City Council Report 915 I Street, 1 st Floor Sacramento, CA

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1 City Council Report 915 I Street, 1 st Floor Sacramento, CA File ID: August 29, 2017 Discussion Item 22 Title: Ordinance Amending Sections , , and of the Sacramento City Code Relating to Short-Term Rentals (Passed for Publication 08/22/2017; Published 08/25/2017) Location: Citywide Recommendation: Pass an Ordinance amending Sections , , and of the Sacramento City Code Relating to Short-Term Rentals. Contact: Brad Wasson, Revenue Manager, (916) , Department of Finance Presenter: Brad Wasson, Revenue Manager, (916) , Department of Finance Attachments: 1-Description/Analysis 2-Draft Ordinance (Redline) 3-Draft Ordinance (Clean) James Sanchez, City Attorney Mindy Cuppy, City Clerk John Colville, City Treasurer Howard Chan, City Manager Page 1 of 9

2 File ID: Discussion Item 22 Description/Analysis Issue Detail: On January 5, 2017 Councilmember Harris requested the City Manager provide recommendations to the Law and Legislation Committee to increase Transient Occupancy Tax (TOT) collections on short-term property rentals. Staff estimates there are between properties participating in short-term rental offerings in the City of Sacramento. Currently only 35 permitted operators are collecting and submitting TOT receipts. Over the last year staff negotiated with Airbnb (the most prominent short-term rental on-line platform) to collect the TOT at the time the rental is booked and paid for. An agreement between the City and Airbnb was reached and approved by City Council on June 27, 2017 (Agreement No ), which goes into effect on September 1, The agreement with Airbnb will make collection of the City s TOT much more efficient for all parties involved. Within the agreement Airbnb will also encourage their operators to obtain the City s Short- Term Rental Permit. However, they will not provide the City with individual operator s information. Consequently, the City will not automatically know which operator has obtained City permits and remitted the TOT. To ensure short-term rental operators are in compliance with the City s permit process, staff is recommending adding a requirement to display the City s permit number on any advertisement for the property. One of the areas of concern from residents near short-term rental property is that absentee operators cannot respond to complaints in a timely manner. There is currently a requirement for a manager s name and contact, but not that the manager reside in the local area. In addition, current code requires absentee operators to obtain a Conditional Use Permit (CUP) if their property is rented 90 or more days in a calendar year. However, without data from rental platforms, the City will not know when absentee operators meet this threshold. To provide neighbors of short-term rental properties an avenue for problem resolution, staff is recommending adding a requirement for a local property management contact for absentee operators. In order to track the number of rental nights for absentee operators, staff recommends quarterly submittals of operator s registers. Finally, Airbnb is not the only on-line platform on which short-term rentals are arranged. VRBO, HomeAway Vacation Rentals, VacationRentals, HomeToGo and Craigslist were identified on the internet as advertising for short-term rentals in Sacramento. Staff has reached out to these platforms to bring them into compliance with City Code. Policy Considerations: The additional requirements recommended to increase TOT collections are consistent with the City Council s adopted Fees and Charges policy and support the City s goals of budget sustainability and fiscal responsibility. City of Sacramento August 29, 2017 powered by Legistar Page 2 of 9

3 File ID: Discussion Item 22 Economic Impacts: None Environmental Considerations: This action is not a project subject to CEQA because it involves administrative matters and would not result in new physical development, will not result in direct changes to the physical environment, and will not result in any reasonably foreseeable indirect physical change in the environment. (CEQA Guidelines ) Sustainability: Not Applicable Commission/Committee Action: On July 25, 2017, the Law and Legislation Committee heard this item and directed staff to bring it before the City Council. Chairperson Schenirer asked staff to expand on the city residence requirement for property managers. Staff is proposing that the local property manager reside within a 30-mile radius of the short-term rental property instead of in the city. Rationale for Recommendation: To help increase compliance by short-term rental operators, they could be required to display the City s Short-Term Rental Permit number on each advertisement. A local property management contact would help surrounding residents resolve issues quicker than absentee operators. Quarterly submittal of operator s rental register would help identify when absentee operators meet the 90-day threshold for a CUP. Financial Considerations: Permit fees for short-term rental permits are $125 for new permits, renewal permit fees are $90. Assuming an additional 300 permits, additional revenues would equate to $27,000 in permit fees, $15,000 in Business Operations Tax and $250,000 in TOT annually. Consistent with Council s adopted policy, new revenues will not be counted until realized. If these recommendations are implemented, staff will review subsequent permitting and revenue trends and make adjustments as part of the FY2018/19 budget process. Local Business Enterprise (LBE): None City of Sacramento August 29, 2017 powered by Legistar Page 3 of 9

