TOWNSHIP OF ESQUIMALT STAFF REPORT
MEETING DATE: March 16, 2026 Report No. DEV-26-011
TO: Council
FROM: Bill Brown, Director of Development Services
SUBJECT: Short-Term Rental Policy and Options Analysis
RECOMMENDATION:
Recommendation
That Council receive for information the Short-Term Rental Policy Analysis Report as attached to Staff Report DEV-26-011, and provide direction to staff on guidance related to a proposed short-term rental framework that will inform proposed amendments to the Zoning, Parking, Bylaw Enforcement Notice, and Business Licence Bylaws.
Body
EXECUTIVE SUMMARY:
Both Council and members of the community have expressed a desire to examine the potential of legalizing short-term rentals in Esquimalt (beyond the current legal Bed and Breakfasts and a small number of zoned “Tourist Accommodation” units). To this end, staff have engaged Third Space Planning to prepare a detailed report (Appendix “A” of staff report DEV-26-011) that provides:
- An overview of the legislative framework for short-term rentals.
- An analysis of both potential positive and negative impacts for short-term rentals.
- An overview of the Esquimalt context.
- A jurisdictional scan of how other CRD municipalities are approaching short-term rentals.
- An analysis of the pros and cons for the various regulatory options.
- A summary of the results of the community engagement including detailed engagement results in an appendix.
- An overview of detailed decisions that Council must make to create a regulatory framework for short-term rentals in Esquimalt.
- A list of exempt accommodation service providers.
- An example of guest safety attestation.
- Example of STR-Specific bylaw contraventions and penalties from the District of Squamish.
This report is robust and detailed to provide Council and the public with a thorough understanding of the myriad of details that need to be considered in developing a regulatory framework for short-term rentals in Esquimalt.
BACKGROUND:
Esquimalt has long allowed Bed and Breakfasts as a form of short-term rental. However, each Bed and Breakfast parcel has to be individually zoned, which is a cumbersome and time-consuming process. In addition, the business model has evolved to a point where the traditional Bed and Breakfast has been replaced by less formal short-term rental models. As the popularity of these models grew, the provincial government became concerned that a significant number of housing units were being removed from the long-term housing stock and being used for Short-Term Rental contributing to a shortage of housing. In response, on October 26, 2023, the provincial government enacted - Bill 35, the Short-Term Rental Accommodations Act, which along with the accompanying regulation, provides a robust framework for local governments to develop policy and regulations related to the provision of Short-Term Rentals in their jurisdictions.
In Esquimalt, Council, through the 2023 - 2026 Council Priorities Plan, directed staff to prepare a “Short-term rental policy analysis”. In October 2025, Third Spaces Planning was hired to prepare a detailed policy analysis report and public engagement process. The resultant report is attached as Appendix “A”. It provides a broad spectrum of information to help Council choose how they wish to regulate Short-Term Rentals in Esquimalt. A list of the decisions that Council needs to make are found in the Options section of this report below.
Chronology:
In 2018, the Council added the following Objective and Policy to Section 16.4 the Official Community Plan:
16.4 Tourism
Objective: Consider land use decisions that help promote tourism.
Policy: Consider short-term vacation rentals within legal dwelling units, where the dwelling unit is an owner or tenant’s principal residence, for up to 60 days per year.
October 26, 2023 - Bill 35, the Short-Term Rental Accommodations Act, received royal assent.
“Short-term rental policy analysis” was subsequently incorporated into the Council Priorities Plan 2023 - 2026 as a project under the “Diversified & Thriving Economy” priority.
July 15, 2024 - Staff Report No. DEV-24-036 entitled Short-Term Rental Regulations was presented to the Committee of the Whole.
October 7, 2025 - Third Space Planning (consultant) hired to prepare a report entitled Short-Term Rental Policy Analysis.
November 19 to December 17, 2025 - On-line open house and survey.
November 26, 2025 - Short-Term Rental Policy Analysis Open House held at the Recreation Centre.
February 13, 2026 - Draft Short-Term Rental Policy Analysis Report submitted to the Township for review.
March 16, 2025 - Report presented to Council for information and direction.
Referral Comments:
The Report was referred to the Manager of Economic Development who had the following comments:
- From an economic development perspective, there is a need to balance supporting local economic activity and visitor accommodation needs while also recognizing the importance of housing stability and affordability as foundational economic conditions for residents and employers.
- There are benefits of a clear and predictable regulatory framework for both operators and the public. Improved clarity and alignment between local bylaws and provincial legislation may support better compliance and reduced administrative burden.
