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HomeMy WebLinkAboutCD Short-term Rentals 2019____________________________________________________________________________________ FOR CITY CLERK ONLY Council Meeting: 02/19/2019 Disposition: Accepted report and provided direction to staff Agenda Item No: 6.b Meeting Date: February 19, 2019 SAN RAFAEL CITY COUNCIL AGENDA REPORT Department: Community Development Prepared by: Paul Jensen (EG), Community Development Director City Manager Approval: ______________ TOPIC: SHORT-TERM RENTALS SUBJECT: INFORMATIONAL REPORT ON SHORT-TERM RENTAL APPROACHES, REGULATIONS, BEST PRACTICES AND OPTIONS; FILE NO. P18-013 RECOMMENDATION: Accept report and provide direction to staff on next steps relating to one of three short-term rental policy options. EXECUTIVE SUMMARY: On August 20, 2018, the City Council was presented with a comprehensive report on a broad range of housing topics and issues. The City Council directed staff to follow-up on four, specific housing issues, including short-term rentals (STR). Regarding this topic, staff was directed to return with an informational report on potential short-term rental policy options. This report presents information on STR data, best practices for regulations and enforcement, transient occupancy tax (TOT) revenue projections, program costs, and project cost-recovery fees. It also presents for the following STR policy options: •Option 1: Status quo- continue with no regulation, permitting or active enforcement •Option 2: Minimal enforcement - including regulation, permitting, and tax and fee collection •Option 3: STR ban - including prohibition and enforcement Staff estimates that the City could collect between approximately $18,000 and 105,000 in potential transient occupancy tax (TOT) from active STRs in a given year. On average, TOT collection could be approximately $39,000 annually. The wide range in potential TOT is due to changes in factors including fluctuations in demand and changes in the number of active STR listings. Depending on the three policy options referenced above, first-year program costs would range between $0 to approximately $63,800 and ongoing costs ranging between approximately $5,100 and $46,900 annually. Staff estimates that for Options 1 and 3, the program would not have a positive balance due to the lack of TOT collected or a program fee to cover costs. Staff estimates for Option 2 that if a program fee is charged, the program would have a positive balance. SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 2 BACKGROUND: A. Introduction The STR phenomenon has mushroomed in the last several years. The phenomenon is the result of: a) the high demand for and cost of housing in the Bay Area; b) tourism and the high cost of lodging; and c) the residential property owner’s struggle to make their extremely high mortgage payment. Regarding the latter, the property owner will readily admit that the rent from their short-term rental supplements their income and mortgage payment. Opinions range regarding STRs but often fall into one of two categories. Those in the “pro” camp believe it is a way to address the housing crisis and offer a financial subsidy to the struggling property owner. Those in the “con” camp find that short-term rentals are a nuisance and are changing the character of and commercializing our single-family neighborhoods, thus reducing our permanent housing stock. At present, the City of San Rafael does not prohibit, regulate, tax or enforce short-term rentals. In 2016, as part of the review of the Junior Dwelling Unit (JDU) ordinance, the City Council directed staff to monitor short-term rental activity. Staff was directed to periodically report back to the City Council on the growth and trends for this activity and to log complaints. To assist in this effort, on June 10, 2016, the City entered into a three-year contract with Host Compliance, a STR data and enforcement service to provide the following short-term rental monitoring services: • Provide the City with trend monitoring, a monthly report that is sent via e-mail showing the active short-term rental listings; • Provide the City with a monthly report on the address identification of the short-term listing; • License the City to hosted software for access to the number and location of short-term rentals. Staff has prepared this informational report to follow up on staff direction from the City Council and to analyze potential actions that can be taken to regulate short term rentals. B. Existing Short-Term Rentals Activity in San Rafael 1. Active Rentals Based on listing level date provided by Host Compliance as of December 2018, there are 286 active short-term rentals in San Rafael.1 As seen in Table 1, the largest STR property type—as described by the host—is a three-bedroom house, with 75 listings. The second largest property type is a four-bedroom house, with 53 listings, followed by zero-bedroom apartment/condominiums, with 29 listings. 1 Note, that while 286 active rentals have been identified as of December 2018, this number represents a high -end estimate as some of these listings may be active but may not have been rented. The number of active rentals fluctuates, but the number of listings has steadily increased since staff has monitored. At on-set of monitoring in 2016, the active listing count was 150. SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 3 Table 1. Listings by Host-described Property Type for 2018 Figure 1. Active Short-Term Rentals in San Rafael, 2018 As seen in Figure 1 (above), short-term rentals are relatively geographically distributed equally across the City, with the highest concentrations in the West End, Gerstle Park, and Dominican neighborhoods. Property Type 0 1 2 3 4 5 6 7 Total Apartment/ Condominium 29 -4 8 6 1 2 -50 Bed & Breakfast -----2 1 -3 Boat 1 -------1 Camper/RV/Campsite 1 --1 ----2 Cottage --3 2 ----5 Guest suite 2 -1 5 6 3 1 -18 Guesthouse --3 3 3 ---9 Hotel Room 4 -------4 House 4 2 24 75 53 15 5 1 179 In-law ---1 1 ---2 Other ---1 1 1 1 -4 Studio --1 1 ----2 Townhouse 1 -2 4 ----7 Total 42 2 38 101 70 22 10 1 286 Note: Listing descriptions are self-provided by the host and are not City prescribed. Bedrooms SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 4 2. Short-Term Rental Complaints Logged to Date Over the past three years of monitoring, staff has tracked and recorded inquiries and complaints about short-term rentals. During this time frame, the City received less than one dozen inquiries and complaints. The following is a summary of the types of complaints that have been received: • Multiple short-term rentals on the same street or very closely spaced; concerns about change in neighborhood character, traffic, safety and quality of life. • Shared driveway and other shared infrastructure with a neighboring property where there is an active short-term rental. Concerns about potential liability, which is shared by both property owners. Guests are unaware of the protocols that are typically respected between the property owners such as designated parking areas and cleared driveway access. • Concerns that short-term rentals reduce the housing supply for long term residents; impacts to the hotel/motel business owners and increase the cost of rental housing. • Neighbor actively (almost every night) using home as a short-term rental; noise and evening parties. Guests often mistake their home and knocked on the neighbor’s door, sometimes late at night. • Regarding general inquiries, most have been focused on questions about permitting, business license and taxes. C. Short Term Rental Approaches and Regulations In 2018, the Community Development Department commissioned the following “white papers” to present general data on and best practices for STR approaches, regulation and taxing. • Overview of leading regulatory and enforcement approaches used by local governments to achieve common short-term rental related policy objectives, Prepared by Host Compliance, LLC, April 2018 • Short-Term Rentals in San Rafael, Prepared by Allison Griffin, November 2018 A STR webpage has been created on the City of San Rafael website. This webpage, which can be accessed here includes links to both white papers. Some of the key information on regulations (e.g., approaches in neighboring Marin jurisdictions) and best practices on enforcement, fees, fines and penalties is presented below. 