4 ORDINANCE NO. Adopted by the Sacramento City Council Date Adopted AN ORDINANCE AMENDING SECTIONS , , AND OF THE SACRAMENTO CITY CODE, RELATING TO SHORT TERM RENTALS BE IT ENACTED BY THE COUNCIL OF THE CITY OF SACRAMENTO: SECTION 1. Section of the Sacramento City Code is amended to read as follows: Registry required. A. A permittee shall keep a register that documents the following information: 1. All dates on which the permittee provided lodging for compensation; 2. The number of lodgers on each date; and 3. The amount of rent paid by lodgers for each night of lodging. B. A permittee shall maintain this register in a printed format for at least three years and, except as provided in subsection C below, shall provide the register to the city upon request. C. For rentals that are not the primary residence of the permittee, the permittee shall provide an updated copy of the register to the city each January, April, July, and October, by sending or delivering the register to the city department and address listed on the short-term rental permit. SECTION 2. Section of the Sacramento City Code is amended to read as follows: Posting of permit and permit number. A. A permittee shall post a copy of the short-term rental permit in a conspicuous place in each room in which a lodger is expected to sleep. B. All persons operating a short-term rental shall identify the city short-term rental permit number in any advertisement for that rental. For purposes of this subsection, Ordinance No Adopted on 1 Page 4 of 9

5 advertisement means any method used to solicit interest in the rental, including but not limited to internet-based listing or hosting services. SECTION 3. Section of the Sacramento City Code is amended to read as follows: Suspending, revoking, or conditioning a short-term rental permit. A. The city manager may suspend, revoke, or condition any short-term rental permit for any of the following reasons: 1. One or more of the circumstances upon which a short-term rental permit could be denied as described in Ssection exists or has occurred; or 2. The permittee has violated any provision of this chapter. B. The conditions that the city manager may impose on the short-term rental permit include, but are not limited to: 1. Requiring the permittee to remain at the dwelling unit during certain hours while guests are present; 2. For rentals that are the primary residence of the permittee, Rrequiring a property manager who resides in the citylocally and who will quickly respond to complaints; 3. Reducing the number of guests that are allowed to lodge at the dwelling unit; and 4. Reducing the number of days in a year that the permittee is allowed to provide lodging. C. For rentals that are not the primary residence of the permittee, the city manager shall impose a condition on the short-term permit that the permittee identify by name, address, and contact information, including phone number and address a property manager who resides within a 30-mile radius of the short-term rental and who will quickly respond to complaints. The permittee shall notify the city of any change in information for the property manager. Ordinance No Adopted on 2 Page 5 of 9

6 Adopted by the City of Sacramento City Council on by the following vote: Ayes: Noes: Abstain: Absent: Attest: MAYOR City Clerk Passed for Publication: Published: Effective: Ordinance No Adopted on 3 Page 6 of 9

7 ORDINANCE NO. Adopted by the Sacramento City Council Date Adopted AN ORDINANCE AMENDING SECTIONS , , AND OF THE SACRAMENTO CITY CODE, RELATING TO SHORT TERM RENTALS BE IT ENACTED BY THE COUNCIL OF THE CITY OF SACRAMENTO: SECTION 1. Section of the Sacramento City Code is amended to read as follows: Registry required. A. A permittee shall keep a register that documents the following information: 1. All dates on which the permittee provided lodging for compensation; 2. The number of lodgers on each date; and 3. The amount of rent paid by lodgers for each night of lodging. B. A permittee shall maintain this register in a printed format for at least three years and, except as provided in subsection C below, shall provide the register to the city upon request. C. For rentals that are not the primary residence of the permittee, the permittee shall provide an updated copy of the register to the city each January, April, July, and October, by sending or delivering the register to the city department and address listed on the short-term rental permit. SECTION 2. Section of the Sacramento City Code is amended to read as follows: Posting of permit and permit number. A. A permittee shall post a copy of the short-term rental permit in a conspicuous place in each room in which a lodger is expected to sleep. B. All persons operating a short-term rental shall identify the city short-term rental permit number in any advertisement for that rental. For purposes of this subsection, Ordinance No Adopted on 1 Page 7 of 9

8 advertisement means any method used to solicit interest in the rental, including but not limited to internet-based listing or hosting services. SECTION 3. Section of the Sacramento City Code is amended to read as follows: Suspending, revoking, or conditioning a short-term rental permit. A. The city manager may suspend, revoke, or condition any short-term rental permit for any of the following reasons: 1. One or more of the circumstances upon which a short-term rental permit could be denied as described in section exists or has occurred; or 2. The permittee has violated any provision of this chapter. B. The conditions that the city manager may impose on the short-term rental permit include, but are not limited to: 1. Requiring the permittee to remain at the dwelling unit during certain hours while guests are present; 2. For rentals that are the primary residence of the permittee, requiring a property manager who resides in the city and who will quickly respond to complaints; 3. Reducing the number of guests that are allowed to lodge at the dwelling unit; and 4. Reducing the number of days in a year that the permittee is allowed to provide lodging. C. For rentals that are not the primary residence of the permittee, the city manager shall impose a condition on the short-term permit that the permittee identify by name, address, and contact information, including phone number and address a property manager who resides within a 30-mile radius of the short-term rental and who will quickly respond to complaints. The permittee shall notify the city of any change in information for the property manager. Ordinance No Adopted on 2 Page 8 of 9

9 Adopted by the City of Sacramento City Council on by the following vote: Ayes: Noes: Abstain: Absent: Attest: MAYOR City Clerk Passed for Publication: Published: Effective: Ordinance No Adopted on 3 Page 9 of 9