VACATION HOME RENTAL PROGRAM. City Council Meeting April 7, 2015

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1 VACATION HOME RENTAL PROGRAM City Council Meeting April 7, 2015

2 Staff Report Presentation Presentation and Report Brief Background Recommendations for VHR Program Amendments Clarifying Questions of Staff Public Comment and Feedback City Council Deliberation and Decision

3 Background Prior to Regulation, VHRs existed in community Community concerns raised to City Council City Council developed proposed regulations Regulations adopted in 2003 (VHR Program begins) Between 2009 and 2012 due to economic recession, fewer visitors and thus, fewer complaints During recession housing prices declined significantly, foreclosures increased, and VHR usage declined , number of visitors increased substantially and larger homes built Increase in VHR use and increase in large size homes have raised concerns about neighborhood impacts

4 Public Comments and Suggestions Public comment, feedback, suggestions and recommendations have been provided during: City Council meeting November 18, 2014 City Council meeting February 17, 2015 Community Workshop March 24, 2015 In addition, s, phone calls and letters have been received on the subject from a variety of perspectives Staff Recommendations Attempt to balance competing perspectives, include community suggestions, City Council direction and staff analysis

5 Government s Role Residents Quality of Life, property rights Govt s Role Industry Tourist based economy Community housing impacts, jobs, environment Develop policies balancing perspectives

6 1574 VHRs in South Lake Tahoe

7 Recommendation #1 Split the VHR Code to address VHR differences by location

8 Vacation Rentals Are Not Alike VHRs in 24/7 facilities Timeshares, partial ownership, condos, waterfront Tourist-Commercial Areas

9 Vacation Rentals Are Not Alike Single Family Residence on 8 acre lot VHRs in Primarily Neighborhoods Range in size from small cabins to large homes, some mansionization

10 # 1: Split the VHR Code Recommendation is to divide the VHR code into two distinct categories to address the differences in VHRs by location: 1. VHRs in Tourist-Commercial Areas Locations where TAUs are authorized High impact tourist locations VHRs in these locations include timeshares, condos, partial ownership, and single family residences Some VHRs located in facility type operations with 24/7 security, commercial trash, onsite parking, property-managed pool and spa operations. 2. VHRs in Neighborhoods Locations where TAUs are not authorized The preservation of neighborhood and community character in these locations should be addressed differently than VHRs in locations with high density TAUs If recommendation approved by City Council, staff will establish a community working group to rewrite the City Code to specifically address VHRs in Tourist / Commercial areas.

11 Recommendation #2 Annual Permit Fees 2-tiers, based on violations

12 # 2: Annual Permit Fee 1. Previous Recommendations Staff recommendations suggested two tiers, based on occupancy and type of management Professionally Managed proposed for lower fee City Council / Public Suggestions added Local Managed 2. Community Suggestions Owners expressed concern they had never had violations but would be forced to pay the higher fee due to the manner in which the property was managed Concerns expressed in difficulty defining professionally or locally managed Community members suggested two-tiers based on violations, not management type or method, which addressed the problem (violations) and incentivized good management rather than type of management

13 #2: Annual Permit Fee Draft ordinance adopts community suggestion to establish the fee structure based on violations, not type of property management. Annual permit fee will begin with the No Violation Fee. Upon issuance of 3 rd Violation to guest/occupant in 12-month period; owner will pay the higher annual fee at next renewal. Proposed fee coordinates with proposed fine structure providing owner two opportunities to address property management issues. If placed on the higher fee schedule, will remain on that fee structure for period of not less than years or until such time as no violations in 12-month period. VHR Annual Fee Based on Violations Three (3) Occupants No Violations Violations 4 or less $150 $300 5 to 8 $300 $600 9 to 12 $600 $1, or more $800 $1,600

14 Recommendation #3 thru #6 Immediately address: Occupancy, noise, parking and trash

15 #3: Occupancy Previous Recommendations 1. Reduce Occupancy Occupancy is directly related to noise and community impacts Recommendation was to (1) Eliminate overnight in the ordinance and (2) reduce occupancy to two per bedroom, plus two 2. Community Suggestions Substantial feedback on this issue.

16 Occupancy: Community Comments Opinions vary substantially VHR owners and managers concerned limiting occupancy will negatively impact ability to rent Resident s express concern occupancy limits are not adhered to in the first place and high occupancy impacts their quality of life Comments include: Make sure there is a limit, Occupancy matters Don t include children, children under 10 (or minors) should not count Two plus four is working fine, don t change it Enforcement is the issue, not occupancy Two plus two Two per bedroom only Occupancy should be based on square footage, not bedrooms

17 Occupancy: Ordinance Amendments Based on wide variance in the opinions on the issue, staff recommendation is to either: 1. Leave as is: two plus four Focus on enforcement and evaluate occupancy for further adjustments during upcoming working group meetings During next few months, collect additional data on occupancy 2. Adopt Amendment now: Two per bedroom, plus (?) Should children be counted, or not, in the number?