- Collection of the Municipal and Regional District Tax (MRDT) could become a supplementary revenue source for destination development, tourism support, or affordable housing initiatives.
- Economic Development recommends a regulatory framework that supports the Township’s long-term housing objectives while also maintaining an appropriate level of visitor accommodation capacity to serve local employers, tourism, and CFB related activity.
- Aligning Esquimalt’s regulations more closely with the provincial model provides the most straightforward and administratively efficient path to achieving these outcomes, while enabling the Township to capture revenue associated with visitation, including potential for MRDT.
ANALYSIS:
There are a variety of options available to Council (see below) - each with various pros and cons. The attached Report (Appendix “A”) contains a detailed analysis of the policy options available to Council along with the results of the public consultation.
OPTIONS:
The Report provides a detailed analysis of the options available to Council. There is a basic series of decisions that Council has to make that will form the framework for a series of amendments to the Zoning Bylaw, Parking Bylaw, Bylaw Notice Enforcement Bylaw, and Business Licence Bylaw. These decisions include:
1) Regulatory Options: Which option does Council wish to pursue (see detailed discussion on pages 27 to 30 of the Report)?
a. In-home permissions - allows residents to short-term rent one or more rooms in their home unit while they are there or to rent their entire home while they are away.
b. Home lot permissions - allows residents to short-term rent one or more rooms in their dwelling unit while they are present or their entire home while they are away. It also allows the resident to use up to one additional dwelling unit on their home lot as a dedicated short-term rental (e.g. a basement suite or a garden suite).
c. Customized Regulations - adds additional regulations such as an annual limit on the number of nights or a quota on the number of business licences issued.
2) Definitions - Currently the Zoning Bylaw refers to “Bed and Breakfast” and “Tourist Accommodation”. Moving forward, new definitions more aligned with Council’s objectives could be developed (see discussion on pages 37 and 38 of the Report).
3) Should owners of strata units in multi-family buildings be allowed to use their unit for short-term rental (note that in many cases this may not be practical if an additional parking stall is required as very few multi-family buildings have surplus parking)?
4) Time Thresholds - Which of the three common time thresholds does Council wish to use:
a. 90 days (consistent with the provincial legislation).
b. 30 days.
c. No specific days but rather use terms like “transient” and “temporary” (see page 38 - 40 of the report for more details).
5) Business License Fees - Staff will suggest a fee in consultation with the Director of Strategic Initiatives when they return with proposed bylaw amendments.
6) Parking - Various approaches to parking are outlined on pages 42 and 43 of the Report. Does Council have a preferred approach to parking?
7) Penalties - Staff will provide Council with suggested penalties when they return with the various bylaw amendments.
8) Municipal and Regional District Tax - Does Council wish to have staff investigate the potential of having Esquimalt designated as a “Designated Accommodation Area”?
COUNCIL PRIORITY:
“Short-term rental policy analysis” was incorporated into the Council Priorities Plan 2023 - 2026 as a project under the “Diversified & Thriving Economy” priority.
FINANCIAL IMPACT:
In terms of potential revenue, there will be a business licence fee. The amount is yet to be determined. The establishment of the business licence fee will require an amendment to the Business Licence Bylaw.
In addition, as noted on page 45 of the Report, there may be potential for Esquimalt to participate in the Municipal and Regional District Tax Program (MRDT). Based on available data, the report estimates that for the past twelve months, the Township could have collected approximately $84,000 to go towards destination marketing and affordable housing initiatives. This figure was derived multiplying estimated revenues posted on the AirDNA website by three percent; the maximum allowable MRDT rate. There is no guarantee that this amount of revenue will be realized through the legalization of short-term rentals. If Council wishes, staff can investigate this potential revenue stream in more detail and report back.
COMMUNICATIONS/ENGAGEMENT:
Extensive public consultation was undertaken as described on page 32 of the report. The results of the consultation are summarized on pages 33 to 36. Detailed results of the consultation are found in Appendix “C” of the Report.
TIMELINES & NEXT STEPS:
Staff will return to Council with a series of amendments to the Zoning Bylaw, Parking Bylaw, Bylaw Enforcement Notice Bylaw, and Business Licence Bylaw based on input received from Council.
REPORT REVIEWED BY:
1. Deb Hopkins, Director of Corporate Services, Reviewed
2. Ian Irvine, Director of Finance, Reviewed
3. Dan Horan, Chief Administrative Officer, Concurrence
LIST OF ATTACHMENTS:
List all items attached to the Staff Report
1. Appendix “A” Short-Term Rental Policy Analysis Report - February 2026
2. Appendix “B” Consultant’s Presentation