HomeMy WebLinkAboutStaff Report 5.B 09/17/2018Agenda Item #5.B
DATE: September li, 2018
TO: Honorable Mayor and Members of the City Council through City Manager
FROM: Ingrid Alverde, Economic Development Manager✓
SUBJECT: Short -Term Vacation Rental Program Review
RECOMMENDATION
It is recommended that the City Council receive this report and provide policy direction
regarding continuation of the short-term vacation rental program.
BACKGROUND
In September 2015 the City Council approved a program to allow short term vacation rentals in
Petaluma under new rules that would require rental hosts to obtain a permit, follow management
rules, and pay Transient Occupancy Taxes (TOT). Section 7.110 of the Municipal Code
(Attachment 1) was added to dictate these requirements. The adopted rules included a clause sun
setting the program on December 31, 2018. The Council directed a program review, sufficiently
in advance of that date, to determine whether the program should continue, be repealed, or
continue with modifications. Considerations at the time vacation rental regulations were
approved included neighborhood impacts due to noise, traffic, parking, and the conversion to
short term rentals of properties that might otherwise provide supply to the long-term rental
market.
DISCUSSION
The program went into effect in January of 2016. The number of listings fluctuates, but there
are typically about 1001istings for short-term vacation rentals in Petaluma at any given time. In
the first two years of the program the City approved approximately 20 permits for short-term
rental units. The program was set up to renew annually and thus the permits were renewed in
2017 and 2018. Since the program's inception, no documented, code -related complaints have
been received, from neighbors or prospective renters. Informal complaints have been raised,
however, regarding the unpermitted hosts and the unfair business advantage those hosts receive
if they are not subject to enforcement regulation.
The City contracted with Host Compliance in late 2017, to improve program complian
ce and to
address these informal complaints. Host Compliance has expertise identifying short term
vacation rentals by mining data from short-term vacation rental websites. This enables them to
produce lists of addresses and owners of the units offered for rent in Petaluma. Under the terms
of its agreement with the City, Host Compliance notices the identified, non -permitted hosts of
the program requirements, and directs them to the City for appropriate resolution. Multiple
notices have been necessary, but as a consequence compliance has increased this past year to as
many as 64 active permits.
Vacation rental hosts receive two warning notices. If they fail to respond, a notice of violation is
issued. A total of 23 such notices were issued to non-responsive hosts this past year. All but one
case was closed, once the hosts permitted their short-term rental properties or removed their
listings. Enforcement is an ongoing requirement as hosts come and go or switch listing websites.
If the Council wishes to continue the short-term vacation rental program, staff anticipates
retaining the contract with Host Compliance to support the enforcement program.
As of August 28, 2018, 103 properties with active listings were identified on short term listing
websites. A map showing the status and location of the listings is attached (Attachment 2). Of
the 103 properties, Host Compliance identified 74 of them as short-term vacation rentals with a
verified address and owner. Of those 74, a total of 56 of them are permitted and 18 are not.
Another 29 listings have not been identified due to lack of data. Host Compliance continues to
work on ways to identify its listings to improve enforcement.
As part of the program rules, a sunset was established so the City Council could review the
program before determining whether to continue it, repeal it, or modify it. Unless the Municipal
Code is amended to remove the sunset provision, the program will end on December 31, 2018.
Based on its review, staff recommends continuing the program, and removing the sunset
provision. These changes, and any others that may be recommended, will need to be proposed to
the Planning Commission, but it is desirable to have City Council guidance before approaching
the Planning Commission. Subsequent to Planning Commission review, a recommendation will
return to the Council for final action.
FINANCIAL IMPACTS
Permit fees of $27,014 provide full cost recovery to M -Group for administration of the program.
TOT proceeds totaling $68,427 were collected in FY 2017/18; approximately $1255200 has been
collected since program inception. Host Compliance's annual fee of $6,500 is supported by
these TOT collections. Proceeds from TOT should surpass current year's collections, as
program compliance increases.
ATTACHMENTS
1. Petaluma Municipal Code Section 7.110
2. Short Term Vacation Rental Listing Map
2
Attachment 1
7. Food Service. Food service shall be limited to registered overnight guests only and shall not include an
independent restaurant. Cooking facilities in individual guestrooms are prohibited (with the exception of
microwaves and coffee makers).
