HomeMy WebLinkAbout06212022 Planning & ZoningWork Session - Short Term RentalsPlanning & Zoning Commission
Work Session Packet
Work Session
Tuesday, June 21, 2022
Council Chambers, City Hall
6: 00 p. m.
The City of Seward, Alaska
SEWARD PLANNING AND ZONING COMMISSION ib"
WORK SESSION AGENDA
June 21, 2022 6:00 p.m. Council Chambers
Clare Sullivan
1)
CALL TO ORDER
Chair
Term February, 2024
2)
DISCUSSION ITEMS
Vanessa Verhey
a)
Capping Short-term Rental Permits (I hour)...................Page
3
Vice Chair
Term February, 2023
i) Number of permits
Nathaniel Charbonneau
ii) Type of STR to be capped
Commissioner
iii) Permitting structure
Term February, 2024
b)
Definition Revisions (20 min)......................................Page
4
Victoria Monaco
i) Hotel/Motel
Commissioner
Term February, 2025
c)
Permit Requirements (40 min).....................................Page S
Brenan Hornseth
i) Insurance
Commissioner
11) Fee schedule
Term February, 2025
iii) Ownership of property
Troy Staggs
Commissioner
d)
Other recommendations to Council (30 min)..................Page 6
Term February, 2025
i) Increase utility on/off fees and base rates
Vacant
ii) Taxing non -primary residences / investment properties
Commissioner
Term February, 2025
iii) Increasing taxation for vacant land / vacant homes
3)
SUPPORTING RESOURCES
Janette Bower
a)
Effects of no regulation..............................................Page
7
City Manager
b)
STR data in Seward...................................................Page
8
Jason Bickling
c)
Current STR Code Overview........................................Page
11
Community
Development Director
c)
Examples of STR Fee Schedules.....................................Page
13
Courtney Bringhurst
City Planner
4)
ADJOURNMENT
Selena Soto
Planning Assistant
Brenda Ballou
City Clerk
`a
A) Capping STR Permits:
• How many permits should the City allow?
o Base number on operational history
■ i.e. Whomever operated in 2019, 2020, 2021, or 2022 will automatically
get a permit in 2023 if they apply, but would need to stay actively
operating each year in order to keep their permit
• Add a few `available' permits above that number? Or don't add
any additional permits
• What types of Short-term rentals should be capped?
o All forms of nightly rentals / lodging (outside of hotels/motels)
o STRs of traditional Bed and Breakfasts (owner occupied, < 50% of bedrooms)
o Non -owner occupied STRs (whole house rentals)
• What should be the structure of permit regulation?
o Progressive
■ Revisit every couple of years and add a certain number of available
permits by percentage
o Regressive
■ Drop permits as people drop out (no wait list)
o Status Quo
■ Keep number of permits static
• Should certain regulations favor Seward residents or be waived for Seward
residents?
o Have to provide proof of residency, i.e. approved PFD, Alaska Driver's license,
etc.
3
B) Definition Revisions:
• How should we distinguish between a `small hotel' and a `large hotel'?
o There are currently 5 properties that are listed as hotel/motel that have 6 or more
rooms, but for all intents and purposes, are not hotels
■ Not centrally staffed 24/7 as a hotel would be
o Once a building rents or leases more than 5 rooms on a nightly basis, they are
required to meet higher standards in fire code
Still needs to be considered a `hotel' for that reason
We can create language to distinguish between a small hotel and a large
hotel
o Language suggestions
■ Large hotel
• Add emphasis to centrally staffed
• More than 10 rooms for nightly rentals?
Small hotel
• Not centrally staffed
• Rents 10 or less rooms for nightly rentals, but not more than 5
15.10.140 —Definitions in Code
(49) Lodging. The renting out of a dwelling, or portion thereof, to provide overnight sleeping
accommodations for a period of less than 30 consecutive days. The use includes the providing of meals
to overnight guests only. This use includes bed and breakfast, but does not include motel, hotel or
hostel.
d. Hotel. A facility with six or more guest rooms and on -premises management offering transient
lodging accommodations to the general public on a daily rate where access to all sleeping rooms
is through a main entrance and which may provide food, entertainment, meeting rooms,
recreational facilities or various personal services. Includes lodges and inns.
