Ocean City homeowners will retain the right to offer short-term rentals after voters narrowly rejected a proposed law that aimed to restrict the practice in certain residential areas.
In a closely watched referendum held Tuesday, residents voted 834 to 800 against Ordinance 2025-04, which would have imposed new limitations on rentals in the town’s R-1 and MH zoning districts.
The R-1 zoning classification includes low-density, single-family residential neighborhoods, while MH zones regulate mobile home parks and subdivisions. Together, these areas account for about 3% to 4% of Ocean City’s estimated 10,000 rental properties — affecting roughly 300 to 350 units, according to City Manager Terry McGean.
Terry Miller, president of OCMD Property Rights, a group formed to fight the proposal, celebrated the victory, calling it a win for homeowners and the local economy.
“It was quite a fight,” Miller said. “I do feel good about it. I was hoping it wasn’t going to be quite so close. I thought we would have a bigger margin, but the opposition really pulled out all stops at the end, and I thought they were able to sway some people.”
The ordinance proposed a five-night-minimum stay in those districts starting this year, with a more stringent 31-night minimum taking effect in 2027. Bookings made before March 3, 2025, would have been exempt.
The referendum was triggered by a successful petition effort led by OCMD Property Rights. In May, the group submitted 1,090 verified signatures — exceeding the 990 required to put the measure on the ballot.
Supporters of the ordinance argued the restrictions would protect neighborhood quality of life, citing issues such as noise, trash and overcrowding associated with short-term rentals. Opponents countered that the measure threatened Ocean City’s tourism-driven economy and infringed upon property owners’ rights.
“From the beginning, we all acknowledged there are a few problems, but you don’t steal people’s property rights over a few problems,” Miller said. “You fix the problems or take away the rights of people who are causing the problems.”
In a statement, the city pointed out that more than 9,000 short-term rental licenses remain outside the affected areas, as well as 11,000 hotel rooms and more than 20,000 condos, townhouses and homes that remain unrestricted, “including the entire ocean block.”
Palmer Gillis relocated to Ocean City from Salisbury in 2000 and was an early supporter of the ban on short-term rentals in R-1 zones, which was later expanded by the mayor and City Council to include MH zones.
Gillis previously served on the Salisbury City Council, representing the city on the Salisbury-Wicomico Planning and Zoning Commission. He said his experience in local government gave him a firsthand understanding of how short-term rentals, much like student rentals, can significantly alter the character of residential neighborhoods.
“I think the folks who opposed this — and it might be two years, and it might be 10 years — will actually regret this because I believe what our community will see is an erosion of neighborhoods,” Gillis said. “There has to be a place for year-round residents to live and act as if they’re in a neighborhood.”
Despite the narrow margin, the vote signals strong community interest on both sides of the issue — and leaves Ocean City’s short-term rental market largely unchanged, at least for now.
Rob Bouse, co-owner of a real estate agency in the city, said he was “glad” voters overturned the ordinance He said it’s right for the homeowner who pays taxes to decide how they want to rent or not rent their property.
“I’m curious to see how the City Council responds and see if they try to draw up another referendum,” Bouse said.
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