County of Sonoma Agenda Item Summary Report

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1 County of Sonoma Agenda Item Summary Report Agenda Item Number: 55 (This Section for use by Clerk of the Board Only.) Clerk of the Board 575 Administration Drive Santa Rosa, CA To: Board of Supervisors Board Agenda Date: December 5, 2017 Vote Requirement: 4/5 Department or Agency Name(s): Permit Sonoma and County Counsel Staff Name and Phone Number: Tennis Wick, Jennifer Barrett, Title: Supervisorial District(s): All Urgency Ordinance Extending Prohibition on New Vacation Rental and Hosted Rental Permits Excluding the Russian River Planning Area Recommended Actions: 1) Adopt an Urgency Interim Ordinance Extending the Prohibition on Issuing New Vacation Rental and Hosted Rental Permits for 90 days, Excluding the Russian River Planning Area. Executive Summary: On October 24 th, 2017, the Board adopted an urgency ordinance prohibiting the issuance of vacation rental and hosted rental permits countywide to preserve an already constrained housing supply, now reduced by 5,100 units due to the Sonoma Complex Fires. Pursuant to state law, the moratorium could only be imposed for an initial period of 45 days ending on December 8, State law allows extension of the temporary moratorium for up to one year, but requires that the moratorium be adopted in sequential steps with specified timeframes. First an initial ban on new permits may be approved for a 45-day period, and then an extension of up to ten months and 15 days may be approved for a combined total of one year. Staff recommends extending the urgency ordinance for an additional period of 90 days while staff gathers additional information on the availability of housing for fire victims. Staff also recommends excluding the Russian River Planning Area that has been a resort and vacation area dependent on tourism. Discussion: The following proposed extension of the temporary moratorium on vacation rental and hosted rental permits is part of the Board s effort to address the most immediate housing needs faced by the citizens of Sonoma County. The drastic decline in rental vacancy rates over the past five years to 1.8%,

2 combined with a 2.5% loss of the County s housing stock due to the Sonoma Complex Fires, indicates an urgent need to preserve the remaining housing stock. State law requires that the temporary ban on issuing vacation rental and hosted rental permits be adopted in two steps with timeframes specified in state law. The first is an initial 45-day period, which the Board adopted on October 24, The recommended ordinance would extend the ban for an additional 90 days (March 5, 2018), at which time staff can return to the Board for further extension of no more than one year if warranted. Unless further extended, additional new permits for vacation or hosted rentals could be issued through the regular administrative process after March 5, 2018 and be in place prior to the peak summer rental season. During any moratorium period, staff will develop more detailed information on available rental housing stock for persons displaced by the Sonoma Complex Fire and the impacts of vacation rental and hosted rental uses on that availability. If the Board determines that more time to consider the impacts of issuing new permits is needed at the end of any extension period, the Board could further extend the moratorium for up to an additional one year, as permitted by state law. No more than two extensions are allowed. Even prior to the Sonoma Complex Fire, the Board of Supervisors found that Sonoma County is experiencing a housing crisis, including a severe lack of rental housing that is affordable to lower and moderate income residents. The 2017 Sonoma County Profile Report developed by the Economic Development Board noted, Residential housing vacancy rates for both rental and homeowner inventory exhibit drastic declining trends. Rental vacancy rates fell from 5.8% in 2011 to a mere 1.8% in Homeowner vacancy rates fell from 2.2% in 2011 to 1% in A report entitled The Impact of Vacation Rentals on Affordable and Workforce Housing in Sonoma County prepared by Economic and Planning Systems for the Sonoma County Community Development Commission in 2015, made similar findings that There is a measurable shift in housing supply, otherwise available to the County s working families, to vacation rentals and other nonresident serving uses. The recommendation from that report was that the County should consider both new regulations to reduce future shifts of workforce housing to vacation rentals and also establish mitigation efforts to offset the existing and future impacts of vacation rentals on the County s housing supply. The Sonoma Complex Fire has now exacerbated the County s housing crisis. The Sonoma Complex Fire consumed more than 173 square miles and destroyed over 5,100 homes. This represents a loss of 2.5% of the total housing stock in Sonoma County. This unprecedented loss of housing has resulted in the displacement of thousands of residents for at least 18 months during recovery and rebuilding. A loss of housing of this magnitude may disproportionately affect renters and those with lower incomes. Vacancy rates for residential rentals before the fire were already less than 2%, far below the desired minimum vacancy of 5% considered to be a healthy rental market. One of staff s major concern is the lack of housing, particularly affordable housing, could cause people displaced by the fire or affected by the tight housing market to relocate out of Sonoma County dramatically reducing our available workforce. The lack of affordable housing and available workforce can further undermine the local economy if not quickly addressed.