1. STR Regulations in Marin Jurisdictions As part of the Short-Term Rentals in San Rafael report, current STR regulations across jurisdictions in Marin were compiled in a table and presented in Attachment A of this report. The following is a summary of this information: • The Town of Tiburon and the City of Sausalito explicitly prohibit STRs. Several cities/towns (Belvedere, Corte Madera) prohibit STRs by default (Zoning Code does not address) or by interpretation (Larkspur). The Town of Fairfax and City of Novato prohibit STRs unless a Use Permit is issued. • Like San Rafael, the Towns of Ross and San Anselmo have “no explicit STR regulations.” • The County of Marin and the City of Mill Valley permit, regulate, and tax STRs. The City of Mill Valley does not allow Accessory Dwelling Units (ADU) built after January 2017 to be used as a STR. SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 5 • The table presents the percentage of active STRs to total housing units. This percentage ranges from 0.41% for the City of Larkspur to 4.23% for the City of Mill Valley. Assuming the current, active 286 STRs in San Rafael, this total equates to 1.2% of the total housing units Citywide (23,900 total housing units). As follow-up to the STR survey, staff contacted City of Mill Valley to discuss their permitting structure, enforcement and other experiences with their program. The oversight and management of the Mill Valley program is done by their Finance Department (registration, business license and TOT) with enforcement provided by Host Compliance. According to Mill Valley staff, since 2015. they collected $450,000 in TOT. Further, it was reported that the Host Compliance enforcement service has been successful and there has been no need for City Code Enforcement staff intervention. 2. Best Practices for Enforcement to Consider As part of the commissioned white papers, the following policy design best practices for potential STR regulation in San Rafael were identified: • Employ a passive “complaint-based” enforcement strategy rather than prohibiting or banning STRs outright; • Expand the existing Transit Occupancy Tax (TOT) ordinance to include residential STRs; • Adopt an STR ordinance including explicit requirements for occupancy maximums, parking minimums, interior and exterior signage, host training, and local contacts; • Develop a program with sufficient enforcement staffing to ensure consistent enforcement and compliance monitoring of STR as soon as an ordinance is passed; • Develop an easy and streamlined online permit application and tax collection process; and • Collaborate with existing STR Platforms—such as Airbnb or VRBO/HomeAway—to aid in host registration and TOT collection and remittance. 3. Fee Options to Consider The following fee options were also identified through the white papers and additional staff research: • Registration Fee- Registration fees are the most common form of cost-recovery methods used for STR programs. Simply, registration fees are set to recover all or a portion of projected costs incurred by the jurisdiction to operate the program, including start-up costs. These fees are charged per rental at the time a host registers their rental. Some programs are set up to charge different fees based upon the type of rental, for instance applying higher registration fees for commercial rentals or lower fees for partial home rentals. Some jurisdictions charge lower registration fees that are not completely cost-recovery to encourage host compliance. • Renewal Fee- A renewal fee is charged upon the renewal of a host’s registration. Often these fees are significantly less than the registration fee and reflect on-going program cost. Like registration fees, renewal fees may not be cost-recovery in order to encourage ongoing compliance. • Business License- This option requires STR hosts to maintain a business license in order to operate. Two versions of this option exist. The first version requires the host to obtain only a business license to comply, either paying for the license at the City’s existing rate or a new created STR class. The second version requires hosts to obtain a business license in addition to a registration fee. Often the license is incorporated into the registration fee to streamline the payment process. In this version, finance-related staffing costs would be covered under the business license fee. SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 6 • Platform Fees- Some jurisdictions charge a platform fee to the company used by the hosts to operate their STR. These platforms would include Airbnb, HomeAway, or VRBO. In addition to levying fees on hosts, waiving fees can be useful as an incentive to register. Several jurisdictions have charged no or reduced fees during early enrollment periods to encourage host compliance. 4. Fine and Penalty Options to Consider As discussed above, San Rafael has received few complaints regarding STRs. Even with a low complaint rate, the use of STR fines and penalties can be used to incentivize compliance and host registration. The following fine and penalty options have been utilized in other jurisdictions: • Use Existing Fine Schedule- The most common process for imposing fines and penalties for STR programs is to utilize the existing fine schedule for hotels and motels. Since most programs use hotel and motel definitions for STRs to collect and remit TOT, it is logical to use the same fine schedule. • Two-Tiered Fine Schedule- A two-tiered fine schedule includes a set of fines for registered STRs and another set for unregistered STRs. Often the fines for unregistered rentals are substantially higher than the registered rental fine schedule—usually an existing fine schedule. The two-tiered fine schedule is intended to incentivize registration by providing an increased penalty for both failure to register and non-compliance. One example of this fine is setting the fine for the first offense equal to two times the average nightly rental rate multiplied by the minimum night stay. For each additional offense the fine would increase by two times the average nightly rental rate multiplied by the minimum night stay (i.e. second offense- four times, third offense- six times, etc.). Note, penalty maximums are limited to $500 per violation in San Rafael. • Three-Strike Ban- A three-strike ban is used to identify and remove problematic hosts from the STR program. This ban removes any host that receives three fines or unresolved complaints. A three-strike ban incentivize compliance and quick abatement of complaints. Airbnb has published their support for such a ban.2 ANALYSIS: A. Analysis of Use and Business Status One of the questions that has been raised is if a STR is defined as a “business.” As noted above, STRs are currently not regulated or enforced, and the host/property owner is not required to obtain a City business license. San Rafael Municipal Code Chapter 10.04 (Business License Tax), Section 14.04.010E, F and G includes the following definitions: E. Business. As used in this chapter, "business" includes professions, trades, occupations, operation and/or ownership of an apartment, hotel, rooming house, or other living accommodations, and all other callings, whether or not carried on for profit and livelihood. F. "Engaged in business" means conducting, managing, or carrying on of any business by any person as owner, officer, agent, manager, employee, servant or lessee. 