HomeMy WebLinkAbout2014-06-10; City Council; 21626; Short Term Vacation Rentals
CITY OF CARLSBAD -AGENDA BILL
AB#
MTG.
DEPT.
21626
6 10 14
City Manager
RECOMMENDED ACTION:
DISCUSSION AND DIRECTION REGARDING
SHORT TERM VACATION RENTALS IN THE
CITY OF CARLSBAD
DEPT. DIRECTOR
CITY ATTY.
CITY MGR.
Approve Resolution No. 2014-119 directing staff to develop recommendations to expressly allow short
term vacation rentals and establish short term vacation rental operating permit policies and procedures.
ITEM EXPLANATION:
1
Currently, short term vacation rentals are not explicitly addressed in the city's Municipal Code. The term
"short term vacation rental" has generally and historically been interpreted to mean residential dwellings that
are not occupied by the owner and are rented on a short term basis to persons seeking a vacation stay of
typically 30 days or less. Under Municipal Code Chapters 3.12 and 3.37, vacation stays of less than 30 days
would require collection of the 10 percent transient occupancy tax (TOT) and the $1 per room night
assessment to support the Carlsbad Tourism & Business Improvement District, respectively.
Also, the city's Zoning Ordinance (Municipal Code Title 21) does not currently list "short term vacation rental"
as a specific permitted use in any zone, and therefore, the use is considered prohibited. Currently, over 400
short term vacation rentals exist in Carlsbad and city records indicate that at least 15 businesses maintain
business licenses for short term vacation rentals and contribute TOT to the city (over $233,000 in FY 2012-13).
However, as the practice is not explicitly permitted, new applicants seeking business licenses to use residential
dwellings as short term vacation rentals have been denied.
The inconsistencies in city policies and practices has created an untenable situation regarding short term
vacation rentals. Expressly allowing short term vacation rentals and requiring operating permits and
standards of operation would establish clear guidelines for property owners, staff and the public to follow.
Exhibit 1 provides additional detail including the current environment in Carlsbad, practices in other cities,
California Coastal Act implications, complaint history, and alternatives. Staff will return in approximately six
months with specific ordinance and policy recommendations to implement City Council's direction.
FISCAL IMPACT:
There is no fiscal impact with the proposed action to direct staff to develop recommendations to expressly
allow short term vacation rentals and establish operating permit policies and procedures.
ENVIRONMENTAL IMPACT:
Pursuant to Public Resources Code section 21065, this action does not constitute a "project" within the
meaning of CEQA in that it has no potential to cause either a direct physical change in the environment, or a
reasonably foreseeable indirect physical change in the environment, and therefore does not require
environmental review.
EXHIBITS:
1. Memorandum to Ci~ Manager dated 5/29/14: Short Term Vacation Rentals Policy Recommendation
2. Resolution No~Ol4-1~egarding short term vacation rental policy development
DEPARTMENT CONTACT: Steve Didier 760-602-2014 steven.didier@carlsbadca.gov
FOR CLERK USE.
COUNCIL ACTION: APPROVED CONTINUED TO DATE SPECIFIC □
DENIED [I CONTINUED TO DATE UNKNOWN □
CONTINUED □ RETURNED TO STAFF □
WITHDRAWN □ OTHER -SEE MINUTES □
AMENDED □ REPORT RECEIVED □
Exhibit I
Memorandum
May 29, 2014
To: Steven Sarkozy, City Manager
From: Gary Barberio, Assistant City Manager
Via: Steve Didier, Management Analyst
Barbara Kennedy, Associate Planner
Cheryl Gerhardt, Business Improvement District Manager
Re: Short Term Vacation Rentals Policy Development
{'cityof
Carlsbad
This memorandum provides detail regarding the short term vacation rental (STVR) industry in
Carlsbad, current regulations, practices in other cities, and staff's recommendation to develop
ordinance, policy and procedure changes that would expressly allow short term vacation rentals in
the City of Carlsbad, require operating permits, establish operating regulations and enforcement
capabilities, and create procedures for collection of associated taxes and assessments.
1. How does the City of Carlsbad currently regulate Short Term Vacation Rentals?
Currently short term vacation rentals (STVR's) are not explicitly addressed in the city's
Municipal Code. The Municipal Code does not define or refer to the term "vacation rental";
however, the term has generally and historically been interpreted to mean residential dwellings
that are not occupied by the owner and are rented on a short term basis to persons seeking a
vacation stay. "Short term" is generally considered 30 days or less, which is consistent with the
city's transient occupancy tax (TOT) and Carlsbad Tourism & Business Improvement District
(CTBID) assessment regulations in Municipal Code Chapters 3.12 and 3.37, respectively. The
City's TOT regulations require a tax of 10 percent to be paid for any structure that is rented to
persons for a period of 30 consecutive days or less for the purpose of "dwelling, lodging or
sleeping." The CTBID assessment is $1 per room night. Neither payment of TOT or the CTBID
assessment, nor acquisition of a business license, would in and of itself authorize operation of a
use that is not permitted by the Municipal Code.
