(originally posted on  https://www.facebook.com/groups/httpsresponsiblehosts.ca) 

To all Tiny Township residents (and other municipalities considering similar short-term rental licensing regimes).

What you are about to read will likely strike you as shocking… As you probably know, Responsible Hosts of Tiny has filed an application with the Superior Court of Ontario to challenge Tiny Township’s short-term rental licensing bylaw. This application was submitted after numerous attempts to engage the Township in dialogue, trying to refine the bylaw to be more fair and balanced for everyone.

The Township refused to make any material changes, and, inexplicably, publicly denigrated Responsible Hosts of Tiny members when they requested a pause in the enforcement of the bylaw.

The court application is a public document, hence Responsible Hosts of Tiny is discussing it in an open forum. The grounds of the case are that the new licensing bylaw attempts to restrict, punish, and make it unreasonably difficult for short-term rentals to operate in Tiny. Legally, a licensing regime can only seek to regulate, not restrict, and hence it’s illegal in its current form.
See Township’s own lawyer’s opinion dated Aug 11, 2021. “Regarding licencing, it is important to note that the licensing process is meant to regulate business – not prohibit it. A licence may not be withheld as punishment for not receiving a licence in the past or to punish for any other reason. Simply put, if an applicant meets all of the requirements to get a licence, a licence must be issued.”
This remains Responsible Hosts of Tiny position, based on legal advice they have been given. Furthermore, some terms of the bylaw, such as the 300 license limit, are also not legally permitted (see the opinion language above, as well as a legal opinion by O’Dwyer Barristers and Solicitors sourced by the Town of Huntsville on the question of limiting the number of short-term rental licenses). Therefore, either in its entirety or in parts, the bylaw will likely be struck down by the courts. Unlike most municipalities that have faced similar challenges, Tiny Township has chosen not to enter into settlement negotiations, instead opting to await a court ruling on the matter. In fact, they have increased their licensing fee by $250 to cover the additional legal costs to argue their case. The timelines are likely to extend into 2024 and beyond. Here is where things get interesting…
By not pausing enforcement of the bylaw during the court challenge and not engaging in good faith dialogue, the Township has now taken on a revenue loss liability of the short-term rental hosts. In the event the bylaw (and even parts of the bylaw) are deemed to be illegal (as Responsible Hosts of Tiny predicts), the Township may be liable for compensating short-term rental owners for the lost revenue and earnings. In short, if the bylaw is illegal, then Tiny bears responsibility for preventing short-term rental hosts from operating for the duration of the licensing regime being in place. Simple math suggests that this financial exposure is in the millions (~600 STRs in Tiny, experiencing a $20,000 drop in revenue would put the Township into the $12 million / year exposure). Responsible Hosts of Tiny will be directing their legal counsel (McCarthy Tetrault) to seek these damages as part of their application. To those who say it’s not likely, the answer is nobody knows, as this is uncharted territory in the Canadian legal domain. The probability is definitely not zero (Tiny Township’s legal counsel will undoubtedly confirm this), and all of it will have to be borne by Tiny taxpayers. With every passing month, this liability grows by $1 million, placing the township on a potential path to insolvency.

The reasonable way out of this quagmire for the Township would’ve been to “grandfather” existing STRs, as virtually every other municipality in Ontario has done. By making a series of rash and not fully thought out decisions, the township has painted itself into a corner, with very limited options remaining. The least prudent of these is to continue enforcing the bylaw and take chances on a legal ruling and putting all of the Township’s taxpayers on the hook for loss compensation. As Tiny Township residents, we deserve better than this. For more information, please reach out to Responsible Hosts of Tiny through Facebook or at responsiblehosts.ca.