CC 2014-06-10_08.i. Adopt Ordinance - Vacation Rentals and HomestaysTO:
FROM:
BY:
SUBJECT:
DATE:
MEMORANDUM
CITY COUNCIL
TERESA MCCLISH, COMMUNITY DEVELOPMENT DIRECTOR
MATTHEW DOWNING~~SSISTANT PLANNER
CONSIDERATION OF ADOPTION OF AN ORDINANCE
REGARDING VACATION RENTALS AND HOMESTAYS;
LOCATION -CITYWIDE; DEVELOPMENT CODE AMENDMENT
14-002; APPLICANT-CITY OF ARROYO GRANDE
JUNE 10, 2014
RECOMMENDATION:
It is recommended that the City Council adopt an Ordinance amending portions
of Title 16 of the Arroyo Grande Municipal Code regulating vacation rentals and
homestays.
IMPACT ON FINANCIAL AND PERSONNEL RESOURCES:
Staff estimates that the proposed Ordinance will result in an increase in Transient
Occupancy Tax (TOT) of approximately $350-$1,500 per rental unit per year.
This amount will depend largely on how often the rental is occupied and the
amount for which it is rented. Business Licenses will also be required for the
operation of vacation rentals and homestays. Additionally, vacation rentals and
homestays could be subject to inclusion in the Arroyo Grande Tourism Business
Improvement District (TBID) in the future. Approval of the Ordinance will result in
some impact to staff time to process permits, but will be reimbursed through
application fees.
BACKGROUND:
Recently, the City has seen an increased interest in vacation rental and
homestay activities. This is due to a number of reasons, including the increased
exposure of the City as a travel destination, internet marketing, County tourism,
and websites specializing in person-to-person rentals (eg. VRBO, AirBnB, etc.).
Staff reviewed neighboring jurisdictions' regulations on vacation rentals and
homestays and developed regulations to address the perceived gap in the City's
Municipal Code.
Item 8.i. - Page 1
CITY COUNCIL
·CONSIDERATION OF DEVELOPMENT CODE AMENDMENT 14-002
REGARDING VACATION RENTALS AND HOMESTAYS
JUNE 10, 2014
PAGE2
Planning Commission
On March 4, 2014, the Planning Commission reviewed a proposed Ordinance
establishing regulations for vacation rentals and grouping homestays as a type of
bed and breakfast inn. The proposed Ordinance required a conditional use
permit for both types of operations. The Planning Commission directed staff to
revise the Ordinance to accomplish the following:
• Separate homestays from bed and breakfast inns and create a new
definition;
• Determine an administrative permitting process instead of requiring a
conditional use permit, with an application fee that recovers the cost of
staff time and resources for permit processing;
• Limit homestays to a maximum of two (2) rooms available for rent at a
time; and
• Do not allow for on-site advertising of homestay availability.
On March 18, 2014, the Planning Commission reviewed a revised Ordinance
developed in response to the Commission's direction. Planning Commissioners
were in support of the revised Ordinance with one modification requiring vacation
rental operators to annually notify the Community Development Department at
time of Business License renewal of any changes to the local contact person for
their operation. This change replaced the requirement for annually notifying
property owners within 300' of the vacation rental.
City Council
On May 27, 2014, the City Council introduced an Ordinance with specific
modifications made during the meeting. These modifications included prohibiting
the establishment of additional vacation rentals within 300' of existing vacation
rentals on the same street. The same prohibition was applied to homestays.
The modifications are reflected in the attached Ordinance. The Council also
requested a status update on the Ordinance in a year or earlier if circumstances
dictate, as well as a monthly report to the Council on any complaints/code
enforcement action taken with regard to violations of the vacation rental and
homestay ordinance.
ANALYSIS OF ISSUES:
Vacation Rentals
The proposed Ordinance will amend several portions of Title 16 of the Arroyo
Grande Municipal Code. Specifically, the Ordinance proposes to add Section
16.52.230 to regulate vacation rentals, in which the operator does not live on-
site. In general, these regulations include provisions regarding:
• Requirement for a minor use permit, business license, and payment of
applicable taxes and assessments;
Item 8.i. - Page 2
CITY COUNCIL
CONSIDERATION OF DEVELOPMENT CODE AMENDMENT 14-002
REGARDING VACATION RENTALS AND HOMESTAYS
JUNE 10, 2014
PAGE 3
• Requirement for a contact person to respond to neighbor complaints and
ensure compliance with applicable City Codes;
• Annual notification to the Community Development Department of contact
information for contact person;
• Restrictions on the number of occupants based upon the number of
bedrooms.
