HomeMy WebLinkAboutStaff Report 4.D 11/21/2016Agenda Item #4.D
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DATE: November 21, 2016
TO: Honorable Mayor and Members of the City Council through City Manager
FROM: Eric Danly, City Attorney `f `
SUBJECT: Resolution issuing legislative subpoenas to websites advertising short-term
residential rental properties located in the City of Petaluma to investigate and
obtain compliance with Petaluma Zoning Code Ordinance No. 2300, Section
7.110 and Petaluma Municipal Code chapter 4.24.
RECOMMENDATION
It is recommended that the City Council adopt the attached Resolution issuing legislative
subpoenas to websites advertising short-term residential rental properties located in the City of
Petaluma to investigate and obtain compliance with Petaluma Zoning Code Ordinance No. 2300,
Section 7.110 and Petaluma Municipal Code chapter 4.24.
BACKGROUND
In July 2015, the City Council amended Petaluma's Implementing Zoning Ordinance to allow
short term rentals in residential zones. The change also included requirements for short term
hosts to secure a permit from the Planning Division, a business license and a certificate to pay
Transient Occupancy Taxes (TOT). Petaluma's Planning Division has issued 21 permits since
the program's initiation on January 1, 2016. Despite broad advertising of the new rules,
including advertising in the newspaper, it appears that upwards of 100 hosts are currently listing
properties on short term rental sites like Airbnb and VRBO, such that only about 115 of those
offering short term rentals in the City are complying with the City's short term rental
requirements.
DISCUSSION
To date, the City has limited enforcement of non - permitted short term rentals to neighbor -
initiated complaints. Petaluma has received one such complaint, which was investigated.
However, there appears to be a large discrepancy between the number of permits issued and the
number of listings, thus, it appears most of the short term rentals that may be occurring in the
City are non - compliant, and the City is losing transient occupancy taxes. It is discouraging to the
hosts who have registered with the City and who are collecting transient occupancy taxes to the
extent the City does not enforce the ordinance and require all hosts to obtain a permit, business
license and collect TOT.
Online listing portals do not provide addresses, making it difficult to determine which hosts are
operating in City limits without a permit. One way other cities have been able to enforce their
rules with regard to short term vacation rentals is by subpoenaing the records from listing
companies to get a complete list of hosts operating in the City.
California Revenue and Taxation Code section 7280 authorizes a city to levy a transient
occupancy tax on the short-term privilege of occupying a room in a hotel, inn, tourist home or
house, motel, or other lodging within the city limits unless the occupancy is for a period of more
than thirty days.
Petaluma Municipal Code chapter 4.24 requires hotel operators in the City to collect the TOT
and to remit the proceeds to the City tax administrator on a monthly basis. "Hotel" includes any
hotel, inn, tourist home or house, motel, studio hotel, bachelor hotel, lodging house, rooming
house, apartment house, dormitory, public or private club, mobile home or house trailer at a
fixed location or other similar structure or portion thereof.
In accordance with Section 7.110(c)(4) of the Zoning Code, short-term vacation rentals are
subject to and must satisfy all applicable requirements of the City's transient occupancy tax.
Section 7.110 also requires short-term vacation rentals to obtain a Short-Term Vacation Rental
Permit and a business license.
California Government Code section 37104 authorizes a City Council to issue a legislative
subpoena "requiring attendance of witnesses or production of books or other documents for
evidence or testimony in any action or proceeding pending before it."
It is recommended that the City Council adopt the attached resolution issuing legislative
subpoenas to two short term rental portals to permit consistent enforcement of the City's
Municipal Code and Implementing Zoning Ordinance requirements for short term rentals. Using
information obtained from short term rental listing portals in response to City legislative
subpoenas, staff will then contact noncompliant hosts with the goal of bringing those hosts into
compliance and collecting applicable taxes.
The following website companies are advertising short-term rentals located in Petaluma and staff
recommends that they each be issued legislative subpoenas:
Airbnb.com
VRBO.com
FINANCIAL IMPACTS
The City's TOT rate is 12% which includes 10% received by the City. 2% is passed through to
the countywide visitor program. The average short-term rental charges about $150 per night.
