CC 2022-09-13_09b Vacation Rentals PP PresentationDISCUSS AND CONSIDER AMENDMENTS TO SHORT TERM RENTAL ORDINANCE
9/13/2022
1
Background
Ordinance 663
June 2014 – CC adopted with regulations in response to concerns raised during public review
Went into effect 7/10/2014
Developed by both PC and CC
Requires compliance with performance standards, adherence to the conditions of approval and presence of local contact to minimize adverse impacts
Currently approved:
86 Vacation Rentals
47 Homestays
9/13/2022
2
Sept. 3, 2019 PC Meeting
Planning Commission received a status report on STRs
Recommended the following:
Implementation of parking requirements for STRs;
Administrative fines for non-permitted STRs
Utilization of compliance technology to address non-permitted STRs; and
Reconsideration of current buffer distances or methods
9/13/2022
3
Oct. 12, 2021 City Council Meeting
Council directed staff to bring a discussion item to evaluate Ordinance 663
In response to public comments regarding the proliferation of STRs, application and appeal process associated with STRs, and other related issues such as the 300-foot location radius
9/13/2022
4
Mar 22, 2022 CC Study Session
City Council reviewed the existing Ordinance and made a number of suggestions for revisions:
Cap on number of VR approvals
Contract with enforcement company
Alter rental buffer distance
Establish revocation triggers
Require applicants to purchase mailing labels from City
Improve performance standards
Establish expiration clause
Consider parking requirement
9/13/2022
5
Trends
Since implementation of Ordinance 663, the City has permitted eighty-six (86) vacation rentals and forty-seven (47) homestays.
STR approvals per year:
2014 – Two (2) VR approvals; five (5) homestay approvals
2015 – Two (2) VR approvals; one (1) homestay approval
2016 – Six (6) VR approvals; two (2) homestay approvals
2017 – Five (5) VR approvals; seven (7) homestay approvals
2018 – Seven (7) VR approvals; six (6) homestay approvals
2019 – Eighteen (18) VR approvals; seven (7) homestay approvals
2020 – Ten (10) VR approvals; four (4) homestay approvals
2021 – Nineteen (19) VR approvals; six (6) homestay approvals
2022 – Fourteen (14) VR approvals*; six (6) homestay approvals*
*Approvals listed for 2022 reflect approvals granted through the end of June and do not include approvals listed on tonight’s agenda
9/13/2022
6
STR Appeals
Since adoption of Ordinance 663, nine (9) vacation rental permits approved by the Community Development Director have been appealed
Each appeal denied by Planning Commission due to PC being able to make the findings for approval
Of these, two (2) PC decisions appealed to CC
Both appeals were denied due to CC being able to make findings for approval
Typical concerns included noise, traffic and parking impacts; transient occupation; and loss of property values
These concerns were determined to have been addressed during Ordinance development and are addressed by performance standards for all STRs
To date, no complaints received that required Code Enforcement action or where revocation of a permit was considered
9/13/2022
7
Housing Needs
Housing Element Policy B.6 states: “The City shall continue to regulate the use of existing residences on residentially zoned properties for vacation rentals.”
Housing Element Program B.6-1 states: “The City shall monitor the loss of permanent workforce housing from vacation rentals and consider modifying the Development Code to adjust for
this loss.”
8/2/2022
8
Housing Needs Continued
US Census Bureau estimates that there are 7,847 housing units in City
2,169 of these are rental units
74 Vacation rentals accounts for ~4% of rental units
City estimates maximum of 716 vacation rentals with current regulations
Would account for ~33% of rental units citywide
9/13/2022
9
Financial Impacts
Short Term Rentals required to pay 13.5% of gross receipts for Transient Occupancy Tax (TOT)
10% to City general fund
Used to maintain streets and services
2% to Arroyo Grande Tourism Business Improvement District (AGTBID)
Used for marketing and promotional efforts for City lodging industry
1.5% to SLO County Tourism Marketing District (SLOTMD) aka Visit SLO Cal
Used for marketing and promotional efforts for County lodging industry
City collected approximately $150,000 in FY21/22 in TOT from Short Term Rentals
9/13/2022
10
Unpermitted STRs
Enforcement of unpermitted rentals is difficult with City’s current resources
Enforcement currently conducted on a complaint basis
Enforcement companies have contacted the City to monitor permitted and unpermitted rentals
Estimates that there are as few as 25 and up to as many as 150-200 unpermitted rentals within City
Estimates that City could be missing out on significant TOT revenue
Companies can locate and contact any unpermitted rental listing and work directly with owner or property manager to bring property into compliance and ensure full collection of TOT
Companies can also work with permitted rentals to ensure particular items appear within listing, such as Business License / Plot Plan Review permit information
9/13/2022
11
Unpermitted STRs Continued
City advertised RFP to select firm to assist with rental host compliance
Reviewed proposals
Interviewed with top three (3) firms
Selected preferred consultant
In progress on contract execution
Identify all rental properties within City
Send outreach letters to all rentals
City will conduct all enforcement on unpermitted rentals
TOT collection through online portal
9/13/22
12
Proposed Ordinance Revisions
Cap on total number
Council directed staff to cap VRs at 120 approvals
Planning Commission concurred with proposed cap
Represents ~1.5% of City housing units or ~4% of rental units
STR Buffer
Buffer currently prohibits any two STRs of the same type within 300’ of one another on the same street
Council directed staff to amend this buffer distance for vacation rentals
No VRs within 300’ regardless of street address
Planning Commission recommended that buffer be increased to 500’ and apply to short term rentals of all types or schools
No STR within 500’ radius of another
No STR within 500’ of a school
PC recommendation included in draft ordinance
Revocation
Currently no clear triggers for revocation of permit holders operating in violation of performance standards
Council directed staff and PC to develop objective performance standards to facilitate harmonious operation and transparent enforcement
PC recommends that revocation process be initiated if:
Emergency contact unresponsive three consecutive times; OR
AGPD issues citation to STR guest
9/13/2022
13
Proposed Revisions Continued
Expiration
CC study session
Operators must remit TOT at least once every twelve (12) months, otherwise approval expires
PC recommends permits expire at point of sale
City Attorney advises against this recommendation due to inconsistencies with MUP approval process
Existing approvals will become legally non-conforming and can continue operation per AGMC 16.48.110(B)(1)
Non-conformity could be addressed through amortization if further direction is provided
9/13/2022
14
Performance Standards
CC Study Session:
Asked PC to develop objective performance standards
Goal: make revocation process simpler to initiate for non-compliant rentals
Recommended requirement to purchase mailing labels from City
PC recommendations:
No STRs in PUDs
Newly implemented performance standards apply to VRs and Homestays
Concurred with requirement to purchase labels from City
Buffer distance increased to 500’ and expanded to all STR types and from schools
Concurred with cap of 120 approved VRs
Revocation initiated after three non-responses from emergency contact or one citation issued by AGPD
Concurred that TOT should be remitted once per year at minimum
Require 2 parking spaces per VR or 1 space per rented bedroom in homestay
9/13/22
15
Definitions
Staff recommends clean-up of definitions to more clearly define rental types
Allow VRs on properties with more than one structure
Explicitly require that homestay operator is physically on site while renting unit
9/13/22
16
Recommended Action
Introduce an Ordinance amending the short term rental regulations within the City
9/13/2022
17
Questions?
9/13/22
18