8. Events. Amplified music, lawn parties, outdoor weddings, and other similar actives shall not occur on
site unless specifically allowed through the approved Conditional Use Permit. All such ancillary uses
shall comply with City Performance Standards, including but not limited to the Performance Standards in
Chapter 21.
9. Signs. One on-site sign shall be allowed on each street frontage. If illuminated, signs shall be indirectly
illuminated, and each sign shall not exceed two square feet in area, consistent with Section 20.110(B)(4).
10. Parking. On-site parking shall be provided as required in Table 11.1 for Bed and Breakfast Inns.
11. Transient Occupancy Tax. Betl and breakfast rentals shall be subject to the City's transient occupancy
tax.
E. Public Notice. Noticing for bed and breakfast inn applications shall include mailed notice to properties within 1,000
feet of the proposed use.
7.110 —Short -Term Vacation Rentals
This Section establishes requirements and conditions for the establishment and operation of short-term vacation rentals within
residential, planned unit development, and mixed-use zoning districts.
A. Purpose. The purpose of this section and the standards outlined below is to serve visitors of Petaluma, to ensure
that short-term vacation rentals are compatible with residential and mixed use, and planned unit districts, and to
preserve the character of the neighborhoods in which they are located.
B. Permit Required.
1. Short-term vacation rentals. Short-term vacation rentals are a permitted use only in residential,
V lanned unit development, and mixed use zoning districts and only pursuant to a valid Short -Term
Vacation Rental Permit issued in accordance with this section by the Planning Director or designee of the
Planning Director.
2. Notice to Neighbors. Upon approval of a Short -Term Vacation Rental Permit, all property owners within
100 feet of the permitted Short -Term Vacation Rental shall be noticed in writing. Such notice shall include
the location of the short-term vacation rental, number of rooms available for short-term vacation rental,
and contact information of the locally -available manager.
C. Requirements Applicable to All Short -Term Vacation Rentals.
1. Guest Manual. The Host shall provide a written manual to guests providing the local manager's contact
information, the Performance Standards set forth in Chapter 21 of the Implementing Zoning Ordinance,
parking limitations, and other helpful information to minimize conflict within the neighborhood.
2. Signs. On-site signage is prohibited.
3. Business License. All short-term vacation rentals require a valid Business License issued in accordance
with Chapter 6.01 of the Petaluma Municipal Code.
Ordinance No. 2300 N.C.S.
Attachment 1
4. Transient Occupancy Tax. Short-term vacation rentals are subject to and must satisfy all applicable
requirements of the City's transient occupancy tax.
5. Permit Number. In every advertisement for the Short Term Vacation Rental, the Permittee shall include
the City issued Permit Number.
D. Requirements Applicable to Hosted Short -Term Vacation Rentals. A Short Term Vacation Rental in which the
permittee occupies the property with the guests and is subject to the following requirements:
1. Limit on Maximum Number of Occupants. No more than 2 overnight occupants per bedroom plus
2 additional occupants are permitted.
a. No more than two bedrooms in the dwelling may be furnished for compensation. (See section
7.100 for Bed and Breakfast requirements.)
b. If the entire dwelling is an accessory/secondary unit, it may be furnished for compensation as a
Hosted Short -Term Vacation Rental, provided that the guests constitute one party, which may
be evidenced through a single rental agreement for the entire dwelling.
2. Manager. The permittee must be available at all times and be able to respond to complaints within 1
hour.
E. Permit Requirements Applicable to Non -Hosted Short -Term Rentals. AShort-Term Vacation Rental in which
the permittee does not occupy the property with the guests and is subject to the following requirements:
1. Limits on Occupants.
a. The entire dwelling may be furnished for compensation, provided that the guests constitute one
party, which may be evidenced through a single rental agreement for the entire dwelling.
b. No more than 2 overnight occupants per bedroom plus 2 additional occupants are permitted.
2. Limitation on Days. The dwelling as anon -hosted vacation rental may be furnished for
compensation for no more than 90 days during any calendar year.
