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Home My WebLink AboutCD Short-term Rentals 2019 PPTInformational Report on Short Term Rental Approaches, Regulations, Best Practices and Options San Rafael City Council February 19, 2019 Informational Report on Short Term Rentals February 19th, 2019 Background Jan. 4, 2016-Council ask Staff to begin monitoring STR activity as part of JDU ordinance review June 10, 2016-Staff enters into contract with Host Compliance to provide the following STR monitoring services: ▪Trend Monitoring; ▪Address Identification Aug. 20, 2018-Staff provides Housing Report to City Council. Council directs staff to return with informational report on STRs. Today-San Rafael does not prohibit, regulate, tax or enforce STRs. Informational Report on Short Term Rentals February 19th, 2019 Existing Conditions •~286 Active Listings in 2018: •Increase from 150 active listings when monitoring first began in 2016. •3-Bedroom Single Family Homes are the largest “host-described” property type (75-listings); •Distributed relatively equally geographical across city: •Slight concentrations in West End, Gerstle Park, and Dominican neighborhoods. •Over the last three years, the City has received less than a dozen STR related complaints. Informational Report on Short Term Rentals February 19th, 2019 Best Practices-Policy Design •Passive “complaint-based” enforcement rather than prohibiting or banning STRs outright; •Easy and Streamlined Online permit application and tax remittance process; •Expand TOT ordinance to include STRs; •Adopt ordinance with clear requirements for host to be able to comply; •Sufficient staffing to enforce from onset; •Collaborate with Platforms for registration & TOT collection and remittance. Informational Report on Short Term Rentals February 19th, 2019 Best Practices-Fee options to consider •Registration Fee-Most common was to recover first year program administration costs. Most jurisdictions set fees to be 100% cost-recovering, some set fees lower to encourage registration. •Renewal Fee-Fee to recover on-going program administration costs. •Business License-Require hosts to maintain a valid business license. This fee can be included in the registration/renewal fee or charged separately. •Platform Fee-Less common fee charged directly to the platform (i.e. Airbnb, VRBO/HomeAway) in order to operate in the jurisdiction. Informational Report on Short Term Rentals February 19th, 2019 Best Practices-Fine options to consider •Existing Fine Schedule -Utilize the existing fine schedule for hotels and motels. •Two-Tiered Fine Schedule -Utilize an existing fine schedule for registered STR listings and a higher fine scheduled for unregistered STR listings. •Three-Strike Ban-Remove from STR program any host who receives three fines or unresolved complaints. Option is already supported by Airbnb. Note: Penalty maximums are currently limited to $500 per violation in San Rafael STR Regulation & Enforcement Options 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 Enforcement 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, -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 Best Practices-Fee & Fine Options 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. Annual Balance Annual Balance Annual Balance Year 1 Ongoing Year 1 Ongoing ExpendituresRevenue Expenditures Expenditures Revenue Revenue Year 1 Ongoing Informational Report on Short Term Rentals February 19th, 2019 Conclusions •Status quo has not been problematic to date; •Due to the wide ranged in TOT revenue projections, Staff does not project a significant increase in net revenue from a STR program. TOT revenue is unlikely to offset program costs without a program fee; •If Councils decides to move forward toward STR regulation, Staff supports Option 2 and strongly opposed Option 3. Informational Report on Short Term Rentals February 19th, 2019 Appendix-Estimated Fees Units Initial Registration Fee Renewal Fee Option 1- Status Quo (No regulation or permitting) 224 -- Option 2- Minimal Enforcement (Permit, Tax, and Regulate) 224 $156 $119 Option 3-STR Ban (Prohibit and Enforce) 224 - Informational Report on Short Term Rentals February 19th, 2019 Appendix-TOT Revenue Calculations Low Estimate-0.5 Standard Deviation below mean High Estimate-1.5 Standard Deviation Above mean Mean Informational Report on Short Term Rentals February 19th, 2019 Appendix-Estimated Program Costs-Option 1 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 Informational Report on Short Term Rentals February 19th, 2019 Appendix-Estimated Program Costs-Option 2 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 Informational Report on Short Term Rentals February 19th, 2019 Appendix-Estimated Program Costs-Option 3 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 $13,073 $33,875 Est. Hours On-Going Informational Report on Short Term Rentals February 19th, 2019 Appendix-Estimated Assessed Value of STR Listings 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.