REPORT SECTION CITY PLANNING COMMISSION AGENDA. STAFF: LARRY LARSEN and ERIN MCCAULEY PLANNING AND DEVELOPMENT TEAM LAND USE REVIEW DIVISION

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1 Page 106 REPORT SECTION CITY PLANNING COMMISSION AGENDA STAFF: LARRY LARSEN and ERIN MCCAULEY PROJECT: SPONSOR: SHORT-TERM RENTAL DEFINITION AND PROVISIONS PLANNING AND DEVELOPMENT TEAM LAND USE REVIEW DIVISION PROJECT SUMMARY: 1. Project Description: Codify an existing zoning interpretation relating to short-term rentals by including a definition type and additional standards. 2. Planning and Development Team s Recommendation: Include the Proposed Code Language (FIGURE 1) as part of the 2011 Code Scrubs for consideration by the Planning Commission later in the year. BACKGROUND: Staff first analyzed the short-term rental use type in August, 2008 after Land Use Inspectors received a complaint. General research was conducted on the possible impacts caused by such rentals and how other communities acknowledge and/or regulate the use type. A stakeholder group was convened in 2009 to provide additional information on both sides of the issue. After inconclusive discussions, staff issued Zoning Interpretation (FIGURE 2), which allowed short-term rentals in any zone where residential units were allowed. In early 2011, staff was directed to revisit the issue to determine if the Zoning Interpretation was adequate or in need of revision. This report is a result of the reanalysis. STAKEHOLDER PROCESS AND INVOLVEMENT: The stakeholder group assembled in 2009 consisted of neighbors and neighborhood organization representatives, lodging industry representatives, and short-term rental owners. That task force met four times in late 2009 to discuss the impacts and possible solutions. No consensus was reached. The task force was reconvened in 2011, this time with a greater and more diverse membership. The group met twice in 2011, and at the close of the second meeting, members were invited to provide written input to the Land Use Review Division on whether short-term rentals should be classified as residential uses or commercial uses under the Zoning Code (FIGURE 3). ANALYSIS OF MAJOR ISSUES/COMPREHENSIVE PLAN CONFORMANCE: 1. Major Issues: The last series of stakeholder meetings brought to light several concerns that are organized into two overarching categories: the classification of the use type as either commercial or residential, and the ways short-term rentals impact the neighborhoods in which they are located. Each category of concern is discussed below.

2 Page 107 Commercial v. Residential As discussion began about the nature of short-term rentals, staff was provided with information and arguments supporting each classification. Proponents of the commercial classification noted that short-term rentals are required to obtain a sales tax license and to collect City sales and lodging tax, that they are income-producing endeavors, and that they are aggressively advertized. Although some commercial uses are required to obtain a sales tax license (i.e. those uses selling tangible goods), this requirement alone cannot be used to classify a use as commercial in nature. For example, the City of Colorado Springs allows for several kinds of home occupations which may require the owner/operator to obtain a sales tax license. One-chair beauty shops or similar businesses that provide a service and limited sales of product are permitted accessory to a residence as long as the occupation complies with the requirements of the Home Occupation codes and regulations found in Chapter 7, Article 15. Similarly, persons who engage in direct marketing businesses such as Mary Kay, Arbonne, Pampered Chef, etc. are also required to remit sales tax either through their corporation or through their own sales tax license even though business is conducted at clients homes instead of at their own homes. According to Section of the City of Colorado Springs Municipal Code, any person who purchases within the City: 1. Any lodging, 2. Any automobile rental, or 3. Any campground space rental Of less than thirty (30) consecutive days, is exercising a taxable privilege. Any lodging of a period of less than thirty (30) consecutive days requires the proprietor to collect and remit sales and lodging tax to the City of Colorado Springs. This requirement is based on the time a person spends in the lodging, and not on the lodging type. For example, campground spaces are traditionally rented for periods of less than thirty (30) days, but if a renter chooses to stay for thirty (30) days or more, tax is no longer collected. Similarly, if a person rents a room in a rooming house (a residential use according to the Zoning Code), but rents the room less than thirty (30) days, the proprietor of the rooming house would be required to collect and remit sales and lodging tax to the City. The collection of sales and lodging tax does not necessarily mean the operation is commercial. Those who argue that a short-term rental should be classified as a commercial use also point to the fact that short-term rentals are income-producers for their owners. A free-lance writer who writes in his or her home-office or a day-trader who plays the stock market from home both produce income but would not generally be viewed as running a commercial business from home. The City also allows for home daycares where the daycare provider is paid to watch up to eight (8) children at a time. And, as discussed above, other income-producing activities are allowed to be conducted from homes under the Home Occupation sections of the Code. Finally, commercial classification proponents argue the business is aggressively advertised. Although advertised on the internet, short-term rentals seldom, if ever, feature on-site advertising. Home Occupations, on the other hand, are allowed on-premise signage up to one (1) square foot in size in addition to whatever off-site advertising they may do. Those who would classify short-term rentals as a residential use note the unit still functions as a residential dwelling unit. Short-term renters enter into a contract with the homeowner to lease the entire premises for periods of up to thirty (30) days. Renters then provide their own food and do their own cooking. Owners also do not provide daily cleaning services. The renters then use the home as any family would they may have cook-outs or other gatherings unless prohibited by the rental contract, they may utilize provided laundry facilities, watch provided televisions, etc. The use of the home remains a residential one; the only difference is the length of residence.