Under the City's code, homeowners are allowed to rent their homes up to 90 nights per year. If
100 homes rented for the average nightly rate of $150 for 90 nights, the City would receive
ON
approximately $162,000 in annual TOT. Since January 2016, approximately $18,961 has been
collected from hosts who have complied with the short-term vacation rental ordinance.
ATTACHMENTS
1- Resolution Issuing Subpoenas
2- Legislative Subpoena -VRBO
3- Legislative Subpoena- AirBNB
ATTACHMENT 1
Resolution No. 2016- N.C.S.
of the City of Petaluma, California
ISSUING LEGISLATIVE SUBPOENAS TO WEBSITES ADVERTISING SHORT -TERM
RESIDENTIAL RENTAL PROPERTIES LOCATED IN THE CITY OF PETALUMA TO
INVESTIGATE AND OBTAIN COMPLIANCE WITH PETALUMA ZONING CODE ORDINANCE
NO. 2300, SECTION 7.110 AND PETALUMA MUNICIPAL CODE CHAPTER 4.24.
WHEREAS, California Revenue and Taxation Code section 7280 authorizes a city to levy a
transient occupancy tax ( "TOT ") on the short-term privilege of occupying a room in a hotel, inn, tourist
home or house, motel, or other lodging within the city limits unless the occupancy is for a period of
more than thirty days; and
WHEREAS, the Petaluma City Council enacted Petaluma Municipal Code chapter 4.24, entitled
"Uniform Transient Occupancy Tax Law "(TOT); and
WHEREAS, Petaluma Municipal Code chapter 4.24 requires hotel operators in the City to
collect the TOT and to remit the proceeds to the City tax administrator on a monthly basis; and
WHEREAS, in accordance with Petaluma Implementing Zoning Ordinance section 7.110(c)(4),
short-term vacation rentals are subject to and must satisfy all applicable requirements of the City's
transient occupancy tax; and
WHEREAS, Petaluma Implementing Zoning Ordinance section 7.110 requires short-term
vacation rentals to obtain a Short-Term Vacation Rental Permit and business license through the City of
Petaluma; and
WHEREAS, to date, the City has issued twenty -one Short-Term Vacation Rental permits;
however, a review of websites which advertise vacation rentals in the City of Petaluma reveals that there
may be approximately one hundred residences in the City which are operating as private short-term
rentals; and
WHEREAS, staff has attempted to identify all properties that are advertised for short-term
rentals in the City, however, additional information is needed to consistently enforce Municipal Code
chapter 4.24 and Implementing Zoning Ordinance section 7.110; and
WHEREAS, California Government Code section 37104 authorizes a city council to issue
legislative subpoenas "requiring attendance of witnesses or production of books or other documents for
evidence or testimony in any action or proceeding pending before it "; and
WHEREAS, the City Council finds that enforcement of the City's transient occupancy tax
ordinance and short-term rental ordinance is a proper legislative concern; and
WHEREAS, case law interpreting section 37104 confirms that matters relating to the
investigation and enforcement of tax measures are proper legislative concerns; and
WHEREAS, a legislative subpoena pursuant to Government Code section 371-04 may be
authorized by a resolution of the city council, and issued by the mayor; and
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WHEREAS, if the subpoenaed party does not comply once served, Government Code section
37106 authorizes the mayor to submit a report to the Superior Court reporting the noncompliance and
failure to appear.
NOW, THEREFORE, the City Council of the City of Petaluma does resolve as follows:
1. The above - recitals are hereby declared to be true and correct and adopted as findings of the
City Council of the City of Petaluma; and
2. The Mayor is authorized and directed to issue the legislative subpoenas attached hereto as
Exhibit A, directed to the Custodian of Records of Airbnb, Inc. and HomeAway.com, Inc.,
and commanding their appearance before the City Council and /or production of documents;
and
3. City staff is directed to serve both legislative subpoenas promptly in accordance with all legal
requirements for service of subpoenas; and
If any custodian of records fails to comply with a legislative subpoena authorized by this resolution, the
Mayor is authorized and directed to submit a report of noncompliance to the Sonoma County Superior
Court.