Motel. A building, or group of detached or connected buildings, having six or more guest rooms,
an on -premises manager and parking conveniently located on the premises, which are designed
primarily to offer sleeping accommodations, with or without meals, to the motoring public on a
daily rate. Includes designations such as motor lodges, auto courts, tourist courts and similar
terms.
C) Permit Requirements:
• Should insurance or proof from Mortgage company that STRs are permissible be
required?
o Many mortgages do not allow the property to be used for STRs. Requiring
proof of insurance would show that the lender/mortgage has been notified and
allows the property to be used as a STR
o "A short-term rental operator must maintain primary liability insurance to
cover the short-term rental dwelling unit in the aggregate of not less than one
million dollars or conduct each short-term rental transaction through a platform
that provides equal or greater primary liability insurance coverage. Nothing in
this section prevents an operator or a platform from seeking contributions from
any other insurer also providing primary liability insurance coverage for the
short-term rental transaction to the extent of that insurer's primary liability
coverage limits" (WA State Law).
• What should be the fee for a Short-term rental permit? (Currently free)
o Room (within an owner occupied dwelling) - $100?
o Self-contained space (includes small hotels/motels) - $250?
o Whole house - $500?
o Examples from other communities (fee schedule)
➢ Seepage 13
• What restrictions should be placed on a STR permit?
o The permit does not stay with the property, if an individual sells their property,
they lose the permit
o Cannot apply for a STR permit until having owned a property for a certain
amount of years (2? 3? 5? years after purchasing a property)
D) Other Recommendations to Council:
Utility fees
• Increase utility on/off fees and base rates (for houses that are closed and vacant in non -
summer months
• Current rates:
o Power - $150 off/on fee, base rate $52/month
o Water - $175 off/on fee, no base rate usage fee
o Sewer — no off/on fees, base rate $52/month
Taxes
• Put a tax on non -primary residences / investment properties
o i.e. Vancouver BC does a 3% tax on homes assessed taxable value for home that
are not principal residences
o https://vancouver.ca/home-property-development/empty-homes-tax.aspx
• Increase taxes for vacant land / vacant homes
o This could help with empty lot infill specifically in the downtown area
Effects of no regulation:
• Small communities have more renters than full-time residents
• PACs are being setup by lodging and booking companies to battle regulation on STRs
(and winning)
• Few amenities available in communities in off season (restaurants, basic services, etc)
• Housing prices and long-term rental prices increase, malting it difficult for families to
live in the community
o Schools decline
o Lose capacity for all services
■ Restaurants
■ Hospital
■ Schools
■ Stores, etc
STR Data in Seward:
Disclaimer
The data below is not comprehensive, but a very good picture of STRs currently in Seward. The data was
acquired from 2021 Hamari reports and 2022 airbnb / vrbo listings. There will be minor discrepancies as
we cannot know everything about an individual's property simply from an online listing or licensing
information.
From year to year, we have about 5-10% of STRs that are "transient" — individuals choosing to drop out
of the STR business and others who are starting a new business.
Finally, there are many properties that are hard to categorize when it comes to defining their spaces
(i.e. is a duplex with an accessory apartment in R2 a tri-plex?)
Below is a chart that shows the distribution of STR listings by zone.