18 #4: Noise

19 #4: Noise Complaints about noise are number 1 concern 1. Noise impacts community & neighbors Hot Tubs, talking over jets Amplified Music Electric, noisy equipment Violations of ordinance: Weddings, parties 2. Community Suggestions Substantial feedback on this issue. Eliminate warning notices and officer discretion

20 # 4: Noise Community Comments Community opinion is fairly united: Turn it down! And Enforce! Comments include: Allow the hot tubs, but not the jets Require higher fences around hot tubs to trap noise Don t cite the owner for noise, occupants are the problem Noise is always a problem Enforce, Enforce, Enforce Increase fines (echoed in one form or another by many) Brutal fines (echoed by several) [Support for] additional enforcement officers Eliminate officer discretion Eliminate warnings Have one complaint contact number to improve tracking

21 #4 Noise: Ordinance Amendments Staff recommendation in ordinance: 1. All Noisy Activities after 10:00 pm. prohibited Strictly enforced, warning notices eliminated Use of hot tub, without jets, at owners discretion Sign must be posted at or near pool, hot tub, spa identifying compliance with City Code section, fines and penalties for failure to adhere to regulations

22 #5: Parking Community Comments: Neighbors have concerns about the number of cars in front of their homes (directly related to occupancy) Cars have been parked on lawns and dirt Too many cars parking illegally and annoying Issues to consider: Difficult to limit parking without permit-only parking zones Public has a right to park on public street Recommendation in Ordinance: Neighborhoods may request permit-only parking Vehicles must be legally parked

23 #6: Trash Trash is Risk for Community VHR Guests may not understand the importance of trash containment VHR Owners likely understand the importance Current City Code requires owner to install bear box after two violations Community Comments: VHRs in timeshare facilities not similar to private VHRs, bear boxes not necessary (can be addressed in the split code) Too many bear boxes would be unsightly Clean Tahoe and Solid Waste JPA Bear Box regulations apply to all homes; ensure coordination not duplicative regulations

24 # 6 Trash: Ordinance Recommendation Recommendation in Ordinance: Require compliance with all trash regulations imposed by South Lake Tahoe Basin Waste Management JPA Any violation of regulations results in fines and penalties as defined in the City s VHR code City Council may amend the current city code to require one or more bear-boxes be installed following a specific number of violations

25 Recommendation #7 Room Rental Couch Surfing Not applicable to VHR, for now

26 Recommendation #8 Fines and Penalties Provide owner opportunity to correct problems before citing

27 Previous recommendation: Cite both owner & violator (guest/occupant) #8: Fines & Penalties Increase fine structure and In an effort to require compliance, citing the owner as well as violator (guest or occupant) was recommended Community Suggestions include: Do and Don t cite both owner and guest, (both sides of the issue) Notify the owner, Give the owner a chance to respond This sentiment has been echoed by many Increase the fines (echoed in one form or another by many), Brutal fines (echoed by several), More enforcement, heavy enforcement Eliminate warnings, Cite every occupant, Anyone can get a bad apple now and then.

28 #8. Fines & Penalties Ordinance Amendments Draft ordinance adopts community suggestion to adopt a fine structure giving owners opportunity to comply before citing Staff will be required to notify owner/managers when citations are issued This fine structure coordinates with the Annual Fee Structure; after 2 nd violation owner will be required to pay the higher annual fee at next renewal. Increase accountability: Staff will also follow up with those who file complaints VHR Annual Fee Based on Violations Violator Property Owner 1 st Violation $250 No Fine, notification of citation 2 nd Violation $500 $500, plus warning re: renewal fee 3 rd Violation $1,000 $1,000, plus higher renewal fee 4 th Violation $2,000 $2,000, plus permit revocation

29 Recommendation #9 Administrative Amendments

30 #9: Administrative Amendments Health and Safety for Pools, Spas and Hot Tubs Application will require acknowledgement of compliance with federal, state, and local regulations. El Dorado County Department of Environmental Management may require inspections (Virginia Gramme Baker Act, public health) and posted sign near pool/spa with notice of compliance with these laws Health and Safety: Fire / Carbon Monoxide Application will require acknowledgement of compliance with federal, state fire and carbon monoxide safety Local Response Required; text-enabled phone for responsible and responsive person within 30 mile radius. Good Neighbor Policy Leave no Impact Policy to be drafted with local working group, posted inside VHR in approved visible location. Staffing Immediately recruit for two full-time enforcement officers (one to become permanent) and one full time auditor.