3 Page 108 After careful analysis, staff concurs with the residential classification of short-term rentals. Although sales tax is collected if the stay is less than 30 days, the use of the home does not change. Short-term renters use the home to sleep, bathe, cook and relax just as owners or longterm renters would. Impacts The second category of concerns centered on the impacts short-term rentals cause their neighbors. Increased turn-over in occupants and rude or loud guests who are inconsiderate of the neighborhood were cited. Several members of the task force expressed their unease about having people unknown to the neighborhood coming and going. Another concern was rude or loud guests who rent the home for vacation and have a party mentality. Some members of the task force reported experiencing cursing from the backyards of short-term rentals, parties and loud music, and car doors slamming in the middle of the night or early morning, which interfered with their sleep. The City has received three complaints about short-term rentals or vacation rentals out of 21,460 complaints over the last two years. The complaints centered on three different properties; one complaint had to do with the scale of the operation which was said to be akin to an events center, and the others had to do with inconsiderate renters. The first complaint was abated when the owner voluntarily scaled back the operation. The City Code prohibits events centers within residential zones and the International Building and Fire Codes regulate occupancy levels. The second complaint was abated when the home sold to a new owner who currently occupies the home. The third and final complaint was abated with stronger contract language and better communication between the short-term rental owner and his neighbors. The small number of complaints suggests that overall, these rentals are a compatible residential use. Although scenarios occur in which guests are rude and inconsiderate, one must ask whether these impacts directly correlate to the short-term rental use type. Indeed, essential to the debate is whether the short-term rentals cause greater adverse impact than one would expect from a traditional long-term rental or owner-occupied residential dwelling unit. When the impacts are analyzed, staff finds no significant difference between the impacts of a short-term rental and the impacts of a single-family dwelling unit whether owner- or renteroccupied. A slamming car door is a regular sound in urban and suburban living environments and cannot be directly attributed to the short-term rental use type. Loud parties occur in all occupancy types. The City Code regulates noise and other nuisances in Chapter 9 and the Colorado Springs Police Department enforces these regulations on all citizens and visitors. After revisiting the short-term rental issue, staff is confident that codification of Zoning Interpretation will adequately address the impacts of short-term rentals. Further, as a guide for short-term rental owners and operators in their endeavors, the City has created a draft Development Assistance Bulletin (DAB) to explain applicable regulations and to inform both neighbors and owners about possible impacts. (FIGURE 4) Neighbors are encouraged to talk to the property owners and to phone owners or managers with any complaints. Owners are encouraged to provide neighbors with contact information and to remind their renters to be respectful of the neighborhood. 2. Conformance with the City Comprehensive Plan: Strategy LU 302c: Promote Compatibility between Land Uses of Differing Intensities Objective LU 6: Meet the Housing Needs of All Segments of the Community It is the finding of the Planning & Development Team staff that the proposed code amendment meets the Comprehensive Plan goals and objectives.