STRs by Zone
R1
12
9.6%
R2
3
2.4%
R3
1
0.8%
RR
2
1.6%
U R
26
20.8%
AC
25
20.0%
CB
38
30.4%
HC
3
2.4%
OR
15
12.0%
Total
125
PR Primary Residence
NPR Not Primary Residence
UNK Unknown
Whole House (Single Family Dwelling)
Total 128
PR 1? INPR 128 JUNK 11
Principally Residential (9)
Principally Commercial (19)
RR
R1
R2
R3
UR
OR
AC
HC
CB
I
1
1
7
8
1
10
Space Rental (Single Family Dwelling)
Total 1 32
PR I 21 NPR I 9 UNK I2
Principally Residential (21)
Principally Commercial (12)
RR
R1
R2
R3
UR
OR
AC
HC
CB
I
3
12
2
4
4
6
2
Duplex
Total 1 7
PR 1 4 NPR I 1 UNK I2
Principally Residential (4)
Principally Commercial (3)
RR
R2
R3
UR
OR
AC
HC
CB
F_Ll
4
1
1
+--L--
1
Triplex
Total 1 4
PR I 1 NPR I 3 UNK
Principally Residential (1)
Principally Commercial (3)
RR
R2
R3
UR
OR
AC
HC
CB
F_Ll
1
3
+--L--
Fourplex
Total 1 2
PR I INPR I 2UNK
Principally Residential (2)
Principally Commercial (0)
RR
R2
R3
UR
OR
AC
HC
CB
F_Ll
2
+--L--
Townhome
Total 1 5
PR 1 2 NPR I 3 UNK
Principally Residential (2)
Principally Commercial (3)
RR
R2
R3
UR
OR
AC
HC
CB
F_Ll
2
1
+--L--
2
Apartment in Commercial Building
Total I 11
PR I INPR I 11UNK
Principally Residential (0)
Principally Commercial (11)
RR
R2
R3
UR
OR
AC
HC
CB
I
F_Ll
11
Others
Total 1 2
PR I 1 NPR I 1 UNK
Principally Residential (0)
Principally Commercial (2)
RR
R2
R3
UR
OR
AC
HC
CB
F_Ll
1
+--L--
1
Hotel / Motel (*based on Firecode definition - number of rooms)
Total I 27
PR I INPR I 27 UNK
Principally Residential (0)
Principally Commercial (27)
RR
R2
R3
UR
OR
AC
HC
CB
I
F_Ll
8
19
it$]
Current STR Code Overview:
Key
P: by permit
H: home occupation
*If blank, it is not permitted
O: allowed outright
C: Conditional Use Permit
Principally Residential
Principally Commercial
Uses
RR
Rl
R2
R3
UR
OR
AC
HC
CB
I
House rental
on a nightly
basis
P
P
P
P
P
P
Lodging, B&B,
rooms, duplex,
and accessory
apartment
H/P
H/P
H/P
H/P
H/P
O/P
O/P
O/P
O/P
Lodging, hostel
P
P
P
P
P
P
Lodging, hotel,
motel, lodge,
inn
C
O
C
C
Lodging,
multifamily
dwelling
apartment
P
P
P
P
P
P
P
15.10.226 Land uses allowed.
(a) Table 15.10.226 Land Uses Allowed is incorporated herein by reference and the restrictions contained
therein are mandatory unless otherwise modified by this chapter (See Table 15.10.226)
(b) Lodging as defined in section 15.10.140B. is allowed in accordance with table 15.10.225 of this chapter and
subject to the following conditions:
(1) Regardless of the date such use began, an annual administrative permit is required. Prior to issuing the
permit, the City shall conduct an annual life safety inspection of each guest room to assure compliance
with the current adopted building code door/window egress standards, the presence of an operable
and inspected fire extinguisher and adequate smoke detection systems, a posted evacuation plan, and
visible signs showing exit locations.
is
(2) Parking will be provided in accordance with section 15.10.215 of this chapter.
(3) No cooking or cooking facilities are permitted in individual guest bedrooms.
(4) Within single and two-family residential districts, lodging is limited to a home occupation within an
owner -occupied dwelling which is the owner's principal place of residence and to the rental of not
more than 50 percent of the bedrooms to a maximum of five.
(5) In all other residential districts, lodging within single-family residences and duplexes is limited to a
home occupation within the business owner's principal place of residence and to the rental of not
more than 50 percent of the bedrooms to a maximum of five.
(6) Within commercial districts, lodging is limited to the rental of not more than five guest bedrooms
regardless of building or business ownership.
(7) Multifamily dwellings used for lodging purposes are not required to be the business or property
owner's residence. The use shall be limited to not more than five apartment units.
(8) The rental of individual rooms for lodging purposes is not extended to apartment unit tenants.
(9) Regardless of business name, the use of more than five guest bedrooms or apartments is considered a
motel or hotel for building and other code interpretation purposes.
I��
STR Fee Schedule Examples:
Anchorage, Alaska
• Anchorage's example of permitting fees. Fees help lead to higher levels of compliance.
Resource:
https://www.muni.org/Departments/operations/streets/Service/Housing%20Committee/HWC%20Marc
h % 202020 % 20packet. pdf
Telluride, Colorado
• Business license for every rental property
Fees: $330 + $44 per sleeping area (including lofts and converted sleeping areas)
o Lodging establishments pay $132 per sleeping room
• "The proceeds derived from the business license fees are first used for reasonable costs incurred
in connection with the administration: of the remaining balance, eighty percent (80%) is used
for marketing and twenty percent (20%) is deposited into the Open Space Fund. All revenue
resulting from the approval by the Town electorate at the election on November 2, 2021, to
increase the business license fees on short-term rental units in Sections 6-1-20(1) through (3) of
the Telluride Municipal Code are dedicated to the Town's Affordable Housing Fund and are used
exclusively to fund and finance the development and preservation of affordable housing,
including the acquisition of land therefor."