Under the power and authority conferred upon this Council by the Charter of said City.
REFERENCE: I hereby certify the foregoing Resolution was introduced Approved as to
and adopted by the Council of the City of Petaluma at a form:
Regular meeting on the 21St day of November, 2016, by
the following vote:
City Attorney
AYES:
NOES:
ABSENT:
ABSTAIN:
ATTEST:
City Clerk
Mayor
IN THE MATTER OF FACTUAL INQUIRY
RELATED TO INVESTIGATION OF
CHAPTER 4.24 OF THE
CITY OF PETALUMA MUNICIPAL CODE
AND IMPLEMENTING ZONING
ORDINANCE SECTION 7.110
ATTACHMENT 2
(Exhibit A to Resolution)
LEGISLATIVE SUBPOENA
(Government Code §§ 37107 etseq)
Date: January 9, 2017
Time: 7:00 p.m.
Place: City of Petaluma City Hall
11 English Street
Petaluma, CA 94952
To: Custodian of Records for HomeAway.com, Inc.
1. You are ordered to appear in person and produce true and correct copies of the
documents specified in Attachment 1 at the Regular City Council Meeting for the City
of Petaluma ( "City ") at 11 English Street, Petaluma, Ca 94952, on January 9, 2017 at
7:00 p.m. (or as soon thereafter as the matter may be heard).
2. You are not required to appear in person and produce the requested documents, if by
Wednesday, January 4, 2017 you deliver the documents described in Attachment 2 to:
City Clerk
City of Petaluma
11 English Street
Petaluma, CA 94952
(707) 778 -4362
All documents produced to the City shall be accompanied by a declaration or affidavit
warranting to their accuracy and completeness sufficient to meet the requirement of
Code of Civil Procedure section 20200.430. The City will pay all reasonable
documented costs associated with photocopying the requested documents. If costs
exceed $100 please contact Jordan Green before copying.
The City requires these records to assist it in evaluating its transient occupancy tax, codified in
the City of Petaluma's Municipal Code section 4.24 et al. and compliance therewith. The
documents requested are material and good cause exists for their production as described in
Attachment 3. This subpoena is issued pursuant to California Government Code section 37104
and authorized by the City Council of Petaluma.
Disobedience of this subpoena will be referred to the Superior Court for enforcement and is
punishable as contempt pursuant to Government Code section 37109. Should you have any
questions regarding this subpoena please contact:
Jordan M. Green
Assistant City Attorney for the City of Petaluma
G
DATED this
City of Petaluma, City Attorney's Office
11 English Street
Petaluma, CA 94952
(707) 778 -4362
day of , 2016.
City Council, City of Petaluma
:
David Glass
Mayor, City of Petaluma
APPROVED AS TO FORM:
in
Eric W. Danly
City Attorney
City of Petaluma
Attest:
:
Claire Cooper
City Clerk, City of Petaluma
7
ATTACHMENT I
The following documents must be produced to the City:
Request #1: Documents sufficient to identify all persons that through any website or
property owned or controlled by HomeAway.com, Inc. (including, but not limited to,
www.vrbo.com) have rented, or offered to rent, any HOTEL for a period of 30
consecutive days or less for dwelling, use, lodging, or sleeping purposes in the City of
Petaluma, California during the period from October 1, 2015 through the present.
"Hotel" means any structure or any portion of any structure which is occupied or
intended or designed for occupancy by transients for dwelling, lodging or sleeping
purposes and includes any hotel, inn, tourist home or house, motel, studio hotel,
bachelor hotel, lodging house, rooming house, apartment house, dormitory, public
or private club, mobile home or house trailer at a fixed location or other similar
structure or portion thereof.