Homestays
The proposed Ordinance also adds Section 16.52.240 to specifically regulate
homestays. Homestays have become increasingly popular in the City as a result
of several internet companies specializing in the advertising of these uses.
These websites are designed to make it easier for individuals to rent out rooms in
their homes to visitors of the City.
The proposed Ordinance amends Section 16.04.070 to define "homestays" as an
owner-occupied dwelling unit where a maximum of two (2) short-term lodging
rooms are provided for compensation. The regulations for homestays are similar
to those for vacation rentals, with the exception that neighboring property
notification of the decision is not required, the requirement for a local contact
person does not apply (as the owner lives on-site), and annual notification to the
Community Development Department of the contact person's contact information
is not required. The regulations developed for homestays also include some
provisions found in the regulations for bed and breakfast inns. These regulations
include restrictions on individual guest stays to not exceed fourteen (14) days
without a seven (7) day break between, as well as compliance with County
Health Department provisions if food is being served to guests.
Minor Use Permit Process
The proposed Ordinance would establish an administrative review process in
which staff would issue a minor use permit-plot plan review, subject to meeting
the specific regulations required for the proposed use. The plot plan review is
one of seven (7) subtypes of the minor use permit and is the most common
permit necessary for the establishment of a new use in the City. Standard
conditions of approval would be imposed to ensure the use complies with the
Municipal Code, such as limiting the number of occupants based on number of
bedrooms. Regulations for bed and breakfast inns remain unchanged.
For vacation rentals, notice of the decision to approve or deny a permit will be
mailed to all property owners within 300' of the property and notice of the
decision will also be provided to the Planning Commission. Homestays will not
require property owner notification. All minor use permit-plot plan reviews are
reported to the Planning Commission under Notice of Administrative Decisions.
Item 8.i. - Page 3
CITY COUNCIL
CONSIDERATION OF DEVELOPMENT CODE AMENDMENT 14-002
REGARDING VACATION RENTALS AND HOMESTAYS
JUNE 10, 2014
PAGE4
The Planning Commission then has the option to consider the item in the future
at a duly noticed public hearing.
Residential and Commercial Use Tables
The proposed Ordinance includes updated use tables for the City's residential
and commercial districts. These updated tables reflect the requirement for a
minor use permit to establish either a vacation rental or a homestay and are
generally consistent with the zoning districts conditionally permitting bed and
breakfast inns. One exception to this was in response to Planning Commission
inquiries regarding the prohibition of vacation rentals and homestays in the
Residential Estate (RE) zoning district, which staff has updated to be a
conditionally permitted use. Vacation rentals and homestays are prohibited in
the Industrial Mixed-Use (IMU) and Regional Commercial (RC) zoning districts.
Revocation of Minor Use Permit
The minor use permit-plot plan review may be revoked by the Planning
Commission upon initiation by either the Planning Commission, City Council, or
by the City Manager in accordance with Section 16.16.220 of the Municipal
Code. Under these provisions, a public hearing is held by the Planning
Commission and if it is determined that the permit was obtained by
misrepresentation or fraud, the use has ceased for six or more months, or that
conditions of the permit are not being met, the permit may be revoked.
ALTERNATIVES:
The following alternatives are provided for the Council's consideration:
• Adopt the attached Ordinance;
• Modify and reintroduce the Ordinance;
• Do not adopt the Ordinance and instead provide direction to staff
regarding desired modifications to the Ordinance; or
• Provide direction to staff.
ADVANTAGES:
The proposed Ordinance will fill a gap in the Development Code with regard to
vacation rentals and homestays. The process for permitting vacation rentals will
allow for a simplified procedure for establishing vacation rentals, while still
providing neighborhood notification of the Community Development Director's
decision. The process for permitting homestays would allow a simplified
procedure for establishing homestays. Additionally, the proposed Ordinance
would require vacation rentals and homestays to pay Transient Occupancy
Taxes to the City and obtain a Business License for operation, while potentially
being included in the TBID in the future.
