West Boulevard Neighborhood Association.

He takes a more measured approach to the issue than some of his neighbors.

- I travel a lot and so I have stayed in Airbnbs for many, many years, probably more than a hundred over the years.

And so I, I've seen how the system works, but I also happen to be a neighborhood president, neighborhood association president that cares deeply about neighborhood cohesion and, and knowing your neighbor and, and doing backyard barbecues and block parties and events and things like that and the, the strength of having a good solid neighborhood.

So I see the benefit both ways of being able to support tourists and also having strong neighborhoods.

And so I don't think that people always kind of think of it from both sides.

I think they always kind of see it, see it as kind of an invasion of their town.

So if you use the platform, you kind of understand it a little bit more.

- Holland also recognizes that many short-term rental owners use the platform as a side gig that can leave room for error, especially when it comes to existing regulation at the state level.

- If somebody's not knocking on their door, they don't know about it.

So I would say that most people are not registered because they have no idea that the registration process exists.

The state is not advertising it.

Nobody is writing them a letter.

Nobody is calling them.

They just don't know it exists.

- The State Department of Health oversees licensure of vacation homes.

State statute defines a vacation home establishment as any home cabin or similar building that is rented, leased, or furnished in its entirety to the public on a daily or weekly basis for more than 14 days in a calendar year and is not occupied by an owner or manager during the time of rental.

Statute defines other regulations for things like ventilation, water supply and egress windows in vacation homes.

A licensed vacation home is also subject to state inspection, but awareness of regulation is one thing.

Enforcement is another.

Plus counties and municipalities are free to enact additional regulations.

Rapid City first considered regulating short-term rentals in 2016, but City council tabled the proposal then came the pandemic.

Jessica Olson is current planning division manager with Rapid City - Since COVID we've seen a vast change in how people have been using their homes and traveling and you know, the tourism and everything around the Black Hills In that time, the amount of short-term rentals has gone from, you know, maybe the low hundreds to up to a thousand at any point in time.

That's, that's the peak that we've seen at this point.

- It's unknown whether the vast majority of short-term rentals in Rapid City are complying with basic health and safety regulations.

Marlo Kapsa is the planning project's division manager with the city and is helping compile data for the advisory committee.

- We range anywhere from 600 to 900 to a thousand units listed units.

And of those, I think the last time that we had checked in with the state, we were just shy of like 30 units that had gone through that state licensing process.

So that's, that's the life safety piece.

We want tourists to come here.

We see the benefit and the piece of the puzzle that short-term rentals play in supporting tourism.

But we also wanna make sure that when people come here on a trip that they're safe and that you know, the units that they're staying in have met those minimum safety requirements.

- Which brings us back to the advisory committee and options for what's next.

- So you have four ways that you can go.

You can eliminate them entirely, you can ban short-term rentals, you can do heavy regulation, you can do light regulation or you could do none.

And so we already tried a ban or heavy regulation and it didn't pass the city council tabled it.

So what I would rather do is find low to moderate regulation, something that everybody can be happy with so that we can avoid another eight years of no regulation because that's just creating the Wild West - As it happens.

An early front runner in regulating short-term rentals is a town famous for preserving the Wild West Deadwood first began regulating vacation home rentals 30 years ago and demand has only grown - Deadwood.

Being a national historic landmark has a lot of visitors come to town.

We have about three and a half to 4 million visits a year and with that we're a town of around 1300 people.

So we have a large tourism industry here and at times it's challenging when you have that many visitors into a small community to balance between the housing needs of the community and the needs of our transient vacationers, our visitors that come into our community.

- Kevin Kuchenbecker works in planning, zoning and historic preservation for the City of Deadwood.

He says in 2023 a task force revisited the city's approach to short-term rentals.

The city matches its definition to the states.

- There are three different classifications of short-term rentals.

We have bed and breakfast where the owner lives on a site, provides a homestyle meal, then we have vacation home establishments and then there are specialty resorts.

All three of those take a conditional use permit to operate in the city limits.

- That means a planning and zoning review action from the city commission and annual reviews.

Deadwood also introduced a 200 foot buffer between short-term rental properties to avoid two many in one neighborhood - To date, we have nearly 40 short term rentals throughout the community and they are a hundred percent compliant.

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 the use of those properties as well.

- But in a place like Deadwood where so much of the appeal is in its historic look, some standards conflict with others.

Two words egress windows.

- One of the challenges we have with historic preservation in in in our community being a national historic landmark is any exterior change or alteration goes through a review process.

And when a use of a property goes from primarily as a residential unit or house to a vacation home establishment, there are different rules and regulations that are set up by the Department of Health when it comes to egress and and that primarily deals with windows and some of our historic resources built 120 to 140 years ago or or so.

Their windows do not meet the egress requirements now under the Department of Health because of that change of use to vacation home establishment.

So they're requiring larger openings, but when you put a larger opening on a historic resource, it could have an adverse effect.

