Cape Coral officials are considering imposing a $600 yearly fee that could affect roughly 10,000 residential rental property owners throughout the city.

The potential fees could translate into rent increases if owners raise rates accordingly, real estate professionals and residents told City Council members at a May 21 meeting. That could impact low-income renters even while a lack of affordable housing continues to be a problem.

Some argued that the fees should only target short-term vacation rental properties.

“Most of these properties are being rented long term by working class families, single moms and single dads (for whom) you just added $50 a month to their rent when they are already struggling to make ends meet,” said Kevin Besserer, director of public policy for the Royal Palm Coast Realtor Association. “In my mind and in my members’ minds, this needs to be scrapped altogether and restarted.”

The fee could also impact vacation rental companies. Vanessa Vetter-Delgado, property manager for Vesteva Vacation Rentals, pointed out that the $600 yearly charge would be an increase from the city’s current fee, a one-time only $35 registration charge for rental property owners.

It could discourage homeowners from listing their properties, she wrote in an email, adding that rental operations draw visitors who frequent other local businesses. “(A $600 fee) is not only unreasonable but also potentially devastating to local businesses and the broader Cape Coral community. The new fee structure will discourage homeowners from listing their properties and deter tourists from choosing Cape Coral as a destination.”

An Airbnb spokesperson responded to the potential fees:

“Many short-term rental hosts in Cape Coral and across the state rely on hosting to offset rising insurance and housing costs. A more than 1,600% spike in annual fees would impose a heavy burden on local hosts, while making travel and tourism unaffordable in the city.”

Several City Council members agreed that the rule should at least be rewritten but were open to imposing it on short-term vacation properties.

“If this is for all rental properties throughout the city, that’s a deal breaker for me, without a doubt,” Mayor John Gunter said. “I’m still open to a little more research on vacation properties.”

District 1’s Bill Steinke said, “I’m totally against it as currently written.”

District 2’s Laurie Lehmann suggested the fee could be for rental owners who have terms of four months or less. “I think we need to say there’s a time limit.”

The official reason for the proposed fee is to maintain current contact information from residential property owners who rent their spaces in case they violate city codes. The city estimates that 20% of the fee would be required to enforce and collect it.

Meanwhile, a glut of multifamily properties in the city has led to an all-time high 29.7% vacancy rate as of the second quarter, a Cape Coral report on market conditions shows, with more than 2,100 new units built over the last year. The prolonged period of high vacancy rates put downward pressure on rents.

City Council also discussed a potential new ordinance describing how the $600 yearly fee could be used. The city is considering earmarking proceeds for a Tourist Development Program.

“It has the ability to absolutely change the trajectory of our community,” said City Manager Michael Ilczyszyn, pointing toward potential projects such as swimming pools, indoor recreation centers or a performing arts hall. “We’re probably talking a quarter-billion to a half-billion dollars worth of stuff that is all around Florida but not in Cape Coral.”

The $600 figure could be adjusted lower or higher. Ilczyszyn said some cities have yearly fees as high as $2,500.

A public hearing about the potential new rules is scheduled for June 4.