2 Airbnb Policy Tool Chest SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 7 G. Evidence of Doing Business. When any person shall by the us e of signs, circulars, cards, telephone books or newspapers, advertise or hold out or represent that he is in business in the city, or when any person holds an active license or permit issued by a governmental agency indicating that he is in business in th e city or when any person makes a sale, takes an order, renders a commercial service or performs any other similar act within the city, and such person fails to deny by a statement given under penalty of perjury to the administrator that he is not conducting a business in the city after being requested to do so by the administrator, then these facts shall be considered prima facie evidence that he is conducting a business in the city. For the City to issue a business license, it must first be determined that the business is allowed in the zoning district for which it is proposed. San Rafael Municipal Code Section 14.03.030 (Zoning Code) presents land use definitions that are used for making this determination. This Code section does not include a definition for “short-term rentals.” However, the Zoning Code includes the following land use definitions for “home occupations” and “hotels,” which have been loosely-linked to STRs: "Home occupation" means an accessory use of a dwelling unit, conducted entirely wit hin the dwelling unit, carried on by one (1) or more persons, all of whom reside within the dwelling unit, as further defined in Section 14.16.220, Home occupations. "Hotel" means any building or portion thereof containing multiple guest rooms designed for compensation, primarily for the accommodation of transient travelers, with eating, drinking, banquet and recreational facilities related to the hotel use, but not including those facilities defined as residential care facilities. At present, these definitions and use types do not fit squarely-in-the-box for defining a STR. Depending on the policy direction chosen by the City Council, changes may be needed to the Zoning Code to include STRs. Changes may include: a) adding a definition for STR as an allowed use; or b) exempting, from the Zoning Code, STR listings that are registered and permitted through a pote ntial STR program. If a STR program is pursued, staff will return to City Council for consideration of any required changes, if necessary. The City’s Transient Occupancy Tax (“TOT”) provisions are set forth in Chapter 3.20 of the San Rafael Municipal Code. By its terms, the tax is collected from “transients” staying at a “hotel.” Section 3.20.020 defines “hotel” and “transient” as follows: “’Hotel’ means any structure, or any portion of any structure, which is occupied or intended or designed for occupancy by transients for dwelling, lodging or sleeping purposes, and includes any hotel, inn, tourist home or house, motel, studio hotel, bachelor hotel, lodging house, rooming house, apartment house, dormitory, public or private club, mobile home or house trailer at a fixed location, or other similar structure or portion thereof.” “’Transient’ means any person who exercises occupancy or is entitled to occupancy by reason of concession, permit, right or access, license or other agreement for a period of thirty (30) consecutive calendar days.” The City Attorney has advised that private homes being offered for tenancies for periods of time not exceeding 30 days, would fall within the business tax code definition of a “hotel” and their occupants would qualify as “transients” for purposes of the TOT. A specific definition added to the business tax code for “short-term rentals” is not needed in order for the City to collect TOT. However, if a STR is defined as a hotel for business tax and TOT purposes, then the Zoning Code land use definition for hotel would have SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 8 to be amended as it currently defines such a use as containing “multiple guest rooms.”. Further, it would be advisable to amend the home occupation provisions of the Zoning Code to explicitly not apply to STRs. If STRs fall under the land use definition of a hotel, and the host/property owner is collecting income from the rental, then it is considered a “business.” Meeting the definition of a hotel is critical in defining STRs as a business. If a property owner merely chooses to rent out rooms in their home as a shared rental and/or to share household expenses, then it is not a business by this definition. B. Estimated TOT Revenue from STRs Staff estimates that the City could generate revenues between approximately $18,000 and 105,000 in TOT in a given year. On average, TOT collection could be approximately $39,000 annually (Table 2). The City charges a ten (10) percent TOT and a two (2) percent Marin County Business Improvement District Tax Assessment (MCBIDCA), which is remitted to the County. The wide range in potential TOT is due to changes in factors including fluctuations in demand and changes in the number of active STR listings. A full methodology for how staff accounted for these natural fluctuations and determined the estimated TOT revenue range is available in Attachment B. Table 2. Overall Estimated Annual Tax Revenue from Short Term Rentals Staff used data from 2014 to 2018 to estimate the potential average revenue generated by STRs in San Rafael.3 Staff calculated revenue estimates by first determining the average number of STR rentals operating in San Rafael, the average nights those STRs were rented, and listings average rate per night. Staff calculated the average annual revenue per listing by multiplying for each year a listing was active: 1. the average number of days rented that year, and 2. the average listing rate per night. The average annual revenue per listing was then calculated based upon the listing size and multiplied by the number of STR listings of that size with revenue in 2018. Finally, these revenues were then added together to determine the total annual revenue. Staff analyzed “Entire Home” and “Partial Home” rentals separately. This separate analysis was due to a wide distribution of property sizes and rental rates. C. Other Program Revenue Options In additional to TOT, the City can also leverage fees and fines to help provide program cost-recovery. As described in the white papers commissioned by the Community Development Department, most jurisdictions include fees and fines in their program design, with $250 as the national average for a STR registration fee. Three main areas of consideration arise when setting fees and fines: 3 Yearly data on listings estimated days rented and average rate provided by Host Compliance. Low* Mean High* Overall Estimated "Entire Home" Host Revenue 144,171$ 323,487$ 865,273$ Overall Estimated "Partial Home" Host Revenue 36,340$ 73,894$ 186,559$ Total STR Host Revenue 180,510$ 397,381$ 1,051,832$ Estimated TOT Collected (10%)18,051$ 39,738$ 105,183$ Estimated MCBIDTA Collected (2%)3,610$ 7,948$ 21,037$ * Rental units with an Estimated Average Revenue of $0 are not included in analysis. ** Low= .5 Standard Deviations below the mean; High= 1.5 Standard Deviations below the mean. Estimated Average Annual Tax SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 9 1. Fees that are set too high--even if cost-recovery--can deter hosts from compliance, leading to a decrease in TOT revenue collection and increase in enforcement costs; 2. Fees that are easy to pay and understand increase compliance, for example a sign registration and fee that can be completed online and include all required submittals (i.e., registration fees and business license, if different); and 3. Fines that utilize existing fine schedules are easier for staff to implement. D. Home-based STRs vs. Investment Properties In addition to the potential fiscal impacts of an STR policy for the City, a potential STR policy will also have impacts on STR hosts as well as their neighboring communities. 1. Impacts on Short Term Rental Hosts Staff analyzed active STR listings to better understand the average profile of an STR host using data from Host Compliance and Assessor Records. The assessed value was used as an indicator of the last time the property was sold or major improvements were made to a property. The average assessed value of residential properties being used as an STR is $862,605 (Table 3).4 While there are STR listings in properties last assessed in 1975, more than half of active STR listings, 148, are in properties assessed since 2010. 