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HomeMy WebLinkAbout2016-03-07 City Administrator Memo to CC 0 _. City of Oak Park Heights 14168 Oak Park Blvd. N•Box 2007•Oak Park Heights,MN 55082•Phone(651)439-4439•Fax(651)439-0574 March 7th,2016 MEMO TO: Mayor and City Council Members FROM: Eric Johnson,City Administrator RE: AirB&B—Short Term Rentals At the February 23rd,2016 City Council meeting the Council directed that staff review and consider the issues related to the concept of an"AirB&B"or perhaps more generally classified as short term rentals of single family housing. What is an"AirBnB"? Specifically, "AirBnB"is a formal name of a website/company that offers and coordinates those persons who desire to rent their home or property to a third party for a short term use-such as a vacation, business traveler,etc.There appear to be other similar companies such as"HomeAway"; "Rentbyowner"or"Tripping.com". The term "AirBnB"seems however to be a general moniker for such an activity. The images below show the workings of the tool, where property owners register their properties, these appear on a map and a renter simply shops for the units they may like. It is relatively straightforward.A search on March 7th,2016 resulted in there being a number of homes in the OPH/Stillwater/Bayport area.One in Oak Park heights on 65th Street as listed through AirBnB of course there may be others. _ e.e+ug,m A£ Nel,gto-:ltf u...n... v mar R:10, ou aeon cueaiA ,.., ., - .,..r ....,.. 4 K Are these permissible under current City Code? The City does have a public interest in ensuring that all properties are reasonably maintained, that proper upkeep is performed and that congruent land-uses remain in-place relative to the City's zoning code. In addition, many property owners might cast a skeptical eye if they knew the neighboring house was to be converted into a short-term rental property or in effect a motel/hotel. That said there is however not a direct methodology under the City Ordinance that would clearly prohibit these,nor--overtly permit them. The City has three ordinances that generally relate to the possible regulation of an"AirBnB"enterprise. 401.15 M Home Occupations: Under this authority,OPH regulates the use of single family structures for the supplemental use as a home based business—such as an accounting office, hair salon or other permitted uses as may be found. More definitively City Ordinance states: "...Any occupation or profession engaged in by the occupant of a residential dwelling unit,which is clearly incidental and secondary to the residential use of the premises and does not change the character of said premises. At first blush one could suggest that a property owner could use their home as a single family rental—regardless of a duration of an occupant as it is their"business"and the use of the property would not change the residential use or charter of the premises. That definition however is a disqualifier in of itself as the business must be"incidental or secondary"to the residential use. Further per 401.15 M 3.11 states, "Not over 25%of any one story can be used for a home occupation"i.e.—not the entire home So while the land use itself would remain generally single-family-a person who desires to establish an"AirBnB"in the City would very likely not be able to do so under the 401.15 M—Home Occupation authority. 401.22.E 3—Bed and Breakfast facilities: Under this authority, a property owner of land zoned R-1 or R-2 may establish a Bed and Breakfast upon the issuance of a Conditional Use Permit by the City.Such CUP process would require a number of regulatory hurdles including limiting the number of beds, lot area sizes, a State issued license for food services, etc. — (see parts a. thru p). The City Council would require a demonstration of compliance before such permit was issued and which would require a detailed submission by the property owner prior to any use being considered following a typical CUP process. But is an"AirBnB"a Bed and Breakfast(B&B)? Under the City Ordinance a B&B is: Bed and Breakfast Facility: A building other than a hotel, wherefore compensation,meals and lodging are provided to transient guests,but not including a building providing these services to more than ten(10)persons,and where at least one(1)meal and/or beverages are offered in connection with the provision of sleeping accommodations. With this definition in place,it would appear possible that a person would be eligible to apply for a B&B status as an"AirBnB"simply by offering a glass of water and keeping the site to less than 10 persons. City Ordinance does not elaborate on the scope of meals or beverages.Admittedly this would be way around the law—per se, but in theory could be done. Lodging Tax-City Ordinance 1411: Prior to 2009,the City adopted City Ordinance 1411 to establish a local lodging tax for the purposes and benefit increase commerce and to provide for a vibrant City atmosphere that will attract tourism and convention business to the City,it is essential that the City be marketed and promoted by a local convention and tourist bureau. Following the definitions found in(1)below,the rental of such property under the"AirBnB"concept would be subject to such Lodging Tax and it is the responsibility of the entity providing the lodging to collect such tax and ensure its remittance to the City.