The County has issued permits for 1,538 housing units to vacation rentals (outside the Coastal Zone) which comprises another 2% of the total housing stock in the unincorporated area.

3 The County has issued permits for 1,538 housing units to vacation rentals (outside the Coastal Zone) which comprises another 2% of the total housing stock in the unincorporated area. The proposed ordinance is intended to temporarily preserve the remaining existing single-family residences and accessory dwellings for residential rental uses for an interim period. Of the 1,538 permitted vacation rental units and 94 hosted rentals permitted, 77 vacation rentals and 6 hosted rentals were destroyed by fire. The remaining 1,461 vacation rentals and 88 hosted rentals will be allowed to continue renting on a transient basis because the moratorium only affects the issuance of new vacation or hosted rental permits. The moratorium does not affect existing or new rentals in the coastal zone, which currently do not require a permit. The vacation rental and hosted rental permits issued on the homes destroyed by the fires will remain valid after rebuilding, provided the units are not sold, in which case the new owner would need to apply for a new permit. Figure 1: Vacation and Hosted Rentals by Supervisorial District District 1 38% % % District 2 District 3 District % District 5 Permit Sonoma receives on average 16 vacation rental and 6 hosted rental permit applications each month, which connotes to approximately 192 units and 72 guest houses or rooms over a one year period that could be made available to rent to house fire victims or the workforce needed to rebuild. With 2.5% of the housing units lost in the fire countywide the conversion of any additional dwellings to vacation rentals or hosted rentals would further contribute to the existing housing emergency and present a current and immediate threat to the public health, welfare and safety of the County and its residents. There were 21 applications for vacation rentals and one for a hosted rental that were pending prior to the October 24 th Urgency Ordinance. Of these, pending permits 13 are in District 5 and 9 are in District 1. These applications were received in the three weeks prior to the fire and two weeks immediately after the fire. The pending applications outside of the Russian River Planning Area will remain in pending status until the end of the moratorium period, unless your Board wishes to allow all pending applications to proceed through the existing process for review and issuance. Applications in process in the Russian River Planning Area would be reviewed and issued under the proposed ordinance extension. However, it should be noted that four hotels were also lost in the fire and that tourism is a major economic driver for the community, particularly in the West County. The Russian River Area has

historically been a seasonal vacation home area and the local economy is highly dependent on the tourist industry. The Russian River Area includes Forestville, Guerneville and Monte Rio.

4 historically been a seasonal vacation home area and the local economy is highly dependent on the tourist industry. The Russian River Area includes Forestville, Guerneville and Monte Rio. The Coastal Zone which includes Valley Ford, Bodega Bay, Duncans Mills, Jenner and Sea Ranch is not subject to the moratorium adopted on October 24, 2017 or the proposed extension because vacation rental permits are not required in the Coastal Zone. Local interest groups are concerned that the moratorium may reduce annual transient occupancy taxes, as many owners have already made their vacation rentals available to fire victims. The moratorium on new vacation rental or hosted rental permits would not affect the existing permitted vacation rentals and would therefore not directly cause a loss of revenue from Transient Occupancy Tax. However, there may be a loss in revenue related to the vacation homes lost in the fire, vacation homes that are voluntarily made available for longer-term rentals, and the potential downturn in visitors coming to the area from the disaster declarations. In order to maintain the economic vitality of the Russian River resort area, staff recommends excluding the Russian River Planning Area from any extension. Figure 2: Russian River Planning Area 4 Recommendation

5 Staff recommends adoption of an urgency ordinance extending the prohibition on the issuance of new vacation rental and hosted rental permits for 90 days to limit any further conversion of housing to transient use. Staff further recommends that due to the local economic factors that rely on tourism in the Russian River, that this area be excluded from the moratorium and allow permits for vacation rentals to continue to be issued. Alternative Actions Alternative actions that may be considered by your Board include: A. Extend the prohibition on new permits for a longer period up to a maximum of 10 months and 15 days as allowed in state law. B. Add a pipeline provision allowing all 22 pending permits to be processed, by deleting Section II.2 of the attached proposed ordinance. C. Do not extend the moratorium. Prior Board Actions: On October 17, 24, 31 and November 7, the Board took various actions to increase the availability of rental housing for persons displaced by the Sonoma Complex Fire. On October 24, 2017 the Board adopted a 45-day temporary prohibition on issuing new vacation rental and hosted rental permits. Strategic Plan Alignment Goal 1: Safe, Healthy, and Caring Community