2018 was the assessed year with the highest number of STR listings, with 38 listings and an averaged assessed value of $1,040,121. Table 3. Average Assessed Home Value of Active Residential STR Listings by Assessed Year STRs also provide a relatively simple and effective way for home owners to generate revenue from their properties. As described earlier, the average “Entire Home” STR listing generates an estimated $3,441 per year (Table B.1, Attachment B), and a “Partial Home” STR list generates $1,800 per year (Table B.3, Attachment B). These figures suggest that STR hosts include both new properties owners with larger mortgage payments and older property owners looking to find ways to generate supplemental income through STRs. 2. Investment Properties In the process of developing this report, staff received numerous calls regarding interest in purchasing properties in San Rafael as investment properties for the explicit purpose to use the property as a 4 Only properties with a residential land-use were included in this analysis to control for commercial properties (like hotels) listing units on STR platforms. Last Assessed Year Number of Listings Average Assessed Value 1975-1979 2 $97,756 1980-1984 -- 1985-1989 13 $771,815 1990-1994 8 $481,610 1995-1999 25 $447,443 2000-2004 22 $680,971 2005-2009 50 $902,726 2010-2014 66*$794,220 2014-2018 82 $1,138,707 Total 274 $862,605 * 6 2013 listings were removed due to discrepancies in the assessed value. SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 10 commercial STR. In these circumstances, the property owner is either an individual or a business acquiring the property to rent full time as an STR. If the owner is local, they may manage the property internally. If the owner is out of the area, they may arrange for a local person or company to manage the property or act as the responsible party in the case of a complaint. The impacts of these types of properties and owners are two-fold. First, STR investment properties have strictly commercial interests. Operating a residential property as a commercial interest can conflict with zoning requirements as well as skirt regulatory requirements other similar commercial properties—like hotels and motels—are required to meet. Second, STR investment properties remove a long-term housing option from the community. Removing long-term housing options from residential areas can lead to increased housing and rental prices. One academic report estimates a one (1) percent increase in Airbnb listing leads to a 0.018% increase in rents and a 0.026% increase in house prices.5 While these estimates indicate a small increase, any such increase is acutely felt given the regional housing crisis and can perpetuate displacement in communities that are most sensitive to changes in housing costs. To address these impacts, some jurisdictions have created STR policies that prohibit strictly commercial use of an STR. Jurisdictions enforce commercial bans by various methods such as either limiting the number of listings a host can operate or requir ing only owner-occupied listings. Other jurisdictions have created STR policies that regulate these properties differently. These policies include a required local contact as well as increased fee schedules, inspections, and fines. E. STR Regulation and Enforcement Options Based upon the above analysis, staff has developed three STR policy options for City Council consideration (Table 4, Page 12). Host Compliance has also provided a list of key responsibilities by entity based on compliance monitoring services (Attachment D). Staff used this list, as well as staffing at other jurisdictions, to estimate staffing requirements for the proposed STR policy options. 1. Compliance Monitoring Software Since the widespread adoption of short-term rentals, several companies have developed online software to assist jurisdictions in the implementation of STR regulations. This compliance monitoring software is a highly cost-effective tool for enforcement of any STR policy as it provides a wide range of services at a cost significantly less than that incurred by a jurisdiction developing and maintaining such services internally. These services include: • STR Address Identification- an online dashboard with address and rental information for all identifiable STRs; • Compliance Monitoring- outreach and monitoring of STR listings for compliance with a jurisdiction’s zoning and regulations; • Permitting and Registration- online and mobile registration or permitting including collection of payments, signatures, and required documents; • Rental Activity Monitoring and Tax Collection- monitoring of STR listing rental activity and support for TOT collection; • Complaint Hotline- 24/7 staffed hotline for neighbors to report non-emergency STR problems. Currently, the City has a contract with Host Compliance to perform STR address identification and monitoring. This contract is for $5,130 per year and expires on June 10, 2019. This contract could be expanded to include compliance monitoring software plus additional services. Alternatively, if the City decides to expand STR monitoring, a competitive bid process could be conducted to assess the capacities of new companies to this space. 5 Barron, Kyle and Kung, Edward and Proserpio, Davide, The Sharing Economy and Housing Affordability: Evidence from Airbnb (March 29, 2018). SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 11 For this report, staff used cost estimates provided by Host Compliance to project the compliance monitoring costs for the proposed STR program design options. Based upon these estimates, the City would incur the following on-going costs for Compliance Monitoring software for each option: • Option 1: $5,130/ year (continue monitoring only; no active enforcement) • Option 2: $18,073/ year (all available services) • Option 3: $13,073/ year (all available services except permitting and registration) 2. Option 1- Status Quo The first proposed STR policy option is to maintain the existing efforts. Under this option, staff would continue to passively monitor STR activity in San Rafael, responding to any complaints via the existing complaint-based process. There would be no active enforcement or permitting as well as no collection of STR TOT revenue. 3. Option 2- Minimal Enforcement 6 The second proposed STR policy option is to develop a new program to collect TOT revenue and a cost- recovery fee with minimal enforcement. This program design would require the following for STR listings and their hosts: • Host training and self-inspection, • Local contact for listing, • Occupancy maximums, • Parking minimums, • External signage identifying the unit as a STR, • Internal emergency contact information, and • Vegetation Management Plan that addresses potential wildfire risks. Compliance monitoring software would be used as a cost-effective tool to provide a streamlined registration and monitoring process. Most administrative tasks and day-to-day operations would be conducted automatically through the software or the software provider’s staff. Software would include the following services: • STR Address Identification, • Compliance Monitoring, • Online and Mobile Permitting and Registration, • Rental Activity Monitoring and Tax Collection, • Complaint Hotline staffed by compliance monitoring software provider. During the first year of the program, one-time staffing costs would include those associated with program implementation including: program management, legal review, technology development, and permit and TOT processing. Additionally, Staff would develop an STR workshop for hosts to learn about the program requirements. No new staffing would need to be hired. After the first year of the program, on-going staffing costs would be kept to a minimum. On-going staffing costs would be limited to program management, registration auditing, responding to complaints, and TOT 6 Note: Staff did not consider a policy design in which TOT collection and remittance was required, but the City did not maintain a compliance monitoring or enforcement mechanism. Staff chose not to consider this policy design due to the ineffectiveness of these programs evident in the best practices of other jurisdictions. For example, according to the Host Compliance white paper, when launched, the City of Petaluma’s STR program operated without a strong compliance monitoring or enforcement mechanism. During the first two years of this program, only 23 permits were issued out of over 200 listings available online. After two years, Petaluma contracted with Host Compliance and over several months was able to increase compliance to about 75% of available listings. SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 12 processing. Staff has assumed 120 total staff hours for this proposed STR policy option. In Mill Valley, with a comparable policy, on-going staffing hours are estimated at 80 total hours per year to manage registration and tax collection for 159 STR listings. As noted above, over the past three-years since the launching of their program, Mill Valley has collected approximately $450,000 in TOT revenue. 