- In other words, those all important life and safety for a vacation home, but up against the historic resources that make Deadwood a visitor attraction in the first place.

Vacation rentals exacerbate another challenge.

Basic geography and proximity to federal forest land make development in the Black Hills a challenge.

I met with Lead Deadwood economic Development corporation's Executive director Emma Garvin in Leeds City Hall because that's, that's such a, I think that's an interesting comparison to a place like Rapid City where you can kind of develop out in space a little bit.

You can't do that in Lead Deadwood.

- Absolutely.

And we do have some pocketed areas of land and, and certainly you can blast anything but you know, is that the kind of development that we really wanna do in this area?

It's also very expensive.

And so when you're taking a look at those projects, you really have to be, you know, guaranteed that that's right for your community.

- In the same way the old west shaped Deadwood mining shaped lead, the Homestake mine sustained the community for more than a century.

- All of the expense and anything infrastructure, anything that needed to be done in the community was done by Homestake Mining Company to keep their people happy and keep them safe and keep their kids educated and so that they would stay working in the mine.

- The Sanford Underground Research Facility meant new industry opportunities but that hasn't necessarily translated to new housing.

- You know, in Rapid City deals with this a little bit because you have flat land economic growth looks like a new Best Buy or you know, a bigger medical facility or you know, some of these other large housing complexes.

We don't see our economic growth quite that in our faces because a lot of it has been happening underground for the last 10 years, getting the lab up to snuff and now getting new scientific research projects happening down there.

So while we don't have the historic preservation dollars that Deadwood might have, the community has rallied together and come up with some creative ways to deal with infrastructure projects and and issues that we have here.

- Garvin says lead had the most short-term rental listings of any South Dakota community five years ago.

Since then, many in town units have shifted to long-term rentals or sold to permanent residents - Rentals.

And I think that's due to a couple of things.

We have larger short-term rentals that are being built outside the city limits.

Some of them are privately owned, some of them are investment properties that are used for short-term rentals predominantly.

And so that meant that these little short-term rental owners and littler houses in the city that could have been sold for family housing or workforce housing just couldn't compete with that.

- Meanwhile, luxury housing developments like Powder House Pass and Deer Mountain outside of town are underway, but those are less likely to meet the average resident's needs.

Garvin says hospitality is the number one industry in Lead, it's also one of the lowest paying jobs - And it was just in the paper they sold their, it was the first million dollar lot in the state of South Dakota, a lot for a million dollars in Deer Mountain.

So, you know, that's definitely happening and I think my, my pro to what's happening out there is that all those people are coming in and they're coming in to lead to get their groceries and they're coming in to lead to eat dinner and they're coming in to lead to, you know, shop and, and do whatever they need to do.

And so, you know, we are winning a little bit from from what's happening out there for sure without still taking away from the workforce.

I think our, our largest issue with workforce housing is just being able to per preserve the inventory that we have and then we don't have senior housing so seniors aren't moving out of their homes that could become family homes because we don't have zero degree entry apartments for them and they don't want to, they don't wanna leave the area, they don't wanna leave their church, they don't wanna leave, you know, their grocery store or their bank.

- Places like Hill City, Lead, and Deadwood use local ordinances to ensure there's some housing stock left available for residents.

Even as the short term rental market continues to attract visitors but that doesn't solve for everything.

- The part of the challenge is affordability and of course that's a, a challenge when the market is driven by the people coming into the community, maybe from outside where the housing was a lot more expensive coming here and thinking oh this is very affordable yet people working on Main Street may not be able to afford those.

So it becomes a challenge for the community.

- But in places like Rapid City with lots of new development, it's harder to see an immediate connection between short-term rentals and housing availability.

Manya Larson and her sister spent three years renovating this historic home near the West Boulevard neighborhood in Rapid City.

They furnished it with local thrift fines and decorated it with photography from local artists.

The original wood floors and stairs were covered with carpet when they first bought the house.

- No hot of sanding.

We had some, a couple of guys came from Mission, South Dakota who work construction and they came in sanded labor the stairs for example.

Like every little niche of love because I could have just as like we could have just as well been like, oh I'll just cover it up with more carpet.

But it's really nice to sort of bring it back to what it was.

I feel like every house you go into has like an energy and a story to tell.

There was a family that was raised there, there was like moments of happiness and sadness and meals on the table and I feel like every house really like holds that - In the five or so years since she's run an Airbnb Manya has found a passion for hosting.

- When I first started doing Airbnbs, I'd get notes from people.

One was really touching where they came for Father's Day a year after they had lost their father and the mom was there and the kids were there and the grandkids were there and they all got to kind of come together and spend time together healing in in the space and in the house.

And I love that they shared that with me.

That was really beautiful.

Like they said, thank you for opening up your home.

This was very healing for us.

We got to come and spend some time here together remembering my father.

So it's a bit more meaningful than just sort of like an in and out space for a lot of people.