6 Fiscal Summary Expenditures FY Adopted FY Projected FY Projected Budgeted Expenses Additional Appropriation Requested Total Expenditures Funding Sources General Fund/WA GF State/Federal Fees/Other Use of Fund Balance Contingencies Total Sources Narrative Explanation of Fiscal Impacts: The moratorium on new vacation rental or hosted rental permits would not affect the existing permitted vacation rentals or vacation rentals in the coastal zone, and is not expected to directly cause a loss in revenue from Transient Occupancy Tax. Staffing Impacts Position Title (Payroll Classification) Monthly Salary Range (A I Step) Additions (Number) Deletions (Number) Narrative Explanation of Staffing Impacts (If Required): Attachments: 1. Urgency Interim Ordinance Extending the Prohibition on Issuing New Vacation Rental and Hosted Rental Permits for 90 Days, Excluding the Russian River Planning Area. Related Items On File with the Clerk of the Board:

7 ORDINANCE NO. ( ) URGENCY INTERIM ORDINANCE OF THE BOARD OF SUPERVISORS OF THE COUNTY OF SONOMA, STATE OF CALIFORNIA, EXTENDING THE PROHIBITON ON ISSUING NEW VACATION RENTAL AND HOSTED RENTAL PERMITS EXCEPT IN THE RUSSIAN RIVER PLANNING AREA FOR NINETY DAYS TO FACILITATE EMERGENCY HOUSING FOR PERSONS DISPLACED BY THE SONOMA COMPLEX FIRE URGENCY ORDINANCE - 4/5 VOTE REQUIRED The Board of Supervisors of the County of Sonoma, State of California, ordains as follows: Section I. Emergency Findings. This urgency ordinance is adopted pursuant to California Government Code section and shall take effect immediately upon its approval by at least a four-fifths vote of the Board of Supervisors, for a period of no more than ninety (90) days from the date of its adoption unless extended after notice and public hearing. The Board finds that this ordinance is necessary for the immediate preservation of the public peace, health and safety, based upon the following facts: 1. Conditions of extreme peril to the safety of persons and property within the County were caused by fast-moving and widespread fires, referred to as the Sonoma Complex Fire, commencing on the 8th day of October, 2017, at which time the Board of Supervisors was not in session. 2. California Government Code section 8630 and Sonoma County Code section 10-5 empower the County Administrator to proclaim the existence of a local emergency when the county is affected or likely to be affected by a public calamity, subject to ratification by the Board of Supervisors at the earliest practicable time. 3. On October 9, 2017, the County Administrator of the County of Sonoma proclaimed the existence of a local emergency within the Sonoma County Operational Area and also requested that the Governor of the State of California make available California Disaster Act Assistance and seek all available forms of disaster assistance and relief programs, including a request for a Presidential Declaration of a Major Disaster. 4. On October 9, 2017, the Governor of the State of California proclaimed a State of Emergency for Sonoma and other counties and has declared Sonoma County eligible for Fire Management Assistance Grant and other relief programs. 5. On October 10, 2011, the Board of Supervisors adopted Resolution No ratifying the County Administrator s proclamation of the existence of a local emergency with the Sonoma County Operation Area 1

8 and requesting that the Governor of the State of California make available California Disaster Act Assistance and seek all available forms of disaster assistance and relief programs, including a request for a Presidential Declaration of a Major Disaster. 6. On October 10, 2017, the President declared the existence of a major disaster in the State of California and ordered Federal aid to supplement state and local recovery efforts in the areas affected by wildfires, including the Sonoma Complex Fire, beginning on October 8, 2017, and continuing. 7. The Sonoma Complex Fire to date has consumed well over one hundred thousand acres and has led to the destruction of thousands of homes. It is estimated that at least 1500 households in Sonoma County, including unincorporated Sonoma County and municipal jurisdictions within Sonoma County, are without homes. 8. The Board of Supervisors has previously found that Sonoma County is experiencing a housing crisis. Even prior to the Sonoma Complex Fire, there existed in the unincorporated county area a severe lack of rental housing that is affordable to lower and moderate income residents. 9. The housing units destroyed by the Sonoma Complex Fire increased this rental housing shortage by several orders of magnitude and also severely reduced the number of owner-occupied housing units in the County. 10. Destruction of housing units in other nearby counties, including Lake, Napa, Solano and Mendocino Counties further exacerbates the ability of persons who live and work in Sonoma County and have been displaced by the Sonoma Complex Fire to relocate to other housing. 11. There are currently more than 1300 dwellings approved for use as vacation rentals in Sonoma County, many of which are operated by owners living off-site. The operation of these properties as vacation rentals reduces the number of dwellings otherwise available for longer term rentals for persons living and working in Sonoma County. 12. The County of Sonoma wishes to consider whether changes or amendments to its existing regulation of vacation rentals are necessary in light of the severity of the housing crisis in Sonoma County, as exacerbated by the Sonoma Complex Fire. 13. Conversion of additional single family housing units, including accessory dwellings and junior accessory dwellings, to vacation rentals presents a current and immediate threat to the public health, welfare and safety based on the facts and findings made herein. Approval of additional vacation rental permits in the County during an interim period in which the County 2