4. Option 3- Short-Term Rental Ban The final proposed STR policy option is an outright ban on short-term rentals. Due to the ban, no TOT or program fees would be collected. Compliance monitoring software would be used as a cost-effective tool for monitoring and enforcement. Software would include the following services: • STR Address Identification, • Compliance Monitoring, • Rental Activity Monitoring, and • Complaint Hotline. While the software would be able to identify STR listings and notice banned listings, staff would be required to enforce the ban for it to be effective. This increase in enforcement requirements would mean a corresponding increase in on-going code enforcement and program management staffing hours. Hiring of an additional part-time code enforcement officer would likely be necessary. The City of Sausalito currently has an STR ban that is actively enforced. Even with this ban, As of January 8, 2019, Sausalito City staff estimated roughly 157 homes listed on STR platforms. Table 4. Short-Term Rental Policy Options F. Other Measures to Consider for Regulating STRs Option 2 would permit tax and regulate short-term rentals. Should this option be pursued, additional property-related regulations may be appropriate to consider for STRs proposed in residential zoning districts. The following are several suggested regulations that could assist in reducing potential neighborhood impacts and nuisances: Compliance Monitoring Enforcement Revenue Option 1- Status Quo (No regulation or permitting) - Maintain Existing Address Identification contract with Host Compliance. - Staff passively monitors STR Activity - Staff responds to Complaints (i.e. Police for parking and noise violations, Code Enfrocement for code violations) - No TOT Collection - No Program Fee - Possible Code Enforcement Citations Option 2- Minimal Enforcement (Permit, Tax, and Regulate) - Expand or Acquire a new Compliance Monitoring Software Service to perform: Address Identification, Compliance Monitoring, Permitting and Registration, Rental Activity and Monitoring and Tax Collection, and Complaint Hotline. - Hosts complete registration, self-inspection, and fee payment online or on mobile phone. - Staff responds to unresolved complaints filed with the Complaint Hotline. - Staff performs annual audit of STR submitted documentation. - TOT Collection and Remittance - Cost-Recovering Program Fee (including Business License) - Online Payment for fees and TOT - Potential Program Fines Option 3- STR Ban (Prohibit and Enforce) - Expand or Acquire a new Compliance Monitoring Software Service to perform: Address Identification, Compliance Monitoring, Rental Activity and Monitoring, and Complaint Hotline. - Staff actively monitors STR Activity - Staff actively responds to all complaints and addresses identified as an active STR. - No TOT Collection - No Program Fee - Possible Program Fines SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 13 • Require a minimum residential lot size. • Require that the residence comply with the City’s minimum off-street parking regulations. • Limit one STR per residential lot. • Prohibit STR on residential lots accessed by a driveway that is shared with another neighboring lot(s). • Require spacing or separation requirements between short-term rentals. • Prohibit allowing Accessory Dwelling Units from being used as a STR. The one caution about adding property-related regulations is that they could increase the need for hands- on enforcement. While some of the regulations listed above can be vetted or flagged as part of the initial application screening process, confirmation of compliance would require an actual site inspection by a City inspector. G. Conclusions According to Community Development Staff, the status quo (Option 1) has not been problematic. Since staff began monitoring STR activity in 2016, the Community Development Department has received fewer than a dozen complaints and concerns. The projected TOT revenue does not demonstrate a significant increase in net revenue. Additionally, due to a wide range of projected TOT revenue, TOT revenue is unlikely to offset the expenditure without a program fee. Should the City Council decide to move forward toward STR regulation, staff supports Option 2 and strongly opposes pursuing Option 3. COMMUNITY OUTREACH: A public notice of this meeting was mailed to stakeholders, agencies and special interest groups 15 days prior to this meeting (Attachment E). Those noticed included, among others, all neighborhood associations, the Federation of San Rafael Neighborhoods, housing advocacy groups, and the San Rafael Chamber of Commerce. As part of the preparation for this report, staff contacted representatives from Airbnb and the San Rafael Chamber of Commerce. This outreach included phone calls reviewing the proposed STR policy design options and to receive feedback. Representatives from Airbnb expressed willingness to work with the City to develop a minimal enforcement policy design. Airbnb representatives stressed the importance of developing a streamlined and transparent registration and payment process. Staff also discussed with Airbnb representatives the ability for their platform to automatically collect and remit TOT as is currently done through STR listings regulated by the County of Marin. Staff was informed that the Airbnb platform does have this capability but requires the City to enter into a Voluntary Compliance Agreement (VCA). VCAs are agreements between Airbnb and the jurisdiction stipulating that Airbnb will collect and remit TOT as a lump sum for all STR on their platform. Staff outreach to the San Rafael Chamber of Commerce included a conversation with Joanne Webster, President and CEO. The Chamber expressed support for maintaining the “status quo” STR approach. If the City decided to move forward with new program design, however, the Chamber of Commerce has indicated that they would be willing to work with the City to develop a streamlined and cost-effective program. FISCAL IMPACT: There is no fiscal impact associated with this informational item. SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 14 This section outlines the estimated costs associated with the proposed STR policy options. This section also includes estimates for cost-recovery fees and annual balances for the proposed options. If the City Council decides to move forward with a new STR policy, further staffing analysis will be needed to accurately estimate program costs. STR Program Option Costs 1. Option 1- Status Quo Staff estimates no first-year costs for Option 1 as there are no changes proposed to the existing process. Staff estimates on-going costs of $5,130 to cover the costs associated with the Host Compliance contract, under the existing contract amount (Table C.1, Attachment C). 2. Option 2 - Minimal Enforcement Staff estimates first-year costs for Option 2 at approximately $34,907. These staffing costs include first- year program management, permit processing , technology development, and expanded compliance monitoring software services. Additionally, these costs include staff time for conducting an STR workshop and for the City Attorney to develop a VCA with STR platforms. Staff estimates on-going costs of approximately $26,500 (Table C.2, Attachment C). These costs would cover expanding STR Compliance Monitoring Services as well as on-going staffing costs as described in the Analysis section. 