3. Manager. A manager located within 45 miles of the City must be available at all times and be able
to respond to complaints within 1 hour.
F. Short -Term Vacation Rentals in Planned Unit Developments. A permit issued for aShort
-Term Vacation Rental
in a Planned Unit Development must comply with Section 19.050 of the Implementing Zoning Ordinance.
G. Dispute Resolution. Upon receipt of three or more complaints in a calendar year about a Short Term Vacation
Rental, with the consent of the parties involved, the City may refer the parties to a third party mediator. The cost
shall be shared equally by the parties involved, unless the parties agree otherwise in writing.
H. Application Process. The application process for aShort
-Term Vacation Rental Permit shall be as follows:
1. Application for Permit. Application for aShort-Term Vacation Rental Permit shall be made to the
Director on a form provided by the City.
Ordinance No. 2300 N.C.S.
Attachment 1
2. Fee. The We that applies to process applications for Short -Term Vacation Rental Permits shall be
set by the City Council resolution.
3. Parking. The application must show that the applicant can provide:
a. Parking. On site parking for the existing residential use shall be provided as required in Table
11.1 for Dwelling Single Family or Multiple Household, as applicable. The Planning Manager, in
his or her sole discretion, may give credit for up to two uncovered spaces on the abutting public
street if there is legal non -conforming parking on the site; or
b. Parking Exception. Applicants that are unable to meet the parking requirements in Section
H.3.a, due to existing legal non -conforming parking and/or site constraints, may obtain a
Parking Exception upon approval of a Minor Conditional Use Permit as prescribed in Section
24.030. Applications for a Parking Exception must provide documentation demonstrating that
adequate on -street parking is available to accommodate the proposed short term vacation
rental and the other existing uses on the site.
4. Safety. All short-term vacation rentals must provide smoke detectors, CO2 detectors, be adequately
heated, and otherwise satisfy all applicable requirements of the California Building Standards Code
as in effect in the City.
5. Duration. Short -Term Vacation Rental Permits shall be valid through the end of the calendar in
which they are issued. All Short -Term Vacation Rental Permits shall expire on December 31, unless
a renewal application is approved.
6. Permit Approval. AShort-Term Vacation Rental Permit application shall be approved if all
applicable requirements are satisfied; otherwise, the application shall be denied.
Renewal of Permit.
1. Permittees may apply to renew Short -Term Vacation Rental Permits on forms provided by the City.
2. Permit renewal applications tlo not require notice in accordance with Section B.
3. The Director shall issue a renewal of a Short -Term Vacation Rental Permit if the permittee satisfies
all applicable requirements pursuant to this Chapter; otherwise such renewal applications shall be
denied. The Director may deny a renewal application if he or she determines that any of the
following have occurred during the 12 months prior to the renewal application:
a. Failure to timely remit Transient Occupancy Taxes; or
b. More than three verified violations of this section; or
c. The Director determines that permittee has provided false information in the application or
previous renewal application; or
d. An authorized official has given notification or health or safety violations or non-compliance on
the property.
Ordinance No. 2300 N.C.S.
Attachment 1
J. Revocation of Permit. Upon confirmation of three or more verified violations of this section or other information
alleging that a short -term vacation rental has violated or is in violation of any applicable laws, regulations, or other
requirements, including, but not limited to, the requirements of this section, the Planning Director or a designee of
the Planning Director may commence permit revocation proceedings in accordance with section 24.030(J). Once a
Short -Term Vacation Rental Permit has been revoked, continued use of the Short —Term Vacation Rental at that
location is prohibited and subsequent applications may not be filed within one (1) year from the date of revocation.
K. Appeal. Appeal of decisions of the Planning Director pursuant to this section may be brought pursuant to Section
24.070.
L. Enforcement. The City may seek remedies for any violations of this section pursuant to any applicable authorities,
including, but not limited to, those contained in Chapter 26 and those contained in Title 1 of the Petaluma Municipal
Code,
M. Sunset. Unless otherwise extended, or modified and extended by action of the City Council, this Ordinance shall
expire and its terms shall no longer remain in effect as of midnight, December 31, 2018,
Ordinance No. 2300 N.C.S.
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