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HomeMy WebLinkAboutDirection - Preperation Short-Term Rental OrdinanceCITY OF PALM DESERT DEPARTMENT OF COMMUNITY DEVELOPMENT STAFF REPORT REQUEST: DIRECT STAFF TO PREPARE AND BRING FORWARD FOR CONSIDERATION: 1) A SHORT-TERM RENTAL ORDINANCE AND 2) A PROFESSIONAL SERVICES CONTRACT WITH AN INDEPENDENT CONTRACTOR TO PROVIDE SERVICES TO IDENTIFY AND BRING INTO COMPLIANCE NON -LICENSED SHORT-TERM RENTALS SUBMITTED BY: Tony Bagato Principal Planner APPLICANT: City of Palm Desert DATE: December 8, 2011 RECOMMENDATION That the City Council, by Minute Motion, direct staff to prepare and bring forward for consideration: 1) a Short -Term Rental Ordinance and 2) a professional services contract with an independent contractor to provide services to identify and bring into compliance non -licensed short-term rentals. BACKGROUND On March 24, 2011, the City Council approved a Zoning Ordinance Amendment requiring a Conditional Use Permit (CUP) for short-term vacation rentals in all non - gated, residential communities. The Zoning Ordinance Amendment was approved on a 3-2 vote with the direction that staff return in six months with a follow-up staff report. Previously, staff reported that there could be more than 1,350 short-term rentals: 1,200 in gated communities and 150 in non -gated communities. In addition, staff had determined that the Finance Department was receiving Transient Occupancy Tax (TOT) from only 758 properties, which indicates that over 600 properties are not paying TOT to the City. The requirement for a CUP has not been effective in bringing about compliance with non -licensed short-term rentals. Staff Report Short-term Rental Update December 8, 2011 Page 2 of 3 DISCUSSION Short-term rental of single-family homes has been an item of concern for the past few years. In 2010, a subcommittee reviewed the potential issues with short-term rentals and recommended that the City require a CUP for residential properties not within a gated community. Requiring a CUP was one way to provide restrictions on short-term rentals in non -gated communities and try to eliminate any potential nuisance rental homes. Although requiring a CUP allows the City to place restrictions on the short-term rental, it does not address the large number of unlicensed short-term rentals that don't pay TOT. Many of the unlicensed short-term rental properties are located within gated communities. In addition, many of the unlicensed short-term rental property owners in non -gated communities are not applying for a CUP because of the $500 fee and the public hearing required, neither of which guarantees approval. Staff has spoken with rental agencies and some homeowners trying to operate short-term rentals in non - gated communities, and the main concern they report is that neighbors can speak against the request without any valid issues. Instead of applying for the CUP, many short-term rental property owners would rather continue to operate illegally and take the risk of a complaint, instead of seeking compliance. There are two main issues with short-term rentals: potential nuisance homes and unlicensed rentals not paying TOT. Staff believes that these two issues can be addressed by adopting an ordinance for short-term rentals and active enforcement. A short-term rental ordinance can address all the potential nuisances from a short-term rental home that are now conditioned in a CUP: noise, unruly parties, minimum number of days rented, maximum number of people, and parking. Staff also recommends that the new ordinance require a professional property management company with a local representative who can be contacted at any time and any day of the week. Additionally, staff recommends that such a new ordinance include an aggressive fine structure for non-compliance with the requirements of the ordinance. For enforcement, staff is recommending a contract for a temporary professional services consultant to conduct independent research and investigation of short-term rentals. The consultant would follow internet and advertising leads to identify owners of homes that are being rented for periods less than 30 days, but who are not licensed by the City or paying Transient Occupancy Tax. The City of Rancho Mirage is currently using a professional consultant in the same capacity for their new short-term rental ordinance, and has successfully brought 100 unlicensed rentals in compliance over three months. G:\Planning\Tony Bagato\Staff Reports\Short-term Rental Ordinance\City Council Staff Report (2).doc Staff Report Short-term Rental Update December 8, 2011 Page 3 of 3 Conclusion: Staff believes the current regulations for short-term rentals are not effective in bringing about compliance of unlicensed rental properties, and are not effective with dealing with potential nuisance rentals operating without a CUP. A new ordinance and active enforcement through a professional consultant can achieve a balance between both aspects of the City of Palm Desert as a community for permanent residents and visitors alike who support the programs for the residents. Staff is recommending that the City Council direct staff to prepare a short -Term Rental Ordinance and a professional services contract for an independent contractor to provide the City with services to identify and bring into compliance non -licensed short-term rentals. This would allow the Council to consider the new ordinance with full knowledge of the fiscal impact of adopting and enforcing the ordinance, as well as the potential revenue generated through enforcement activities. Submitted by: Department Head: Tony 136gatl5­7 Lauri Aylaian Principal Planner Director of Community Development CITY COUNCILA5TION Appr7al: APPROVED DENTED RECEIVED OTHER MEETING DATE M. Wohlmuth, City Manager AVEs NO .� } AB NT: ABSTAIN: ��- VERIFIED BY: Original on File with City Office GAPlanning\Tony Bagato\Staff Reports\Short-term Rental Ordinance\City Council Staff Report (2).doc