Telluride's population is around 2,000 people. The town is quite small being 2.25 sq miles.
Resource: https://www.telluride-co.gov/DocumentCenter/View/260/Understanding-Short-Term-
Rentals-Info?bidld=
Salida, Colorado
City of Salida's fee schedule —see file attachments to see the fees established in 2018.
STIR New = $50
STIR Renewal = $100
Late fee renewal = $10
Penalty for Operating without a business license = $1,000.
Resource: https://www.citvofsalida.com/ordinances/updating-short-term-rental-business-license-fee-
cchPrlulP
13
Santa Fe, New Mexico
"The regulations identify four types of short term rental units (STR's). There is an initial application fee
of $100 for all types. An annual fee of $325 applies to Residential and Accessory STR's; Resort and Non-
residential STR's have an annual fee of $100."
Resource:.https://www.santafenm.gov/short term rentals application
14
Short-term Rentals: Three Questions a City/County Should Answer to
Benefit from this Market:
Short-term rentals (STRs) are a phenomenon of today's "shared economy" — a world in which
technology advancements have upended traditional business models. Since 2011, the number
of STIR properties listed on the top four websites (e.g., Airbnb, VRBO) has exploded from about
900,000 to 8 million, an increase of almost 800%. With dramatic increase in properties
participating in short-term rentals, why aren't governments seeing an increase in revenue?
According to a June 2019 report from the American Hotel and Lodging Association, Airbnb's
"voluntary' tax agreements are short-changing state and local governments by millions of
dollars in tax revenue. The report references a table that estimates revenue losses for states
and the nation overall, stating that "after adjusting for different tax systems among the states,
the 'median state' revenue loss of $32.45 million in 2018 translates into a total national loss of
federal, state, and local revenues of $1.64 billion in 2018 and $3.48 billion over the 2013-2018
period."' What does this mean for local governments?
• Traditional sources of Transient Occupancy Taxes (TOT) and Hotel/Motel Taxes are
affected as customers opt for STIR properties over hotels and motels. Traditional audit
and collection processes that rely on collections from hotel/motel operators are no
longer sufficient and need to be rethought. Local governments may be losing revenues
because of the growing market for STRs.
• It may be difficult to know who's operating STRs in your community or where the STRs
are located. It's hard to track what you don't know exists.
• Quality of life may be impacted as transient traffic moves from traditional commercial
areas to residential neighborhoods.
Some cities/counties are doing a good job managing this industry, and some are not. While
hotels are collecting taxes and remitting them monthly to the city or county, short term rentals
require the owner renting the property to report the revenue and hotel/motel tax to the city or
county. In each jurisdiction, there may be hundreds of potential streams of revenue. The
W
problem is most local governments don't know if an STR has been rented, when it was rented,
or how much it was rented for. However, there are three things governments can control:
1. Making STR owners aware that since they are operating a business they need to be
licensed and have a short-term rental permit (which is typically annual).
2. Start collecting the appropriate hotel/motel tax from these individuals.
3. Ensuring the up -front permit fees reflect the actual costs of issuing the permits.
We advise any municipality concerned about the short-term rental market to focus on
answering these three questions:
• What does it cost your agency to issue a short-term rental permit?
• What does it cost your agency to enforce ordinances related to short term rentals, and
what are the implications of this enforcement?
• And finally, are you collecting all the hotel/motel tax you should be?
The second question is one that is often overlooked. Many short term rentals are often used for
parties or large events. These types of activities increase traffic and noise (especially outside of
typical hours of operation) on and off-street parking, littering, indecency, and the list goes on.
This also includes an increase in occupancy — if there are too many people at one location the
public health department could get involved, or even the police. That's why the cost of
enforcing ordinances needs to be identified so it can be reflected in the permit fees or fines.
Resource: https://www.mgtconsulting.com/insights/three-questions-city-county-should-
answer-capitalize-short-term-rentals/