(1) Request #2: Documents sufficient to provide the following information for each person
identified in response to Request #1:
a. The name, physical address, email address, and any other contact information for
each person.
b. The url for each website which the person used to list a HOTEL.
c. The address of the person's HOTEL that has been rented, or offered to rent, for
dwelling, use, lodging or sleeping purposes in the City of Petaluma through any
website or property owned or controlled by HomeAway.com, Inc. during the period
from October 1, 2015 through the present ( "PROPERTY" means the HOTEL(S)
rented as described in this paragraph by the person).
d. The dates and duration of stay for each time the PROPERTY was rented since
October 1, 2015 to present.
e. The rate charged and funds collected for each time the PROPERTY was rented since
October 1, 2015 to present.
f. The method of payment, including name of institution and type of account, for each
time the PROPERTY was rented since October 1, 2015 to present.
g. The name of any person who rented any PROPERTY from a person identified in
Request #1, since October 1, 2015 to present as well as the renter's physical address,
email address and other contact information.
h. The total gross revenue generated by the person renting the PROPERTY as a result of
that renting since October 1, 2015 to present.
(2) If documents do not exist sufficient to provide all of the information requested, the City
requests that you produce electronically stored information that is sufficient to provide all
of the information requested. This information must be provided in pdf, Microsoft Word
or Microsoft Excel Format. If production in this manner is not feasible then it must be
produced in a different format agreed to by the City.
ATTACHMENT 2
(3) Alternatively, and in lieu of the documents requested in Attachment 1, you may
provide a list identifying all persons that through any website or property owned or
controlled by HomeAway.com, Inc. (including, but not limited to, www.vrbo.com) have
rented, or offered to rent, any HOTEL for a period of 30 consecutive days or less for
dwelling, use, lodging or sleeping purposes in the City of Petaluma, California during the
period from October 1, 2015 through the present. This list must also include the
following regarding these rentals:
a. The name, physical address, email address, and any other contact information for
each person.
b. The url for each website which the person used to list a HOTEL.
c. The address of the HOTEL.
d. The dates and duration of stay for each time the HOTEL was rented.
e. The rate charged and funds collected for each time the HOTEL was rented.
f. The method of payment, including name of institution and type of account, for each
time the HOTEL was rented.
g. The name of any person who rented any HOTEL, as well as their physical address,
email address and any other contact information.
h. The total gross revenue generated by the person renting the HOTEL.
0
ATTACHMENT 3
[Agenda Report and City Council Resolution]
10
ATTACHMENT 3
(Exhibit A to Resolution)
IN THE MATTER OF FACTUAL INQUIRY) LEGISLATIVE SUBPOENA
RELATED TO INVESTIGATION OF ) (Government Code §§ 37107 etseq
CHAPTER 4.24 OF THE )
CITY OF PETALUMA MUNICIPAL CODE) Date: January 9, 2017
AND IMPLEMENTING ZONING ) Time: 7:00 p.m.
ORDINANCE SECTION 7.110 ) Place: City of Petaluma City Hall
11 English Street
Petaluma, CA 94952
To: Custodian of Records for AirBNB, Inc.
1. You are ordered to appear in person and produce true and correct copies of the
documents specified in Attachment 1 at the Regular City Council Meeting for the City
of Petaluma ( "City ") at 11 English Street, Petaluma, Ca 94952, on January 9, 2017 at
7:00 p.m. (or as soon thereafter as the matter may be heard).
2. You are not required to appear in person and produce the requested documents, if by
Wednesday, January 4, 2017 you deliver the documents described in Attachment 2 to:
City Clerk
City of Petaluma
11 English Street
Petaluma, CA 94952
707 - 778 -4362
3. All documents produced to the City shall be accompanied by a declaration or affidavit
warranting to their accuracy and completeness sufficient to meet the requirement of
Code of Civil Procedure section 20200.430. The City will pay all reasonable
documented costs associated with photocopying the requested documents. If costs
exceed $100 please contact Jordan Green before copying.
The City requires these records to assist it in evaluating its transient occupancy tax, codified in
the City of Petaluma's Municipal Code section 4.24 et al. and compliance therewith. The
documents requested are material and good cause exists for their production as described in
Attachment 3. This subpoena is issued pursuant to California Government Code section 37104
and authorized by the City Council of Petaluma.