The Zoning Ordinance (Municipal Code Title 21) does not currently list "short term vacation
rentals" as a permitted use in any zone. The Zoning Ordinance is structured such that it only
permits those uses that are specifically listed in each zone, as well as uses determined to be
substantially similar to specifically permitted uses. While the current interpretation is that the
use is not permitted in any zone, anywhere in the city, the history of this interpretation has
been varied.
While STVR's are not currently permitted, over 400 currently exist throughout the city. City
records also indicate that at least 15 businesses maintain business licenses for STVRs and
City Manager's Department
1200 Carlsbad Village Drive I Carlsbad, CA 92008 I 760-434-2820 t 2
Short Term Vacation Rentals Policy Development May 29, 2014
Page 2
contribute TOT to the city ($233,000 in FY 2012-13). However, applicants who are currently
seeking business licenses to use residential dwellings as STVRs have been denied due to the
city's current zoning interpretation. There is also a concern for equity with Carlsbad hotels that
routinely contribute TOT, while many unregulated short term vacation rentals do not.
2. How many complaints does the city receive about STVRs?
The city's code enforcement staff receives on average five formal complaints per year about
STVRs, typically in residential areas located near the beaches and lagoons. Key issues
associated with complaints are loud noise, crowds, parking problems, excessive trash, and
concerns for the residential character of the neighborhood. Code compliance actions related to
STVRs have been resolved on a case-by-case basis, but have had inconsistent resolution from a
land use perspective. The inconsistencies in the city's land use, business license, TOT, and code
enforcement policies and practices are central to staff's recommendation to expressly allow
STVRs and require operating permits with standards of operation and enforcement capability.
Over the past few years, the city has also experienced formal complaints about several STVRs
routinely operating as special event venues for large events such as weddings, corporate
parties, and retreats. This type of use could be expressly prohibited under the operating
standards for permitted short term vacation rentals, or the city could regulate this use through
the development of separate city ordinances.
3. How does the California Coastal Commission (CCC) view STVRs?
Any amendment to a city's Zoning Ordinance to expressly limit or prohibit STVRs in the coastal
zone requires CCC approval of a Local Coastal Program (LCP) amendment. The CCC has
historically and successfully opposed attempts by other cities to prohibit/limit STVRs in the
coastal zone, contending that they provide a low-cost alternative to lodging in the coastal zone
and provide the general public with a greater opportunity for access to the beach, recreation
and coastal resources. In consideration of the need to quickly address the STVR concerns, staff
anticipates developing STVR policy alternatives that would not require an LCP amendment or a
lengthy CCC approval process.
4. How do other cities regulate STVRs?
Solana Beach
The City of Solana Beach allows STVRs in all residential zones throughout the city and requires
owners to apply for an operating permit and comply with operating standards. They also
require a minimum stay of 7 days and no more than 30 days. A copy of the operating permit
with code compliance contact information must also be posted inside of a front window and be
clearly visible. This system has worked well and provided an adequate level of operational
oversight and better means to collect TOT. Staff also contacted Solana Beach and learned that
they have had no complaints for at least a year.
Short Term Vacation Rentals Policy Development May 29, 2014
Page 3
Encinitas
Encinitas initially proposed a LCP amendment to prohibit STVRs in all residential zones. But
after lengthy opposition from the CCC the city ultimately opted for a municipal code
amendment that requires operating permits and standards of operation similar to the City of
Solana Beach. Encinitas allows STVRs in all residential zones with an operating permit for
periods of 30 days or less. They also allow STVRs in some nonresidential zones with a
conditional use permit.
Coronado
The City of Coronado LCP was approved in 1983 and prohibits STVRs for a period of less than 26
days. Short term vacation rentals are only permitted in motels, certain lodging houses, and a
multi-family residential zone in their Orange Avenue Corridor Specific Plan.
Oceanside
The City of Oceanside does not regulate STVRs. Transient occupancy tax is collected on a
voluntary basis through any real estate agencies or other licensed businesses that manage
STVRs.
5. How many STVRs are in Carlsbad and how are they managed?
Review of vacation rental industry websites and discussion with industry representatives
suggests there are over 400 short term vacation rentals in Carlsbad. Short term vacation
rentals are typically managed either by the property owner or through a real estate firm
specializing in management of STVRs. Many property owners advertise through various
internet services, such as Vacation Rentals by Owner (www.vrbo.com). Others hire real estate
firms to advertise their properties and manage housekeeping and maintenance for them.