Item 8.i. - Page 4
CITY COUNCIL
CONSIDERATION OF DEVELOPMENT CODE AMENDMENT 14-002
REGARDING VACATION RENTALS AND HOMESTAYS
JUNE 10, 2014
PAGE 5
Proponents of homestays and vacation rentals argue that they provide an income
option for residential properties that improves neighborhoods. Proponents argue
this is because the uses provide an incentive for owners to maintain their
property in good condition when compared to traditional rentals, which are now
allowed with no special permitting requirements.
DISADVANTAGES:
The proposed process for vacation rentals and homestays is greatly simplified
from the originally identified process of a conditional use permit. Some residents
may feel the requirement for a minor use permit-plot plan review is inadequate.
Additionally, the action formalizes that homestays and vacation rentals are
conditionally permitted use. Complaints received by the City include that
vacation rentals and homestays are commercial enterprises that can change the
character of residential neighborhoods and cause disruptions, including noise,
parking congestion, and increased traffic.
ENVIRONMENTAL REVIEW:
In accordance with the California Environmental Quality Act (CEQA), staff has
determined that the draft Ordinance is exempt per Sections 15061 (b )(3) and
15308 of the CEQA Guidelines.
PUBLIC NOTICE AND COMMENT:
A summary of the Ordinance was published in the Tribune on June 5, 2014. The
agenda was posted in front of City Hall on Thursday, June 5, 2014 and the
agenda and staff report were posted in City Hall and on the City's website on
Friday, June 6, 2014.
Item 8.i. - Page 5
ORDINANCE NO.
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ARROYO
GRANDE AMENDING TITLE 16 OF THE ARROYO GRANDE
MUNICIPAL CODE REGARDING VACATION RENTALS AND
HOMESTAYS
WHEREAS, the City of Arroyo Grande ("City") currently does not regulate vacation
rentals or homestays; and
WHEREAS, the City does regulate similar transient uses with similar impacts such as
bed and breakfast inns; and
WHEREAS, the City Council finds that, unless properly regulated, vacation rentals and
homestays can result in adverse impacts to adjacent properties; and
WHEREAS, the purpose of these regulations is to ensure that vacation rentals and
homestays conform to the existing character of the neighborhood in which they are
located and do not create an adverse impact on adjacent properties; and
WHEREAS, the increasing popularity of vacation rentals and homestays in the City the
implementation of appropriate regulations to ensure that impacts are addressed and the
character of existing neighborhoods is maintained, while providing an expanded type of
lodging facility available within the City; and
WHEREAS, it is the purpose of this Ordinance to protect the public health, safety, and
welfare within the City by establishing rules and requirements for vacation rentals and
homestays; and
WHEREAS, after consideration of all testimony and all relevant evidence, the City
Council has determined that the following Development Code Amendment findings can
be made in an affirmative manner:
A. The proposed revisions to Title 16 are required to ensure consistency with the
objectives, policies and implementation measures of the General Plan,
particularly the Land Use Element, and is therefore desirable to implement the
provisions of the General Plan.
B. The proposed revisions to Title 16 will not adversely affect the public health,
safety, and welfare or result in an illogical land use pattern.
C. The proposed revisions are consistent with the purpose and intent of Title 16 and
satisfy the intent of Chapter 16.08 of the Municipal Code and provide for internal
consistency.
D. The proposed revisions to Title 16 are exempt under per Sections 15061 (b )(3) and
15308 of the California Environmental Quality Act (CEQA) Guidelines.
Item 8.i. - Page 6
ORDINANCE NO.
PAGE2
NOW, THEREFORE, BE IT ORDAINED by the City Council of the City of Arroyo
Grande as follows:
SECTION 1: The above recitals and findings are true and correct and incorporated
herein by this reference.
SECTION 2: Arroyo Grande Municipal Code Section 16.52.230 is hereby added as
follows:
SECTION 16.52.230-VACATION RENTALS
A. Purpose and intent. The purpose of these regulations is to ensure that vacation
rentals located in the city conform to the existing character of the neighborhood
in which they are located and do not create an adverse impact on adjacent
properties.
B. Applicability. Vacation rentals may be permitted only with approval of a minor use
permit. Vacation rentals shall comply with the property development standards
of the underlying district and the performance standards and special conditions
listed in Section 16.52.230.C.
C. Performance standards and conditions for vacation rentals.
1. Operators of vacation rentals are required to obtain a minor use permit-
plot plan review (Section 16.16.080) and a business license.
2. Any proposed vacation rental shall be compatible with the neighborhood in
which it is located in terms of landscaping, scale and architectural
character. The use shall be harmonious and compatible with the existing
uses with the neighborhood
3. All Building Code and Fire Code requirements for the level of occupancy
of the vacation rental shall be met.
4. All environmental health regulations shall be met.
5. The operator of the vacation rental shall, at all times while the property is
being used as a vacation rental, maintain a contact person/entity within a
fifteen (15) minute drive of the property. The contact person or entity must
be available via telephone twenty-four (24) hours a day, seven (7) days a
week, to respond to complaints regarding the use of the vacation rental.
The contact person or entity shall respond, either in person or by return
telephone call, with a proposed resolution to the complaint within three (3)
hours between 7:00 am and 9:00 pm, and within thirty (30) minutes
between 9:00 pm and 7:00am.
Item 8.i. - Page 7
ORDINANCE NO.
PAGE 3
6. The operator of the vacation rental shall annually, at the time of renewal of
the business license, notify the Community Development Department of
the name, address and telephone number of the contact person required
in subsection 16.52.230.C.6.
7. A written notice shall be conspicuously posted inside each vacation rental
unit setting forth the name, address and telephone number of the contact
person required in subsection 16.52.230.C.6. The notice shall also set
forth the address of the vacation rental, the maximum number of
occupants permitted to stay overnight in the unit, the maximum number of
vehicles allowed to be parked on-site, and the day(s) established for
garbage collection. The notice shall also provide the non-emergency
number of the Arroyo Grande Police Department.
8. On-site advertising of the vacation rental is prohibited.
9. The number of overnight occupants shall be limited to two persons per
bedroom and two additional persons. A bedroom shall meet the minimum
size requirements as defined in the Building Code.
10. All refuse shall be stored in appropriate containers and placed at the curb
for collection every week.
11. The operator of the vacation rental shall pay Transient Occupancy Tax as
required by Arroyo Grande Municipal Code Section 3.24.030.
12. Establishment of a vacation rental within 300 feet of an existing vacation
rental on the same street shall not be permitted.
13. Violations -violation of these requirements shall constitute grounds for
revocation of the minor use permit pursuant to Section 16.16.220.
SECTION 3: Arroyo Grande Municipal Code Section 16.52.240 is hereby added as
follows:
SECTION 16.52.240-HOMESTAYS
A. Purpose and intent. The purpose of these regulations is to ensure that
homestays located in the city conform to the existing character of the
neighborhood in which they are located and do not create an adverse impact on
adjacent properties.
B. Applicability. Homestays may be permitted only with approval of a minor use
permit. Homestays shall comply with the property development standards of the
Item 8.i. - Page 8
ORDINANCE NO.
PAGE4
underlying district and the performance standards and special conditions listed in
Section 16.52.240.C.
C. Performance standards and conditions for homestays.
1. Operators of homestays are required to obtain a minor use permit-plot
plan review (Section 16.16.080) and a business license.
2. Any proposed homestay shall be compatible with the neighborhood in
which it is located in terms of landscaping, scale and architectural
character. The use shall be harmonious and compatible with the existing
uses with the neighborhood
3. All Building Code and Fire Code requirements for the level of occupancy
of the homestay shall be met.
4. All environmental health regulations shall be met.
5. The operator shall reside on the premises.
6. Individual guest stays shall be limited to fourteen (14) days, with a seven-
day period between stays.
7. On-site advertising of the homestay is prohibited.
8. A bedroom shall meet the minimum size requirements as defined in the
Building Code.
9. The operator of the homestay shall pay Transient Occupancy Tax as
required by Arroyo Grande Municipal Code Section 3.24.030.
10. Establishment of a homestay within 300 feet of an existing homestay on
the same street shall not be permitted.
11. Violations -violation of these requirements shall constitute grounds for
revocation of the minor use permit pursuant to Section 16.16.220.
SECTION 4: The following definitions in Arroyo Grande Municipal Code Subsection
16.04.070.C. are hereby amended or added as follows:
16.04.070.C. Definitions
"Bed and breakfast inn" means an owner-occupied dwelling unit where three (3) or more
short-term lodging rooms and meals are provided for compensation or onsite siqnaqe is
desired.
Item 8.i. - Page 9
ORDINANCE NO.
PAGE 5
"Homestay" means an owner-occupied dwelling unit where a maximum of two (2) short-
term lodging rooms are provided for compensation.
"Vacation rental" means a structure being rented for less than thirty (30) days without
concurrently being occupied by the owner/operator where the short-term lodging is
provided for compensation.
SECTION 5: Arroyo Grande Municipal Code Section 16.16.080 is hereby amended to
add Subsection 8.10 and Subsection C.6 as follows:
16.16.080.8.1 0. Establishment of vacation rentals or homestays in applicable zoning
districts identified in Table 16.32.040-A and Table 16.36.030(A).
16.16.080.C.6. For plot plan reviews establishing the use of property for vacation rental
purposes, the decision of the community development director shall also be mailed to all
property owners of parcels within three hundred (300) feet of the property for which the
plot plan review has been requested, in addition to the requirements of Section
16.16.080.C.5. The notice shall indicate the appeal provisions of Section 16.12.150.
SECTION 6: Arroyo Grande Municipal Code Table 16.32.040-A, entitled "Uses
Permitted Within Residential Districts", Section A. Residential Uses is hereby amended
to add Subsection A.17. as follows:
USE RE RH RR RS SF VR D-2.4 MF MFA MFVH MHP
A. Residential Uses
17. Vacation Rentals MUP MUP MUP MUP MUP MUP MUP MUP NP NP
and Homestays
SECTION 7: Arroyo Grande Municipal Code Table 16.36.030(A), entitled "Uses
Permitted Within Mixed Use and Commercial Districts", Section B. Services-General is
hereby amended to add the following use:
USE VCD VMU
HCO D-2.11 OMU 1
TMU D-HCO D-Specific
IMU D-2.11 2.4 D-2.4 GMU FOMU HMU 2.20 RC 2 Use Stds
B. Services -General
Vacation Rentals and NP MUP MUP MUP MUP MUP MUP MUP NP 16.52.230
Homestays 16.52.240
SECTION 8: If any section, subsection, subdivision, paragraph, sentence, or clause of
this Ordinance or any part thereof is for any reason held to be unlawful, such decision
shall not affect the validity of the remaining portion of this Ordinance or any part thereof.
The City Council hereby declares that it would have passed each section, subsection,
subdivision, paragraph, sentence, or clause thereof, irrespective of the fact that any one
or more section, subsection, subdivision, paragraph, sentence, or clause be declared
unconstitutional.
Item 8.i. - Page 10
ORDINANCE NO.
PAGE6
SECTION 9: Upon adoption of this Ordinance, the City Clerk shall file a Notice of
Exemption pursuant to 14 CCR § 15062.
SECTION 10: A summary of this Ordinance shall be published in a newspaper
published and circulated in the City of Arroyo Grande at least five (5) days prior to the
City Council meeting at which the proposed Ordinance is to be adopted. A certified
copy of the full text of the proposed Ordinance shall be posted in the office of the City
Clerk. Within fifteen (15) days after adoption of the Ordinance, the summary with the
names of those City Council Members voting for and against the Ordinance shall be
published again, and the City Clerk shall post a certified copy of the full text of such
adopted Ordinance.
SECTION 11: This Ordinance shall take effect thirty (30) days from the date of
adoption.
On motion of Council Member
following roll call vote to wit:
AYES:
NOES:
ABSENT:
, seconded by Council Member
The foregoing Ordinance was adopted this 1 01h day of June, 2014.
, and on the
Item 8.i. - Page 11
ORDINANCE NO.
PAGE 7
TONYFERRARA,MAYOR
ATTEST:
KELLY WETMORE, CITY CLERK
APPROVED AS TO CONTENT:
STEVEN ADAMS, CITY MANAGER
APPROVED AS TO FORM:
TIMOTHY J. CARMEL, CITY ATTORNEY
Item 8.i. - Page 12