3. Option 3 – Short-Term Rental Ban Staff estimates first-year costs for Option 3 at approximately $60,835. These staffing costs include first- year program management, technology development, and expanded compliance monitoring software services. Additionally, these costs include staff time for conducting an STR workshop and for the City Attorney to develop an appropriate ban ordinance. Staff estimates on-going costs of approximately $46,900 (Table C.4, Attachment C). These costs would cover expanding STR Compliance Monitoring Services as well as on-going staffing costs as described in the Analysis section. Cost-Recovery Fee Based upon the estimated program costs, Staff estimates a 100 percent cost-recovering registration fee, paid at the time of initial registration, of $156 for Option 2. Staff estimates a 100 percent cost-recovering renewal fee, paid every year after initial registration, of $119 for Option 2 based upon an average of 224 units active in the last 10 months. Fees were not calculated for Option 1 and Option 3 (Table 6). Table 6. Estimated Cost-Recovery STR Program Fees Overall Estimate of Revenues/Expenditures Staff analyzed annual balances for all options given the low, mean, and high estimate for TOT revenue collection presented in the Analysis section. Staff presented both year one and ongoing annual balances with estimates for if the program collected a cost-recovery fee or if no fees were collected using TOT as the only program revenue (Table 7). Staff included this “no fees collected” estimate to determine a program would be cost-recovery without a program fee. As discussed in the Background section, some jurisdictions charge no program fee or one that is not fully cost-recovery due to the additional TOT revenue expected. Option Units*Initial Registration Fee Renewal Fee 1) Status Quo 224 -- 2) Minimal Enforcement 224 $156 $119 3) STR Ban --- * Unique STR properties in San Rafael in past 10 months as identified by Host Compliance SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 15 Staff estimates that for Options 1 and 3, the program will not have a positive balance under any scenario due to the lack of TOT collected or a program fee. For Option 2, staff estimates that in all scenarios where a program fee is charged, the program would have a positive balance equal to the TOT collected. Under the scenario where no fees are collected, Option 2 would have a positive Year One and on-going balance under the mean and high estimate. Option 2 would have a negative Year One and on-going balance under the low estimate. Table 7. Estimated Cost-Recovery STR Program Fees OPTIONS: The City Council has the following options to consider on the matter: • Accept the report and direct staff to return with program design and draft ordinance relating to one of three short-term rental policy options; • Direct staff to return with more information on one or more short-term rental policy options; • Accept the report with no follow-up action; or • Reject the report. RECOMMENDED ACTION: Accept report and provide direction to staff on next steps relating to one of three short-term rental policy options. ATTACHMENTS: A. STR Regulations in Marin County, November 2018 B. Estimated TOT Revenue Range Methodology & Detailed Analysis C. Estimated Fiscal Impacts of STR Program Options D. Key Responsibilities by Entity Based on Compliance Monitoring Services E. Public Notice of Short-Term Rental Information Report to City Council Low Estimate Option Year 1- Fees Ongoing- Fees TOT Year 1 Ongoing With Fees Collected* No Fees Collected (TOT Only) With Fees Collected* No Fees Collected (TOT Only) 1) Status Quo $0 $0 $0 $0 $5,130 $0 $0 -$5,130 -$5,130 2) Minimal Enforcement $34,907 $26,576 $18,051 $34,907 $26,576 $18,051 -$16,856 $18,051 -$8,525 3) STR Ban $0 $0 $0 $60,835 $46,948 -$60,835 -$60,835 -$46,948 -$46,948 Mean Estimate Option Year 1- Fees Ongoing- Fees TOT Year 1 Ongoing With Fees Collected* No Fees Collected (TOT Only) With Fees Collected* No Fees Collected (TOT Only) 1) Status Quo $0 $0 $0 $0 $5,130 $0 $0 -$5,130 -$5,130 2) Minimal Enforcement $34,907 $26,576 $39,738 $34,907 $26,576 $39,738 $4,831 $39,738 $13,163 3) STR Ban $0 $0 $0 $60,835 $46,948 -$60,835 -$60,835 -$46,948 -$46,948 High Estimate Option Year 1- Fees Ongoing- Fees TOT Year 1 Ongoing With Fees Collected* No Fees Collected (TOT Only) With Fees Collected* No Fees Collected (TOT Only) 1) Status Quo $0 $0 $0 $0 $5,130 $0 $0 -$5,130 -$5,130 2) Minimal Enforcement $34,907 $26,576 $105,183 $34,907 $26,576 $105,183 $70,276 $105,183 $78,608 3) STR Ban $0 $0 $0 $60,835 $46,948 -$60,835 -$60,835 -$46,948 -$46,948 * Program fees are calculated as cost-recovering for program expenses. If fees are collected, Year 1 and Ongoing program balances would be the same as they reflect the TOT Revenue collected that year. Revenue Expenditures Expenditures Revenue Revenue Annual Balance Annual Balance Annual Balance Year 1 Ongoing Year 1 Ongoing Year 1 Ongoing Expenditures ATTACHMENT A: STR Regulations in Marin Jurisdictions (as of November 2018) Jurisdiction (* TOT collected on STRs or Hotels) Active Listings Total Housing Units STR % of Total Housing Current Regulations City of Sausalito* 150 (Includes Marin Headlands and Muir Beach) 4,676 3.05% • Prohibits STRs based on existing regulations. • City voted to appropriate funds for a full-time enforcement officer dedicated only to STRs (complaint-driven) • STR permit and regulate pilot program proposal rejected by the city (Feb 2017). • Issue is to be discussed in Sausalito General Plan update according to city’s website. Town of Tiburon* 51 (includes Belvedere) 4,207 1.21% • Explicitly bans STRs in 2015 ordinance. • Complaint driven enforcement. City of Belvedere (see above) 1,079 N/A • Prohibits STRs by default in existing permissive zoning code. • Complaint driven enforcement. • City does not collect Transient Occupancy Tax (TOT) and has no plans to do so in the future. City of Mill Valley* 267 6,298 4.23% • Permits and regulates residential STRs based on existing code: requires business license, collects TOT • Does not allow accessory dwelling units built after Jan 2017 to be used as STRs. • Complaint driven enforcement with using existing staff and Host Compliance STR monitoring services City of Corte Madera* 30 4,081 0.73% • Prohibits STRs by default in existing permissive zoning code • Complaint driven enforcement • As of a June 4, 2018 Town Council directed city staff to address Short Term Rentals in a draft ordinance City of Larkspur* 25 6,093 0.41% • Prohibits STRs in residential zoning districts as an official interpretation of existing zoning code (Oct 2015) Complaint driven code enforcement • Currently considering defining STRs and prohibiting advertisement of them in omnibus zoning update (2018-2019) Town of Ross 6 876 0.68% • No explicit STR regulations, any complaints are addressed on an individual basis through code enforcement • Town Council voted to continue taking a “Wait and See” approach after a fall 2016 community survey indicated that the town was divided on whether to prohibit, permit and regulate, or continue unconditionally permitting STRs. • Town does not collect TOT, would require major voter approval to do so Town of San Anselmo 80 5,464 1.46% • No explicit STR regulations, other than requiring a business permit Ambiguous in town code whether STRs are considered a residential or commercial use: STRs generally permitted as a residential use as long breakfast is not served. No TOT collected. This was put on local ballot in 2009 and voted down because it was thought to single the only hotel in San Anselmo: The San Anselmo Inn Town of Fairfax* 70 3,564 1.96% • Prohibits STRs by default in zoning code unless a Special Use permit is obtained. • Planning Staff is currently in the process of updating zoning ordinance to conditionally allow STRs and collect TOT (as of 2017). A community survey indicated that 55% of residents are in favor of allowing accessory dwelling units to be used as STRs City of Novato* 107 22,457 0.47% • Prohibits