Disobedience of this subpoena will be referred to the Superior Court for enforcement and is
punishable as contempt pursuant to Government Code section 37109. Should you have any
questions regarding this subpoena please contact:
Jordan M. Green
Assistant City Attorney for the City of Petaluma
11
City of Petaluma, City Attorney's Office
11 English Street
Petaluma, CA 94952
(707) 778 -4362
DATED this day of , 2016.
City Council, City of Petaluma
:
David Glass
Mayor, City of Petaluma
APPROVED AS TO FORM:
an
Eric W. Danly
City Attorney
City of Petaluma
Attest:
LIN
Claire Cooper
City Clerk, City of Petaluma
12
ATTACHMENT 1
The following documents must be produced to the City:
Request #1: Documents sufficient to identify all persons that through any website or
property owned or controlled by Airbnb, Inc. (including, but not limited to,
www.airbnb.com) have rented, or offered to rent, any HOTEL for a period of 30
consecutive days or less for dwelling, use, lodging, or sleeping purposes in the City of
Petaluma, California during the period from October 1, 2015 through the present.
"Hotel" means any structure or any portion of any structure which is occupied or intended
or designed for occupancy by transients for dwelling, lodging or sleeping purposes and
includes any hotel, inn, tourist home or house, motel, studio hotel, bachelor hotel, lodging
house, rooming house, apartment house, dormitory, public or private club, mobile home or
house trailer at a fixed location or other similar structure or portion thereof.
Request #2: Documents sufficient to provide the following information for each person
identified in response to Request #1:
a. The name, physical address, email address, and any other contact information for
each person.
b. The url for each website which the person used to list a HOTEL.
c. The address of the person's HOTEL that has been rented, or offered to rent, for
dwelling, use, lodging or sleeping purposes in the City of Petaluma through any
website or property owned or controlled by Airbnb, Inc. during the period from
October 1, 2015 through the present ( "PROPERTY" means the HOTEL(S) rented as
described in this paragraph by the person).
d. The dates and duration of stay for each time the PROPERTY was rented since
October 1, 2015 to present.
e. The rate charged and funds collected for each time the PROPERTY was rented since
October 1, 2015 to present.
f. The method of payment, including name of institution and type of account, for each
time the PROPERTY was rented since October 1, 2015 to present.
g. The name of any person who rented any PROPERTY from a person identified in
Request #1, since October 1, 2015 to present as well as the renter's physical address,
email address and other contact information.
h. The total gross revenue generated by the person renting the PROPERTY as a result of
that renting since October 1, 2015 to present.
If documents do not exist sufficient to provide all of the information requested, the City
requests that you produce electronically stored information that is sufficient to provide all
of the information requested. This information must be provided in pdf, Microsoft Word
or Microsoft Excel Format. If production in this manner is not feasible then it must be
produced in a different format agreed to by the City.
13
ATTACHMENT 2
(1) Alternatively, and in lieu of the documents requested in Attachment 1, you may
provide a list identifying all persons that through any website or property owned or
controlled by Airbnb, Inc. (including, but not limited to, www.airbnb.com) have rented,
or offered to rent, any HOTEL for a period of 30 consecutive days or less for dwelling,
use, lodging or sleeping purposes in the City of Petaluma, California during the period
from October 1, 2015 through the present. This list must also include the following
regarding these rentals:
a. The name, physical address, email address, and any other contact information for
each person.
b. The url for each website which the person used to list a HOTEL.
c. The address of the HOTEL.
d. The dates and duration of stay for each time the HOTEL was rented.
e. The rate charged and funds collected for each time the HOTEL was rented.
f. The method of payment, including name of institution and type of account, for each
time the HOTEL was rented.
g. The name of any person who rented any HOTEL, as well as their physical address,
email address and any other contact information.
h. The total gross revenue generated by the person renting the HOTEL.
14
ATTACHMENT 3
[Agenda Report and City Council Resolution]
15