$3 for every$100 in the gross receipts. That stated however,this particular provision does not define or outline if a"AirBnB"may operate,rather it is an additional regulatory condition for which any operator of a going-concern where there is a "consideration (paid for) lodging" of less than 30 days in duration."AirBnB"would appear to be subject to paying this lodging tax. 1411.020 Lodging Tax Establishment. In furtherance of that purpose,and pursuant to Minnesota Statutes§469.190,a tax of 3%is hereby imposed on the gross receipts generated within the City from the furnishing for consideration of lodging at hotels,motels,rooming houses,tourist courts or resorts,other than the renting or leasing of lodging for a continual period of 30 days or more. (I1 Collection.Any person,business entity,corporation,partnership or association(Operator)that provides lodging to others must collect the tax at the time lodging charges are paid. The amount of tax must be separately stated from the lodging charges and held in trust for the City until remitted to the City. Pro and Cons of"AirBnB"-type facilities Some"pros"of"AirBnBs"are that it may bring added tourism into a community and offers additional lodging choices,perhaps even for larger groups who wish to stay together.Another possible"pro"is a possibility of additional lodging tax revenue.A third benefit may be to provide a property owner with additional income from the occasional rental of their home.Of course there are likely others. Some"cons"of"AirBnBs"are that the transient nature of the occupants can detract from the character of a neighborhood as owner occupied homes are generally better maintained versus non-owner-occupied. Short term Transient occupancy for such specific purposes may also create a vacation like-atmosphere—in a residential district not designed for such use-and could lead to additional refuse, noise and other localized complaints if not closely monitored by the property owner. There are of course perspectives on both sides that have merit, but like many related elements—much depends on the property owner on how they maintain and manage their property. Summary: Beyond these parameters the City has no other clear regulatory authority in its current ordinance that prohibits rentals of single family homes for short,transient(or even long)durations. If it is a short duration for under 30 days, however it would appear that the lodging tax would apply and would need to be paid. Immediate Options: OPTION 1: If the City defines"AirBnBs"as a bed and breakfast the current language for its enforcement and licensure(CUP)may be reasonable and proper but the definitions should be clarified to also include these.The CUP tool could ensure constant compliance with City Ordinances by the owner and codes related to exterior upkeep and reasonable use.The CUP could be rescinded if violations become commonplace. If the City Council desires to allow"AirBnB"type facilities, it may consider amending its definitions of a BED and BREAKFAST with the following: Possible definition amendments to _- Bed and Breakfast Facility: A building or facility other than a hotel, wherefore compensation is provided to the owner or their designee in exchange for—meals and/or-lodging are-provided-to transient guests,:, but not including a building providing these services to more than ten (10) persons.,and whore aAt least one (1) meal and/or beverages must ars also be offered in connection with the provision of sleeping-lodging accommodations. OPTION 2: Alternatively, the Council might consider the creation of a new CUP element entitled Transient Lodging under the similar zoning classifications where single family homes exist in R1, R2 and/or R3 districts.A CUP would need to be applied for and secured by a property owner who desires to rent-out their home t Possible definition of Transient Lodging: Transient Lodging: A building or facility constructed solely as a single family home not occupied by the owner and where compensation is provided to the owner or their designee in exchange for lodging to transient guests not exceeding 30 consecutive days for any one transient occupant. Enforcement ultimately becomes the key element. City staff will likely not be able to regularly check various rental sites to ensure all property owners know the law and compliance will likely fall to self-reporting and follow-up enforcement of the City is provided information or a concern. Moreover,is simply the listing of one's property the violation?(probably not),rather it is the use itself which make the enforcement all that more challenging and costly. Some Subsequent Questions and Comments: Does the City Council desire to permit these type of facilities? If the Council does not desire"AirBnBs"that regulation will take some additional analysis as to how that could be outright precluded. Rental Ordinances are routinely challenged and the nature of the issue at hand is the duration of stay—not the condition of the facility itself. Does regulation include registration of some form—if so how often?Fees?Inspections? The implementation of a CUP may be the easiest from an initial entry review,fee structures and clear permit.And would send a distinct message and opportunity to surrounding neighbors that this enterprise is being proposed.And, if upkeep is not maintained or the site becomes an issue the CUP could be revoked or suspended. Perhaps inspections are only on the basis of meritorious complaints?