COMMISSION ACTION FORM SUBJECT: ZONING TEXT AMENDMENT TO ALLOW SHORT-TERM RENTALS WITHIN APARTMENT UNITS.

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1 COMMISSION ACTION FORM ITEM: 6 DATE: 01/16/19 SUBJECT: ZONING TEXT AMENDMENT TO ALLOW SHORT-TERM RENTALS WITHIN APARTMENT UNITS. BACKGROUND: On September 19, 2018, the Planning & Zoning Commission (P&Z) reviewed and made a recommendation on the draft short-term rental (STR) ordinance for single and two-family homes. STRs are often referred to as Airbnb s. The draft ordinance was taken to the City Council for discussion on October 23, 2018 and again on November 13, City Council directed staff at its November 13 th meeting to prepare and ordinance to allow short term rentals within one and two-family homes in specified zoning districts and require annual licensing for each short term rental type. The Single-Family STRs included Home Shares as an accessory use to the primary resident living in the home and a principal use of the home as a Vacation Rental, where no primary resident lived in the home. The Vacation Rental use will be subject to STR licensing, Rental Code compliance, and approval of Special Use Permit. City Council at its November 13 th meeting also considered allowing for STRs within multi-family dwellings (apartment/condominium buildings) and directed staff to create draft standards to allow STRs within apartment dwellings as an allowable use with no additional specified parameters. Expanding the allowance of STRs into apartments was not part of the draft ordinance reviewed by the P&Z in September. Allowing STRs within apartment units requires additional review and a recommendation from the P&Z before formal action on an ordinance can be taken by the City Council as it is a new issue that had not been previously discussed. The Commission is asked to consider apartment STRs in the context of allowing for the use as accessory to the regular occupancy of the apartment unit and/or as a Vacation Rental principal use, permitting and licensing process, and limitations on the number of STRs to differentiate apartments from lodging uses. The originally proposed STR classification system did not include multi-family dwellings within the range of allowed types due to staff concerns about distinctions between household living and lodging uses and concerns about occupancy levels with additional guests. The potential complication of compliance monitoring of tenant relationships and guests is also outside of the City s normal scope of review for rental properties. City Council had concerns that not allowing for STRs within apartment buildings affected both condominium owners and traditional apartment renters that may desire to host STRs. Allowing STRs within apartment dwellings The Zoning Ordinance considers buildings that include three or more dwelling units as apartment buildings, regardless of the ownership pattern. This means that a multi-family building of condominiums with individual owners is regulated the same as a multi-family building under one ownership with multiple rental units. 1

2 According to staff s snapshot evaluation of STRs operating within Ames [October 2018], 14 listings self-identified as apartments and 2 as condos (or 31% of the total STR listings). Airbnb requires a host to self-identify the type of accommodation. (For the purpose of zoning classifications, condominiums are not a residential dwelling type, they are an ownership mechanism that can apply for any type of property.) Allowing for STR use within apartment dwelling types would be a substantive change to proposed classifications. It would potentially change the character of the use of some apartment buildings to be more like a commercial hotel/motel use due to the potential number of transient guests. The distinction for lodging versus household living currently is an expectation that lodging is for visitors staying less than 60 days and for household living residents to have an average say that exceeds 60 days. Although leases can be varying length, a typical apartment dwelling cannot operate exclusively with very short term leases similar to a hotel. Hotels are also differentiated by expecting staff to be on site, where as apartment buildings do not require on site management. Even though rental apartments are generally associated with higher density zoning districts, an inventory of currently licensed rental apartments in Ames indicates that even low density (RL) and medium density (RM & UCRM) districts include a number of existing apartments. Zone # of: Parcels Est. Units RL (The majority of units are in 3-6 unit buildings [68%]) UCRM (The majority of units are in 3-6 unit buildings [75%]) RM / O-SFC (The majority of units are in 3-6 unit buildings [78%]) FS-RM & RM (The majority of units are 6+ unit buildings [98%]) Although currently existing, apartments are a non-conforming use within the RL zoning district. Apartments within the UCRM zoning district are permitted only as a pre-existing use and apartments within the RM zoning district are permitted but restricted to 12 or less units per building. Within O-SFC, existing apartments are considered a conforming use, but construction of new apartments is restricted. According to staff s snapshot evaluation of STRs operating within Ames [October 2018], 31% of apartment STRs are located within the UCRM zoning district in single-family homes that have been converted into three or four-plex apartment units. It appears that most of these offerings are by the property owner and not as a sublet offering of the tenant. Allowing for STR use within apartment dwellings would also affect both residential and commercial districts that allow mixed-use developments with apartments. These are: Community Commercial Residential (CCR), Downtown Service District (DSC), Campustown Service Center (CSC) and Downtown Gateway Commercial (DGC). Of the zones that allow for apartments, allowing for Home Shares as an accessory use is likely not a substantive issue, however allowing for principal STR Vacation Rentals for apartments within the RL, UCRM, and RM/O-SFC would be a substantive change to allowed uses as these districts severely restrict changes to the current apartment buildings in these areas. Given the variation in location and context of apartments, one solution would be to allow STRs in apartments, but to vary the licensing requirements for apartments by district to accomplish the city s objectives. For example, Homeshare accessory uses 2