STRs unless issued a special use permit as a boarding house or bed and breakfast Complaint driven code enforcement County of Marin* Data Unavailable 112,259 N/A • Currently, STRs are unconditionally allowed in unincorporated areas of Marin County. County planning staff is currently in the process of drafting a third version of a proposed ordinance to regulate STRs in unincorporated Marin Source: City of San Rafael staff interviews and research. ATTACHMENT B- Estimated TOT Revenue Range Methodology & Detailed Analysis Estimated TOT Revenue Range Methodology Staff calculated the standard deviation to estimate the potential variation in the average revenue projections. Staff used the standard deviation to account for natural fluctuations in the vacation rental market including: • changes in active listings, • changes in demand for STRs, • changes in rental rates, and • rentals that may not be identified. Accounting for these variations is important because it will impact the amount of STR revenue in a given year. Staff used the standard deviation to determine a low-end and a high-end estimate for STR revenue projections. Typically, 95% of the variation in an estimate is within two standard deviations from the mean (Figure B.1). Staff found that for STR revenue was not normally--meaning the same amount of variation above and below the mean. Instead the STR revenue indicated more variation above the mean (Figure B.2). Staff accounted for this variation by calculating the low-end revenue estimate as the mean minus one-half (0.5) a standard deviation. The high-end revenue estimate was calculated as the mean plus one-and-one-half (1.5) standard deviation. Together, this range suggests that there is a 95% likelihood that annual STR revenue will fall between the low-end and high-end revenue estimate. Figure B.1. Example of Normal Distribution Figure B.2. Distribution of Average Annual STR Revenue by Listing, San Rafael 2014-2018 Estimated TOT Revenue from “Entire Home” STR Staff estimated average an average annual revenue for “Entire Home” rentals of $3,441 per listing. This estimate was based upon 353 total listings between 2014 and 2018. “Entire Home” rentals were rented on average 20 nights per year at an average rate of $212 per night (Table B.1). Table B.1. Estimate Average Annual Revenue per Unit for "Entire Home" Short Term Rentals from 2014-2018 in San Rafael Across all “Entire Home” listings, Staff estimates a total annual revenue of between approximately $144,000 and $865,000 (Table B.2). Based upon this revenue, the City could collect between $14,000 and $86,000 annually, with an average of $32,349 in a given year. Table B.2. Overall Estimated Annual Revenue for "Entire Home" Short Term Rentals Low* Mean High* Standard Deviation 0 42 18 117$ 1,007$ 2,000$ 4,980$ 1,986$ 1 4 15 129$ 918$ 1,903$ 4,861$ 1,972$ 2 47 26 146$ 1,645$ 3,574$ 9,359$ 3,857$ 3 136 17 236$ 1,158$ 3,139$ 9,082$ 3,962$ 4 96 21 230$ 1,643$ 3,317$ 8,342$ 3,349$ 5 17 31 354$ 5,821$ 9,433$ 20,270$ 7,224$ 6 10 16 215$ -$ 4,930$ 21,001$ 10,714$ 7 1 1 177$ 177$ 177$ 177$ -$ Overall 353 20 212$ 1,266$ 3,441$ 9,969$ 4,351$ Estimated Average Annual Revenue/ * Rental units with an Estimated Average Revenue of $0 are not included in analysis. ** Low= .5 Standard Deviations below the mean; High= 1.5 Standard Deviations below the mean. Avg. Listing Rate/ Night Est. Avg. Nights Rented/ Year Number of Rentals*Bedrooms Low* Mean High* 0 8 8,056$ 16,002$ 39,837$ 1 1 918$ 1,903$ 4,861$ 2 15 24,677$ 53,604$ 140,384$ 3 32 37,059$ 100,449$ 290,619$ 4 27 44,355$ 89,571$ 225,221$ 5 5 29,106$ 47,166$ 101,349$ 6 3 -$ 14,791$ 63,002$ 7 0 -$ -$ -$ Overall 91 144,171$ 323,487$ 865,273$ 14,417$ 32,349$ 86,527$ 2,883$ 6,470$ 17,305$ Estimated Average Annual Revenue Bedrooms Number of Rentals * Rental units with an Estimated Average Revenue of $0 are not included in analysis. ** Low= .5 Standard Deviations below the mean; High= 1.5 Standard Deviations below the mean. Estimated TOT Collected (10%) Estimated MCBIDTA Collected (2%) Estimated TOT Revenue from “Partial Home” STR Staff estimated average an average annual revenue for “Partial Home” rentals of $1,800 per listing. This estimate was based upon 167 total listings between 2014 and 2018. “Partial Home” rentals were rented on average 19 nights per year at an average rate of $96 per night (Table B.3). Table B.3. Estimate Average Annual Revenue per Unit for "Partial Home" Short Term Rentals from 2014-2018 in San Rafael Across all “Partial Home” listings, Staff estimates a total annual revenue of between approximately $36,000 and $186,500 (Table B.4). Based upon this revenue, the City could collect between $3,600 and $18,600 annually, with an average of $7,389 in a given year. Table B.4. Overall Estimated Annual Revenue for "Partial Home" Short Term Rentals Low* Mean High* Standard Deviation 0 5 14 67$ 411$ 923$ 2,461$ 1,025$ 1 5 29 151$ 3,380$ 4,410$ 7,501$ 2,061$ 2 28 20 93$ 576$ 1,985$ 6,212$ 2,818$ 3 59 19 79$ 836$ 1,423$ 3,183$ 1,173$ 4 44 20 124$ 899$ 2,262$ 6,350$ 2,725$ 5 22 15 87$ 797$ 1,296$ 2,791$ 997$ 6 4 22 75$ 1,427$ 1,603$ 2,129$ 351$ 7 0 0 -$ -$ -$ -$ -$ Overall 167 19 96$ 760$ 1,800$ 4,921$ 2,080$ Estimated Average Annual Revenue/ * Rental units with an Estimated Average Revenue of $0 are not included in analysis. ** Low= .5 Standard Deviations below the mean; High= 1.5 Standard Deviations below the mean. Avg. Listing Rate/Night Est. Avg. Nights Rented/ Year Number of Rentals*Bedrooms Low* Mean High* 0 2 821$ 1,846$ 4,922$ 1 1 3,380$ 4,410$ 7,501$ 2 6 3,455$ 11,910$ 37,275$ 3 16 13,382$ 22,769$ 50,929$ 4 11 9,889$ 24,879$ 69,846$ 5 5 3,984$ 6,478$ 13,957$ 6 1 1,427$ 1,603$ 2,129$ 7 0 -$ -$ -$ Overall 42 36,340$ 73,894$ 186,559$ 3,634$ 7,389$ 18,656$ 727$ 1,478$ 3,731$ Number of RentalsBedrooms * Rental units with an Estimated Average Revenue of $0 are not included in analysis. ** Low= .5 Standard Deviations below the mean; High= 1.5 Standard Deviations below the mean. Estimated Average Annual Revenue Estimated TOT Collected (10%) Estimated MCBIDTA Collected (2%) ATTACHMENT C- Estimated Fiscal Impacts of STR Program Options Table C.1. Option 1- “Status Quo” Estimated Costs Table C.2. Option 2- “Minimal Enforcement” Estimated Costs One Time New Existing New Host Compliance Services Address Identification $5,130 Host Compliance Sub-total Implementation Staffing (One-Time) Program Management 0 $0 City Attorney 0 $0 STR Workshop 0 $0 Technology development 0 $0 Permit Processing 0 $0 Community Development Staffing (On-going) Program Management 0 $0 Code Enforcement 0 $0 Finance Staffing (On-going) Business License & TOT Processing 0 $0 $0 Business License & TOT Review 0 $0 $0 One-Time Staffing Subtotal $0 On-Going Staffing Subtotal Total $0 $5,130 $0 $5,130 Est. Hours On-Going One Time New Existing New Host Compliance Services Address Identification $5,130 Mobile Registration $5,000 Compliance Monitoring $2,535 Rental Activity Monitoring $3,380 24/7 Dedicated Hotline $2,028 Host Compliance Sub-total Implementation Staffing (One-Time) Program Management 60 $4,066 City Attorney 10 $1,148 STR Workshop 8 $542 Technology development 20 $1,355 Permit Processing 20 $1,220 Community Development Staffing (On-going) Program Management 60 $4,066 Code Enforcement 20 $1,440 Finance Staffing (On-going) Business License & TOT Processing 20 $1,205 $1,205 Business License & TOT Review 20 $1,793 $1,793 One-Time Staffing Subtotal $8,331 On-Going Staffing Subtotal Total $8,331 $18,073 $8,503 $26,576 Est. Hours On-Going Table C.3. Option 3- “STR Ban” Estimated Costs One Time New Existing New Host Compliance Services Address Identification $5,130 Compliance Monitoring $2,535 Rental Activity Monitoring $3,380 24/7 Dedicated Hotline $2,028 Host Compliance Sub-total Implementation Staffing (One-Time) Program Management 160 $10,842 City Attorney 10 $1,148 STR Workshop 8 $542 Technology development 20 $1,355 Permit Processing 0 $0 Community Development Staffing (On-going) Program Management 160 $10,842 Code Enforcement 320 $23,034 Finance Staffing (On-going) Business License & TOT Processing 0 $0 $0 Business License & TOT Review 0 $0 $0 One-Time Staffing Subtotal $13,887 On-Going Staffing