They save their money all year and they say we're gonna take a trip to the, to the Badlands or the Black Hills and I wanna make it really special for them.

- She follows state guidelines at her properties and is in favor of reasonable local regulations.

She's more skeptical about other concerns about short-term rentals.

Do you buy into the concern about Airbnbs taking houses off the market for full-time residents?

- I do not.

I don't wanna laugh about it because I haven't looked at the actual numbers and facts about it.

But the way that I see houses being built steadily and all the developments that are currently growing and the houses that are sitting vacant 'cause they haven't sold what's available on the current market.

We don't have a shortage of houses by any means.

The bigger problem probably is the cost of houses in our community versus the amount of pay that we have.

And that is something that has trickled down from South Dakota being an open state when COVID happened and then people from out of state moving here.

This isn't something that we foresaw, - It's a valid point.

The open for business philosophy that stabilized the tourism industry in 2020 also rippled to the housing industry as South Dakota attracted new residents on top of new visitors and point blank Rapid City can't keep up.

Laura Jones is the housing and community development manager with Elevate Rapid City, the local economic development hub.

- We build about 200 houses every year.

The city issues about 200, 250 housing permits per year and our projected demand based on kind of census numbers and expected growth of 1% per year, we're expecting to need 2,400 housing units of some fashion by 2030.

If we were to look at the current ownership versus rental market, the ownership need would be 2000 units at 200 at houses built per year.

We are not gonna hit 2000 units built in the next five years.

And so there is kind of a tightening of that single family market that will need to be made up in the rental market.

But then where's your opportunity for home ownership for those you know, young families, people just moving here, people just graduating college.

That opportunity is lessening and lessening every month.

- Jones is straightforward on the question of whether short term rentals exacerbate that shortage.

- Absolutely they do.

It would be shortsighted to say that they have no impact on the housing market.

It'd be like saying these Pinterest perfect houses that are small and cute and contribute to the economy don't have any impact on the housing market.

Even though there are over a thousand listings currently today.

Which if you recall back, we build only about 250 houses a year.

So four years worth of housing production in Rapid City are listed as short-term rentals on Airbnb.

- She admits homes in the West Boulevard neighborhood probably don't meet a first time home buyer's budget needs.

But Jones points to a national study that found a 10% increase in the number of Airbnb listings resulted in 0.4% rent increases and 0.75% home price increases for the same area.

Rapid City has seen a 75% increase of Airbnb listings in the last three years.

- I'm doing simple math, nearly 6% increase in home prices just based on the number of Airbnb listings alone based on that national study.

- But considering the broader economic implications of short-term rentals, Jones is in favor of keeping them around.

- So I did some kind of creepy sleuthing where like compared photos from Airbnb to Zillow photos and then pulled their property information and found that of the 45 I was able to identify only four or five of 'em were actually owned by out-of-state entities.

Most of them were locally owned.

And so that revenue from those short-term rentals is staying in our economy just by virtue of being owned by a local person.

- And contrary to popular belief, Jessica Olson with the city tells us short-term rentals do pay their fair share in most cases.

- So they actually do pay taxes toward and it's the sales tax and lodging taxes both state and municipal as long as they're hosting through Airbnb or VRBO because those two have agreements with our state to be able to remit taxes to us.

And then the state remits the taxes to the municipalities - In addition to sales taxes.

Airbnb operators in Rapid City alone collected $6.9 million in 2024.

That's down from more than $11 million the year before.

And that doesn't count any additional money visitors spend while they're in town.

- The income alone from just the nightly fee is incredible and it's really crucial to our economy at this point.

I think if that amount of money suddenly disappeared we'd be like, what happened?

Who?

What closed did Walmart close?

- The advisory committee is expected to make its recommendation to city council yet this spring.

According to the city's online survey, the most popular regulation is basic licensing and registration.

This issue speaks to the delicate balance.

Communities must strike between keeping up with changing travel trends and ensuring adequate infrastructure for full-time residents.

But back on Kristin Bennett's acreage, she and Nathan Derksen say the differences between traveler and neighbor aren't so distinct and they hope future policy keeps that in mind.

- Most of our renters come with from a 200 mile circle and in the off season it's a much smaller circle that like, that's exactly it.

I mean ask your friends how many of them we do as a family.

Every Thanksgiving we all go in together.

That's our Christmas gift to each other is we rent a cabin to spend family time together.

- I don't think it's the locals or the tourists 'cause sometimes we're the same people.

You know, this isn't an industry that just serves out of state people or big real estate investors.

Like we are the people that live here.

We are trying to build a nest egg and a retirement and something our kids can build off of.

We're kind of the same people.

It's not, I don't see an us and them.

The tourism is great, but so much is like local people.

We have a wedding, we need, you know, we need extra.

The hotels are booked, it's rally.

My hope would be that we start to see less of an us and them when it comes to like balancing the needs of the community.

We are the needs, we are the community.