3 could be allowed for all apartments, but not allow for Vacation Rental as principal use in residential zones. Exempting apartment STRs from the Special Use Permit (SUP) process or Licensure Annual License Rental apartments are already required to comply with the rental code and to obtain a LOC. The compliance with the Rental Code is one of the primary reasons that the STR options allow for Vacation Rentals. Knowing that the units meet basic living standards for safety and that landlords are responsible for managing their tenants actions, such as sub-leasing, would support different licensing and permitting requirements than the single-family STRs. For this reason, Council expressed that additional licensure oversight by City staff of apartment STRs might not be warranted and could be exempted from licensure as is required of Single-Family homes. Annual licensing may only be necessary if there are specific operational requirements to review that are different from the Rental Code. Rather than exempt rental apartments from licensure altogether, the licensing approach could be modified. The previous (proposed) approach for single-family and two-family STRs was to license the unit. This aligns well with the LOC, which is also issued per dwelling unit (or address). However, LOC s for apartments are not issued by unit, but rather by building (or address) while individual condos are licensed by unit as they are considered to have separate ownership. In an attempt to minimize (but not exempt) the licensure process for apartment STRs, the licensing could be modified to be based not upon unit but rather on a building (or address) basis. A second option would be licensing apartment STRs on a per parcel basis with individual apartment buildings included (if all under the same ownership). Licensure of rental apartments could be granted for all of the dwelling units within a parcel, under the same ownership. Condominiums would need to be licensed individually. In order for a tenant to sublet their unit as a STR, the property owner would have to have an annual STR license either for the building or parcel. Special Use Permit For single-family STRs, the principal use of a Vacation Rental requires approval by the Zoning Board of Adjustment of a Special Use Permit (SUP). This requirement was intended to allow for review of unique circumstances about compatibility that could arise from use of a house as lodging with no owner present. It could be argued that apartment areas should not require a SUP given their higher density surroundings and potentially lower concerns about compatibility. However, not all apartments are in higher density areas as illustrated in the table above. Whereas an exemption might be appropriate in some areas, an exemption for all rental apartments from a SUP would be inappropriate compared to how single-family STR require SUPs. The question of needing a special use permit come down to the question of concerns about compatibility and a need to monitor their use at a higher level than occurs through the Rental Code licensing. In higher density areas, where the prevailing character of the district is of similar density/intensity, there would be less compatibility concerns with neighboring properties and less need for the scrutiny of a SUP. However, in low and medium density residential areas, where single-family housing is the prevailing housing type (and characteristic of the district), 3

4 allowing an exemption from the SUP process could be viewed as promoting STR uses in apartments compared to single-family dwellings in the same zoning district. Restricting the percentage of STRs allowed within one parcel A key issue regarding apartments is maintaining the apartment housing stock to meet Ames housing needs. Short-term rentals reduce the availability of housing for longer term household living purposes. Additionally, hotels are not a permitted use in residential zones and allowing for apartments to be utilized as short term lodging could be viewed the same as allowing for hotels in residential areas. However, from the perspective of a landlord, having the ability to offer apartments to both household living and STR markets could be an advantage, especially during times of reduced demand. With concerns on the overall operation of an apartment building as an STR, standards could be created to restrict the overall percentage of units within a development or building. Proposed Text Amendment To allow for STR within multi-family buildings changes to both the definitions of STRs and the base zoning district use allowances are needed. Attachments have been amended from the single-family version as a reference to reflect these proposed changes. Attachment A includes a Summary Apartment STR Standards and Attachment B includes Changes to the Zone Use Tables. The proposed tables assume that the following set of standards for Apartment STRs compared to allowing for STRs as a permitted use with no separate licensing/permitting requirements: 1. Home Share as an accessory use permitted with no license. 2. Vacation Rental as a primary use restricted to no more than 30% of the units in building/project. 3. Special Use Permit required for Vacation Rental in non-high density or commercial areas (Nonexempt: A, RL, RM / O-SFC, UCRM, RLP, F-VR, FS-RL, F-PRD, and S- SMD) ALTERNATIVES: 1. The Planning & Zoning Commission can recommend a zoning text amendment allowing the expansion of STRs into apartments in all residential zoning districts, with the following modifications to the licensing requirements: a. Home Share as an accessory use permitted with no license, oversight compliance would be the responsibility of the landlord. b. Vacation Rental as a primary use restricted to no more than 30% of the units in building/project. c. An exemption from a SUP would be applied by zoning district: i. Exempt: RM, RH, FS-RM, NC, CCR, DSC, CSC, and DGC. ii. Nonexempt: A, RL, RM / O-SFC, UCRM, RLP, F-VR, FS-RL, F-PRD, and S-SMD. d. Other rental licensing requirements would still apply. 2. The Planning & Zoning Commission can recommend a zoning text amendment allowing the expansion of STRs into apartments in all residential zoning districts, with modified provisions from what is stated above. 4