4 Page 109 STAFF RECOMMENDATION: Include the proposed code language (FIGURE 1) as part of the 2011 Code Scrubs for consideration by the Planning Commission later this year.

5 Page 110 Proposed Code Language for Inclusion with the 2011 Code Scrubs Section 1: : Definitions of Use Types: A. Residential Uses Types: 13. Short-Term Rental (STR): A residential dwelling unit, other than a hotel, motel, rooming house or bed and breakfast inn that is used in its entirety as lodging for a period of less than 30 days for compensation, where no cleaning or meals are provided. Section 2: : Additional Standards for Specific Uses Allowed in Residential Zones: R. Short-Term Rental: A Short-Term Rental shall be allowed in any zone where single-family or multi-family residential uses are allowed. Short-Term Rentals shall comply with the following additional standards: 1. Sales and Lodging Tax Collection. All Short-Term Rentals shall comply with City Code provisions regarding sales and lodging tax collection. 2. Occupancy. Short-Term Rentals shall meet the occupancy requirements as stated in the locally adopted International Building and Fire Codes. 3. Signage. No signage advertising the availability or identifying the name of the Short-Term Rental shall be allowed on the property.

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32 Page 137 Short-Term Rentals DAB Development Assistance Bulletin 405 Uses Short-term rentals are homes that are rented out by the owner or a property management company to vacationers or other occupants for periods of less than 30 days. This travel option has been popular in Europe for a number of years for visitors who prefer a slower-paced stay in a residential neighborhood over a fast-paced rush from hotel to destination. This concept has caught on throughout the world and is now an additional option for visitors to Colorado Springs. Owners If you are thinking about starting a short-term rental, there are several things you should know from zoning and tax collection to being respectful of your neighbors. Zoning and Building Codes Short-term rentals are allowed in any zone where singlefamily or multi-family residential uses are allowed. For more information on how to obtain the zoning of your property, consult DAB 201 or contact the Land Use Review Division at (719) Short-term rentals must also meet the occupancy requirements as defined by the International Building and Fire Codes. For more information on occupancy type, you may call the Regional Building Department at (719) Be Neighborly Before starting a short-term rental, it is a good idea to talk to the neighbors. Give them contact information so they may call you if they experience problems with your short-term renters or if they see something suspicious at your property. It is also a good idea to have someone available to respond to potential problems as they arise. If you will be out of town, make arrangements with a friend, business associate, or property management company to make sure someone will be available at all times. Also, ensure your short-term renters know they are renting a home in a neighborhood and let them know you expect them to conduct themselves in a courteous and respectful manner while in the home. Neighbors If you live next to a short-term rental and you experience problems, call the property owner or management company first. If you do not receive a prompt response, notify the proper authorities. Even though renters may be on vacation or from out of town, they must still abide by the City s nuisance laws. To report violations, contact the City of Colorado Springs Police Department at (719) Finally, no signage identifying the property as a short-term rental is permitted. The intent of this regulation is to ensure compatibility between short-term rentals and the surrounding neighborhoods. Tax Collection Short-term rental owners or managers will need to obtain a sales tax license from the City s Sales Tax Office at 30 S. Nevada Avenue, Suite 203. Owners or property managers must collect both sales and lodging or LART tax for each stay of less than 30 days. For more information, call the main Sales Tax line at (719) A short-term rental is compatible with the surrounding neighborhood. City of Colorado Springs Planning & Development Team Land Use Review Division 30 S. Nevada Avenue, Suite 105 P.O. Box 1575, MC 155 Colorado Springs, CO (719)