Subtotal Total $13,887 $46,948 Est. Hours On-Going $13,073 $33,875 ATTACHMENT D Key responsibilities by entity based on services subscribed Provided by Host Compliance Host Compliance Customer Mobile Permitting • Implementation/customization to allow online registration and payment • Automatically collect and verify required documentation such as proofs of permanent residency, landlord permissions, HOA approvals, insurance policies etc. • Enable applicants to review and electronically sign applications and affidavits under penalty of perjury • Instantly determine and verify permit eligibility by cross-referencing application info with other data sources such as electronic zoning maps, property ownership records, subsidized housing databases, lists of Ellis Act evictions • Seamlessly collect debit card, credit card and electronic check (ACH) payments without having to worry about PCI compliance and complex implementation processes • Put renewals on autopilot by automatically notifying permit/license holders of renewal deadlines • Provide requirements: questions/documents to be asked, email copies, tax and penalty rules, certificate template(if any) etc. • feedback on initial setup and designing of process / one- time • sign up for stripe (payment gateway) / one-time • audit if host paid using stripe's backend / as needed • Provide logo for the city to use on the application • Existing payments data per registration if you’d like to collect back taxes(recurring every quarter if still collecting mail-in application) Address Identification • Creating and maintaining databases of short term rental units • Access control management • Ongoing support and maintenance security, backup and restoration • sync with HC list of hosts already in compliance or registered manually over the phone/walk-in (recurring) • Updated assessor file (recurring every quarter) • Updated existing registrations to date (recurring every month if accepting mail-in applications) Compliance Monitoring • Monitoring of STR properties for zoning and registration compliance • Performing proactive/systematic outreach to owners of non- compliant short-term rental units using San Rafael's letter head (additionally we can send FIRST CLASS, CERTIFIED and/or REGISTERED letters) • Proof of contact provided in the form of FIRST CLASS, CERTIFIED, and/or REGISTERED letter tracking info (where such data is provided by USPS) and PDF copies of all letters • Real-time accessible reporting on zoning, registration and legal non-compliance by address and by owner • Approval on template, messaging and cadence in which to send • Provide letter head • Sign off on mail recipients lists (recurring every month/when you want to send letters) ATTACHMENT D Rental Activity Monitoring and Tax Audit Support • Integrated mobile-enabled web forms to automate the calculation and collection of transient occupancy taxes and fees • WEEKLY monitoring of 50+ short-term rental websites for signs of rental activity • Detailed WEEKLY information on reviews and pricing for each listing • Consolidated utilization and revenue estimates across listing platforms using ADVANCED REVENUE, UTILIZATION AND TAX FRAUD DETECTION ALGORITHMS • Continuously updated list of short-term rental owners suspected of non- or under- reporting taxes • Pro-active, systematic and data-informed outreach to STR operators suspected of under-reporting taxes using Malibu’s ADVANCED MULTI-PAGE form letters • Provide custom reports and analytics to support tax audits and other STR related investigations • Confirmation on SOW if wanting outbound letter help and/or online tax audit support / one-time • Reported revenue data (can also be derived from existing payments data if provided) 24/7 Dedicated Hotline • 24/7 staffed telephone and hotline and mobile-enabled web form for neighbors to report non-emergency problems related to STR properties • Full documentation of all reported incidents • Digital recordings and written summary reports of all calls • Ability for neighbors to include photos, video footage and sound recordings to document complaints • Real-time outreach to owners/managers of problem properties (whenever owner’s contact info is known) • Full documentation of owner/manager outreach activities • Detailed reporting on incidents • Automatic escalation of issues to emergency responders where required • local number available • Code enforcement to monitor following business day if any complaints warrant their attention • easy spot check for repeat offenders (some municipalities have a 3 strikes you lose your license rule) • Local non-emergency police line • Emails to receive hotline complaint notifications NOTICE OF PUBLIC MEETING – CITY COUNCIL You are invited to attend the City Council meeting on the following proposed project: PROJECT: INFORMATION REPORT ON SHORT-TERM RENTALS. The City Council and public will be presented with an informational repo rt on the topic of short-term rentals. This report will include data on the current, active short-term rentals, as well as approaches and best practices for regulating, permitting, enforcing and taxing short -term rentals. The report will include several options for the City Council to consider such as a prohibition on short-term rentals and allowing such rentals with different levels of enforcement. A webpage has been created on the City’s website, which includes two “white papers” addressing this topic. This webpage can be accessed at: https://www.cityofsanrafael.org/short-term- rentals/. City File No. P18-013 State law (California Environmental Quality Act) requires that this project be reviewed to determine if a study of potential environmental effects is required. It has been determined that this project, which is an informational report, will have no physical impact on the environment. The Housing Forum is classified as a planning study, which qualifies for a Statutory Exemption from the provisions of the California Environmental Quality Act Guidelines under 14 CRR Section 15262. MEETING DATE/TIME/LOCATION: Tuesday, February 19, 2019, 7:00 p.m. City Council Chambers, 1400 Fifth Ave at D St, San Rafael, CA FOR MORE INFORMATION: Contact Ethan Guy, Senior Analyst at (415) 485-2392 or ethan.guy@cityofsanrafael.org. Mr. Guy’s office is located at City Hall, 3rd floor, which is open from 8:30 a.m. to 4:30 p.m. on Monday through Thursday, and from 8:30 a.m. to 1:30 p.m. on Friday. You can also view the staff report after 5:00 p.m. on the Friday before the meeting at http://www.cityofsanrafael.org/meetings. WHAT WILL HAPPEN: You can comment on the informational report. The City Council will be requested to accept the report and provide direction to staff on the report options. No formal action will be taken by the City Coun cil. IF YOU WANT TO COMMENT: You can send written correspondence by email to the address above, or by mail/hand delivery to the City of San Rafael, 1400 5th Avenue, San Rafael, CA 94901. At the above time and place, all written correspondence received will be noted and all interested parties will be heard. If you challenge in court the matter described above, you may be limited to raising only those issues you or someone else raised at the public hearing described in this notice, or in written correspondence delivered at, or prior to, the above referenced public hearing (Government Code Section 65009 (b) (2)). Judicial review of an administrative decision of the City Council must be filed with the Court not later than the 90th day following the date of the Council’s decision. (Code of Civil Procedure Section 1094.6) Sign Language and interpretation and assistive listening devices may be requested by calling (415) 485-3085 (voice) or (415) 485-3198 (TDD) at least 72 hours in advance. Copies of documents are available in accessible formats upon request. Public transportation to City Hall is available through Golden Gate Transit, Line 22 or 23. Para-transit is available by calling Whistlestop Wheels at (415) 454-0964.To allow individuals with environmental illness or multiple chemical sensitivity to attend the meeting/hearing, individuals are requested to refrain from wearing scented products. Attachment E