5 3. The Planning & Zoning Commission can recommend approval of Zoning Ordinance language allowing STRs within apartments in all residential zoning districts as a permitted use without other licensing/permitting requirements due to the Rental Code compliance. 4. The Planning & Zoning Commission can recommend the City Council not allow STRs within apartments. RECOMMENDED ACTION: The allowance for Apartment STRs has different definitional and licensing aspects than that of the previously consider single-family STRs. Due to the Rental Code compliance and locations throughout the community the primary concern could be impacts to housing availability for traditional renters. However, in certain zoning districts there are nonconforming apartment buildings that may have compatibility concerns similar to that of single-family STRs. Staff recommends that the apartments in certain zoning district be subject to the same Special Use Permit requirements and that there is an overall limit on the use of apartment buildings for STRs to distinguish the use from short term lodging. Staff believes that the proposed text amendment provides both a balanced and reasonable method of accommodating short-term rentals within apartments. Therefore, it is the recommendation of the Department of Planning and Housing that the Planning and Zoning Commission approve Alternative #1. 5

6 Type Hosted Home Share Home Share Vacation Rental Primary Residence Primary Residence Business/Investment Property Description Owner Required to be Present Partial Dwelling (resident and guest) Owner Not Required to be Present Entire Dwelling Owner Not Required to be Present Entire Dwelling Maximum # of Bedrooms 2 No Limit No Limit Maximum # of Guests 2 adults 5 adults (Rental Code occupancy standard) 5 adults (Rental Code occupancy standard) Number of STRs Concurrently 1 guest contract per dwelling unit 1 guest contract per dwelling unit 1 guest contract per dwelling unit and no more than 30% of the number of dwelling units on a parcel/common development Maximum # of Days / Year No Maximum 90 days/yr. No Maximum Maximum Stay 30 consecutive days 30 consecutive days 30 consecutive days Signage none none none See Sec Meet Apartment Meet Apartment Meet Apartment Signage none none none Operating License None Require Required Renewal Annual Annual Annual Rental Code Registration Fire Safety Checklist & Inspection Only Fire Safety Checklist & Inspection Only Yes; Letter of Compliance Required Approval Process Administrative Approval Administrative Approval Special Use Permit (Certain Apartments are Exempt from the SUP, based on their Zoning) Districts Allowing Permitted as an Accessory Use in the Following (primarily residential) Zones: A, RL, RM, UCRM, RLP, RH, F-VR, FS- RL, FS-RM, F-PRD, S-SMD, and NC. Permitted as an Accessory Use in the Following (primarily residential) Zones: A, RL, RM, UCRM, RLP, RH, F-VR, FS- RL, FS-RM, F-PRD, S-SMD, and NC. Permitted by Special Use Permit in the Following Zones: A, RL, RM, UCRM, RLP, RH, F-VR, FS- RL, FS-RM, F-PRD, S- SMD, NC, CCR, DSC, CSC, and DGC. ATTACHMENT B - Summary of Changes to Zone Use Tables 6

7 ZONES Hosted Home Share RESIDENTIAL USE Household Living Accessory Uses Home Share Bed & Breakfast Establishment Group Living Vacation Rental Agricultural- A OL OL SP, OL SP, LOC, OL Residential Base Zones RL OL OL SP, OL SP, LOC, OL RM OL OL SP, OL SP*, LOC, OL UCRM OL OL SP, OL SP, LOC, OL RH OL OL SP, OL SP*, LOC, OL RLP OL OL - SP, LOC, OL Commercial Base Zones NC OL OL SP, OL SP*, LOC, OL CCN HOC PRC CCR SP*, LOC, OL CVCN DSC SP*, LOC, OL CSC SP*, LOC, OL CGS Industrial Base Zones GI PI RI Special Purpose Districts S-HM S-SMD OL OL SP, OL SP, LOC, OL DGC SP*, LOC, OL Floating Zones F-VR OL OL SP, OL SP, LOC, OL FS-RL OL OL SP, OL SP, LOC, OL FS-RM OL OL SP, OL SP*, LOC, OL F-PRD OL OL SP, OL SP, LOC, OL LOC = Letter of Compliance (Administrative Approval) OL = Operating License (Administrative Approval) SP = Special Use Permit (Zoning Board of Adjustment Approval) *= Apartments in zoning districts RM, RH, FS-RM, NC, CCR, DSC, CSC, and DGC are exempt from the Special Use Permit requirement; However, zoning district RM / O-SFC is not exempt. 7