31 Recommendation #10 Consideration of Moratorium for Neighborhood VHR permits

32 Reflections VHRs are Important and popular tourist lodging product. And the Good news is TAHOE is popular place to vacation! VHRs are reportedly the fastest growing lodging market Given the demand for VHRs, the interest in buying a home as an investment, or potential retirement home, or second home for personal and investment use has increased VHRs are a valuable asset in the Tahoe Basin; For South Lake Tahoe, the impact of additional amendments and regulations must be addressed from all points of view Overall economy, Resident s Quality of Life, Real Estate, and Environment the VHR s impact on the environment and the value of revenues provided to local government to protect the environment

33 Reflections For many years, the south shore lodging properties and business community have effectively argued there are too many TAUs on the South Shore. The over-supply of tourist accommodations drives down the Average Daily Room Rate (ADR) and thus, contributes to the lack of capital attraction and lack of owner capital to improve motel /Hotel properties. Commercialization of Neighborhoods. Home Business Operations: The VHR permitting process has been an administrative one largely excluding community members from the decision making process, which directly affects the character of their neighborhood: Should the permitting process be changed to require notification of neighbors similar to home business operations?

34 Reflections Uneven Playing Field among Lodging properties: Tahoe is unique. Building in Tahoe is expensive. The purchase of Tahoe building commodities is prohibitive to some commercial operations. VHR is hybrid mix between a home and a business. VHRs have taken advantage of the building regulations for homes, which do not require obtaining TAUs, paying mitigation fees, or compliance with business and commercial operations. While that makes sense for other communities, in Tahoe it creates a highly uneven operating field for lodging properties. The VHR permitting may need to address these issues. Impact on housing supply. VHR rental more lucrative than long-term rental and local home ownership; an evaluation of these concerns is warranted. Quality of Life: The City has an obligation to preserve and protect quality of life for community members. The mansionization of homes built and used exclusively for VHRs as a business may have reached a tipping point of concern. Economy: Tourism economy is substantially impacted by VHRs, from various viewpoints and perspectives.

35 Suspend Permit Issuance As a result of these concerns and the many differing view points on the issues, the suspension of the issuance of new VHR permits in neighborhoods should be considered. If so directed, staff would return to the City Council with an urgency ordinance to provide time to evaluate these concerns and others. All VHRs currently operating would continue as-is; moratorium would be for the issuance of new permits freeze in place the current number. A community working group would be established to assist staff in collecting information and making recommendations. Is there a tipping point in the number of VHR permits we should be concerned about reaching? Or has it been reached? What is the economic impact of VHRs? Housing values, economy. What is the socio-economic impact of VHRs on Quality of Life?

36 Permit Moratorium Exclusions Moratorium would only suspend the issuance of new VHR permits and would not reduce or limit the use of currently permitted VHRs. Moratorium would not apply to VHRs in locations already authorized for TAUs (tourist-commercial areas); Grace period should be established to allow anyone operating illegally (w/o permit) time to submit application. Homes currently under construction that indicated they would be applying for VHR would be authorized to apply.

37 Permit Moratorium Process Moratorium is allowed, pursuant to the Government Code, based upon documented health, safety and general welfare concerns to provide the City time to study more stringent land use controls. The United States Supreme Court has held a temporary development moratoria is a legitimate planning tool. The provisions of Government Code Section provides the statutory authority and time limits for interim ordinances.

38 Moratorium Process If City Council directs staff to return with a Moratorium Ordinance, the following process would be initiated: An urgency moratoria would be presented to City Council The urgency moratoria would prohibit the issuance of new VHR permits An urgency moratoria requires a 4/5 vote of the Council in the case of 4 councilmembers, a vote must be unanimous Urgency moratoria is in place for 45 days, unless extended; If extended by a 4/5 vote (all 4 cc members), a moratoria may last up to 22 months and 15 days or less until a new regulatory ordinance is adopted. The public agency must study the impacts of proposed legislation to eliminate the detrimental impacts of the health and safety issues while the moratoria remains in place; and The urgency measure is effective upon second reading.

39 Summary of Recommendations 1. Direct staff to split the VHR code into two categories 2. Annual Permit Fee: 2-tiers based on violations 3. Occupancy: Lower limits, or leave as-is, consider excluding children 4. Noise: Prohibit all noisy activities after 10:00 p.m. 5. Parking: no illegal parking, strictly enforced 6. Trash: Coordination with local agencies, enforce violations 7. Room Rentals: Exclude for now (separate buildings not excluded) 8. Fines and Penalties: Increase; provide owners opportunity to comply before fined 9. Administrative Amendments to VHR permitting and Staffing 10. Consider Suspending VHR Permit Issuance in Neighborhoods through adoption of a moratorium ordinance w/ amnesty period for illegal VHRs

40 Clarifying Questions of Staff?