Yes and no.

RVs don't have to meet the building codes the same way that houses do. I'd be very skeptical of the covered porch the man built that houses a furnace - there's no comment in the article about that, but I'd be surprised if it met all the requirements for long term housing.

It's fair for the Town to enforce their bylaws and housing codes. We have building codes for a reason.

Additionally, from the article

"We're required to enforce our bylaws and I think that it's demonstrated that we do sympathize with the situation they're in, because we've been working with them for the last two years," Crowder said.

It sounds like it's taken quite a while for them to prepare building plans. They say they 'have them in hand and plan to start the building process soon', which means they haven't actually applied yet. I'm curious what their sewer, water, and power situation is, as those hookups and/or septic beds also require permits from the Town. Living somewhere without running water or sewage removal is a concern for the neighbors.

Two years for just rough plans without having got approval from the Town yet? That's a slow timeline. Especially if they're living on the site the whole time. They haven't started the process yet? Why doesn't the Town say 'start the process and we can discuss extending your time allowed in the trailer'?

This is an odd situation, but the article doesn't go into enough details for us to get outraged about the Town's role.