Vacation Rental Regulation

Summary:

The City Council adopted regulations prohibiting new vacation rentals on December 4, 2017, and the effective date of the new ordinance was thirty days after adoption.

Vacation rentals are no longer a conditionally-permitted use in the Mixed Use and Commercial zones (new vacation rentals were already prohibited in residential zones). An exception provides for new applications for vacation rentals involving the adaptive re-use of a historic structure. Existing, licensed vacation rentals are allowed to continue, provided they meet the updated operating standards.

The updated operating standards established by the ordinance, which apply to all vacation rentals, include:

Occupancy Limits /Maximum Overnight Occupancy. Maximum overnight occupancy limited to a maximum of two persons per sleeping room or guestroom, plus two additional persons per unit.
Noise Limits. A prohibition on outdoor amplified sound is imposed.
Property Manager. A requirement is established for a property manager, with contact information to be provided to the City.
Requirements for Internet Advertisements and Listings. To simplify enforcement of illegal vacation rentals, online advertisements and/or listings for the vacation rental properties are required to include a Business License or Transient Occupancy Tax Certificate number.
Inspection Fee. To recover the costs of ensuring that the operational requirements are met, an allowance for an annual inspection fee could be established. The ordinance does not in and of itself establish a fee. It simply provides for that option as a subsequent action if the City Council so desires.

For more information on the requirements of the ordinance, contact the Planning Department. To report a possible violation or to learn more about enforcement of the City's vacation rental regulations, contact the Code Enforcement Division.

BACKGROUND:

In October 2016, the City Council unanimously adopted (and later extended) an interim moratorium ordinance on the approval of new applications for vacation rentals while changes to the regulations were discussed and implemented. A series of meetings were held by the Planning Commission and City Council as permanent regulations were researched and reviewed. On November 20, 2017, the City Council reviewed the draft ordinance as recommended by the Planning Commission. After holding a public hearing and discussion the matter, the City Council voted 5-0 to introduce the ordinance. The final ordinance was approved on December 4, 2017 as a second reading and became effective 30 days later and included in the City's Municipal Code.

ENFORCEMENT PROCESS:

Enforcement of vacation rental regulations is included in the scope of the contract for the City Prosecutor as part of the general code enforcement function. Typically, cities contract with an outside technology firm that uses specialized software and search capabilities to help monitor and stop illegal short-term rentals and capture past taxes. In 2018-19, staff investigated various vacation rental software compliance programs and selected a STR Helper for data/analytical support (since that time, STR Helper has been acquired by Host Compliance). Code compliance staff has been working in coordination with STR since the spring of 2019.

Vacation rental cases are highly time-intensive due to the steps needed to collect and assemble the portfolio of evidence necessary to take enforcement action. The enforcement process for vacation rentals can be summarized as follows:

Code Enforcement relies on citizen complaints and our 3rd party vendor to identify potential short-term rental violations. STR Helper uses software “sweeps” that include non-business hours and weekends. Once a property has been determined to be in possible violation of vacation rental regulations, the file is assigned to a human validator. If the validator confirms a violation to a 95% certainty the information is forwarded to the Code Enforcement. Code Enforcement conducts its own investigation of each property that has been identified and develops a portfolio of evidence.

An Administrative Notice & Order is sent to the owner of the property in violation. The notice lays out the violation(s) with the details of the evidence compiled, and orders the owner to cease continuation or repeated occurrence of the code violation. In cases of illegal vacation rentals, it also orders the violator to produce records relating to the number of days stayed in the rental and the dollar amount from each day, provides information on penalties, and sets the date for the administrative hearing. Full compliance with the order, including abatement of the violation and payment of taxes, assessments, and penalties owed, can result in pre-hearing resolution of the case.

Unresolved cases proceed to an Administrative Hearing. Hearings are held in Council Chambers. Within 45 days, the hearing officer files a written decision to either uphold or cancel the administrative notice and order as to each named responsible party. The decision of the Administrative Hearing Officer can be appealed to Superior Court.

REPORTS:

Code Enforcement staff provides regular reports to the City Council for their review.