9 will consider amending or otherwise modifying its existing regulation of vacation rentals would contribute to the existing housing emergency and lack of rental housing available to persons and families displaced by the Sonoma Complex Fire. 14. On October 24, 2017, the Board of Supervisors adopted an Urgency Interim Ordinance Prohibiting the Issuance of Vacation Rental and Hostel Rental Permits to Facilitate Emergency Housing for Persons Displaced by the Sonoma Complex Fire, for an initial term of 45 days from October 24, 2017, pursuant to Government Code section Section II. Extension of Temporary Prohibition on Issuance of Vacation Rental and Hosted Rental Permits. 1. For a period of ninety (90) days from and after the effective date of this ordinance, no zoning permit and/or use permits for vacation rental and/or hosted rental units otherwise subject to Sonoma County Code Section shall be issued by the Sonoma County Permit Resources and Management Department, except within the Russian River Planning Area shown on the Sonoma County General Plan Land Use Map, Figure LU-2d. Provisions of the Sonoma County Zoning Ordinance which would otherwise allow vacation rentals and hosted rentals in various zoning districts outside of the Russian River Planning Area, whether as permitted or conditional uses, shall not allow the issuance of vacation rental or hosted rental permits during the life of this ordinance. 2. For a period of ninety (90) days from and after the effective date of this ordinance, no zoning and/or use permit for vacation rental and/or hosted rental unit(s) currently in process shall be granted and no such permit shall be issued, whether or not said application is considered complete, except for applications within the Russian River Planning Area shown on the Sonoma County General Plan Land Use Map, Figure LU-2d, which may be issued. Section III. Adoption of this ordinance is exempt from the provisions of the California Environmental Quality Act (CEQA) pursuant to Public Resources Code Section 21080(b)(3) regarding projects to replace property or facilities damaged or destroyed after a declared disaster and Section 21080(b)(4) regarding actions to mitigate or prevent an emergency, and CEQA Guidelines Section 15269(a) regarding maintaining, repairing, restoring, demolishing, or replacing property or facilities damaged or destroyed as a result of a disaster stricken area in which a state of emergency has been proclaimed by the Governor pursuant to the California Emergency Services Act, commencing with Section 8550 of the Government Code. Section IV. If any section, subsection, sentence, clause, or phrase of this ordinance is for any reason held to be unconstitutional or invalid, such decision shall not affect the 3

10 validity of the remaining portion of this ordinance. The Board of Supervisors hereby declares that it would have passed this ordinance and every section, subsection, sentence, clause or phrase thereof irrespective of the fact that any one or more sections, subsections, sentences, clauses or phrases be declared unconstitutional or invalid. Section V. This ordinance shall be and the same is hereby declared to be in full force and effect immediately upon its passage by a four-fifths (4/5) vote and shall continue in effect for a period of ninety (90) days, unless extended by the Board of Supervisors following notice and public hearing. A fair and accurate summary of this ordinance shall be published once before the expiration of fifteen (15) days after said passage, with the names of the Supervisors voting for or against the same, in The Press Democrat, a newspaper of general circulation published in the County of Sonoma, State of California. In regular session of the Board of Supervisors of the County of Sonoma, introduced and passed on the 5th day of December, 2017, on regular roll call of the members of said Board by the following vote: SUPERVISORS: Gorin: Rabbitt: Gore: Hopkins: Zane: Ayes: Noes: Absent: Abstain: WHEREUPON, the Chair declared the above and foregoing Ordinance duly adopted and SO ORDERED. ATTEST: Chair, Board of Supervisors County of Sonoma Sheryl Bratton, Clerk of the Board of Supervisors 4

County of Sonoma Agenda Item Summary Report

Revision No. 20170501-1 County of Sonoma Agenda Item Summary Report Agenda Item Number: (This Section for use by Clerk of the Board Only.) Clerk of the Board 575 Administration Drive Santa Rosa, CA 95403