Staff has already held preliminary discussions with three representatives from a cross section of
the Carlsbad STVR industry who are among the top TOT contributors for STVRs. One firm
manages the largest single number of small to medium sized STVR properties. Another
represents primarily investment owners for very high-end, upscale STVR properties. And the
third is the owner of a single, large and very unique STVR property. They shared their
perspective on the vacation rental industry in Carlsbad and initial thoughts about the city's
approach to regulating STVRs. Staff will continue to coordinate with this stakeholder group and
others in the development of formal policy recommendations.
6. How would Home Owners Associations (HOA) be affected by STVR regulations?
Home Owners' Associations typically require property owners to comply with a set of Codes,
Covenants and Restrictions (CCRs) specific to the neighborhood. Most CCRs prohibit the rental
of a private residence for a period of less than 30 days. Any policies developed to regulate
STVRs within Carlsbad would not override more stringent regulations already in place which
essentially prohibit STVRs within most HOAs. It is important to note that the city is not
Short Term Vacation Rentals Policy Development May 29, 2014
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responsible for enforcing neighborhood CCRs, nor do city regulations need to be consistent
with neighborhood CCRs.
7. What alternatives are available to regulate STVRs?
Options Recommended '' ' Discus$ion
Would require a Zoning Ordinance revision and LCP
A. Clarify that STVRs amendment that would likely be denied by the CCC
are not allowed No after a lengthy review process. Would also require
anywhere immediate enforcement action against 400+ STVRs
that are currently known to exist in Carlsbad.
This option would also require an LCP amendment and
Zoning Ordinance revision to clarify which zones
would allow STVRs. A lengthy CCC approval process
would also be required. May also require
B. Allow STVRs only enforcement action against STVRs in some zones.
in certain No Would likely result in relatively little change to the
residential zones current environment since the CCC would not approve
any restrictions in the coastal zone, where most STVRs
are located in Carlsbad, and most neighborhoods
situated inland from the coast have HOAs that already
regulate STVRs, so additional regulation is not needed.
C. Expressly allow This option could be implemented locally without a
LCP amendment or CCC approval process. The STVRs throughout proposed method of requiring operating permits and the city and standards of operation has shown to be a successful require operating Yes model in neighboring cities. Would be relatively easy permits and to implement. Requires the least amount of city standards of resources for success. Quickly increases TOT and operation CTBID assessment revenues.
CONCLUSION
Staff estimates that it will take approximately six months to fully research and develop
recommendations that must be vetted by a variety of city departments and internal and
external stakeholders. If City Council approves, staff will begin immediately working to further
research and develop the required ordinance revisions and policy documents to carry out City
Council's direction.
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Exhibit 2
RESOLUTION NO. 2014-119
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD,
CALIFORNIA, DIRECTING STAFF TO DEVELOP RECOMMENDATIONS
TO EXPRESSLY ALLOW SHORT TERM VACATION RENTALS AND
ESTABLISH SHORT TERM VACATION RENTAL OPERATING PERMIT
POLICIES AND PROCEDURES.
WHEREAS, short term vacation rentals (STVR's) are not explicitly addressed in the city's
Municipal Code, and the Zoning Ordinance (C.M.C. Title 21) does not currently list "short term
vacation rental" as a permitted use in any zone; and
WHEREAS, the Zoning Ordinance is structured such that it only permits those uses that
are specifically listed in each zone, as well as uses determined by the City Planner to be
substantially similar to specifically permitted uses; and
WHEREAS, over 400 STVR's are currently known to exist throughout the city.
WHEREAS, city records indicate that at least 15 businesses maintain business licenses for
STVRs and contribute transient occupancy taxes (in excess of $233,000 in FY 2012-13) and
Carlsbad Tourism & Business Improvement District (CTBID) assessments to the city; and
WHEREAS, the city has received formal complaints relating to the operation of STVRs in
Carlsbad requiring code enforcement action; and
WHEREAS, staff has completed preliminary research and determined that the
inconsistencies in the city's land use, business license, TOT/CTBID, and code enforcement policies
related to STVRs have created an untenable situation.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California,
as follows that:
1. The above recitations are true and correct.
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2.
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The City Council directs staff to develop recommendations to expressly allow short
term vacation rentals and establish short term vacation rental operating permit
policies and procedures.
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PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council ofthe City
of Carlsbad on the 10th day of June 2014, by the following vote to wit:
AYES: Council Members Hall, Packard, Wood, Schumacher, Blackburn.
NOES: None.
ABSENT: None.
MATT HLL, Mayor
ATTEST: