1 STAFF REPORT
DATE: September 24, 2024
TO: Justin Hess, City Manager
FROM: Patrick Prescott, Community Development Director
VIA: Fred Ramirez, Assistant Community Development Director, Planning Scott Plambaeck, Planning Manager
Daniel Villa, Principal Planner
BY: Vanessa Quiroz, Senior Planner
SUBJECT: Discussion a nd Overview on Short-Term Rental Regulations
RECOMMENDATION
Direct staff to commence work on a Zone Text Amendment to establish Short-term Rental Regulations.
BACKGROUND
At the January 23, 2024, City Council meeting, Council Member Takahashi requested a first-step report on regulating short-term rentals (STRs), including potential enforcement options and opportunities to collect Transit Occupancy Tax (TOT).
Existing C
onditions
A STR is the rental of a dwelling or a portion thereof, by the owner to another person or group of persons for occupancy, dwelling, lodging, or sleeping purposes for a period of fewer than 30 consecutive calendar days. With the proliferation of STR platforms (i.e., Airbnb, VRBO, etc.) in the last two decades, STRs have become a popular alternative to hotel and motel stays and may provide homeowners and occupants with an additional source of income.
The Burbank Municipal Code (BMC) is generally silent on STRs, and they are prohibited by “omission” in residential zones
1. However, based on research of industry websites and
discussions with a consultant that specializes in STRs, there are an estimated 300 to 400 unpermitted STRs currently operating in the City of Burbank (City).
1 The BMC is generally silent on STRs. However, it does restrict the length of rental terms to longer than 30 days for Accessory Dwelling Units, Junior Accessory Dwelling Units, and SB 9 Second Family Dwellings.
COMMUNITY
DEVELOPMENT
2 Enforcement of unpermitted STRs is challenging since STR platforms do not include the property address in the listing. Therefore, issues pertaining to STRs are currently addressed reactively once complaints are filed with the City’s Code Compliance section.
In the last two years , there have been a total of 174 Code Enforcement cases of unpermitted STRs in the City2.
Further, the City cannot levy the 10% TOT charged to hotel and motel guests for stays of less than 30 days, since STRs are unpermitted.
Previous Efforts to Regulate STRs (2020-2021)
At the June 16, 2020, meeting, Council directed staff to prepare an Ordinance to regulate STRs (Attachment 1 and Attachment 2). At the time, approximately 400 to 500 STRs were estimated to be operating illegally in the City. S taff conducted robust research by surveying over 50 cities in Southern California to understand how STRs were regulated (i.e., best practices and processing and monitoring programs), and conducted extensive community outreach with workshops, online surveys, and meetings with local stakeholders to obtain input and feedback.
At a noticed public hearing on December 14, 2020, the Planning Commission 3 (Commission) was presented with a draft O rdinance to permit and regulate STRs (Attachment 3 and Attachment 4). The proposed Ordinance contained the following sections (Attachment 5):
Sections in Draft STR Ordinance from 2020
Permitted Zones
(BMC §§ 10-1-602
and 10-1-627)
Definitions
(BMC § 3-4-2803)
STR Regulations
(BMC § 3-4-2804)
Business License
Regulations
(BMC § 3-4-2805)
Host
Requirements
(BMC § 3-4-2806)
Hosting Platform
Requirements
(BMC § 3-4-2807)
Enforcement
(BMC § 3-4-2808) [Intentionally left
blank]
The Commission voted 3-2 against recommending the proposed Ordinance to Council and expressed concerns with permitting STRs, impacts to residential neighborhoods , difficulties enforcing the regulations , and the proposed 900 STR business license cap.
The Commission then made a motion with a 4- 1 vote to direct staff to return with an updated Ordinance for their consideration after conducting additional community outreach, researching additional best practices , and conducting a cost analysis on the implementation of a proposed Ordinance.
An updated Ordinance was presented to the Commission on August 23, 2021, at a publicly noticed hearing (Attachment 6). The updated O rdinance revised the following sections: STR Regulations, Business License Regulations, and Enforcement (Attachment 7). The Commission did not support the proposed updated Ordinance and voted 4-0 to recommend the ban of STRs in all residential zones to City Council (Attachment 8).
2 The Burbank Code Enforcement Division has received a total of 174 complaints for unpermitted STRs since 2022: 54 in 2022, 71 in 2023, and 49 as of June of 2024.
3 Previously known as the “Planning Board” until 2022. For the purposes of the staff report, it shall be referred to as the Planning Commission.
3 Following the second Commission meeting, STR regulation efforts were paused to focus on new housing laws such as Senate Bills 9, 35, and 330.
DISCUSSION
To address Council Member Takahashi’s request and provide potential STR regulation and enforcement options, staff considered previous efforts to regulate STRs, the current opportunity to collect TOT, and existing practices across other jurisdictions.
2024 Survey of STR Regulations
A survey of 10 California cities was completed to understand current best practices for regulating STRs, the majority of which had previously been surveyed in 2021 (Attachment 8). In general, it was found that cities utilize different approaches and tailor the regulations to meet the specific needs of their community. Some permit hosted stays4 but prohibit un- hosted stays5, while others allow both or prohibit both. Some cities only allow STRs in certain areas, but prohibit STRs in others. For example, the City of Long Beach has a process by which STRs can be banned in certain neighborhoods through a petition process. Some cities apply a maximum cap on nightly stays within a calendar year and a cap on the number of permitted STRs in the city.
It was also found that active enforcement in cities that prohibit STRs varies greatly. Some cities do not actively enforce their ban, while other cities have outlined an enforcement process with violator fees, and the potential to pursue criminal fines. Some cities that prohibit STRs utilize a monitoring and enforcement program to provide staff with the tools necessary to identify unpermitted STR s, while other cities lack the monitoring tools. In general, the survey show ed that cities are utilizing various approaches to attempt to regulate STRs and preserve their residential neighborhoods.
STR Regulation and Enforcement Options
Council currently has three options to consider related to STRs : Option 1: Permit and Regulate STRs; Option 2: Expressly Prohibit STRs; and Option 3 - Status Quo, Prohibit by Omission.
Option 1: Permit and Regulate STRs
This option would establish objective standards to permit and regulate STRs in the City similar to the proposed Ordinance considered by the Commission in 2021. Objective standards would be developed and guided by Council feedback, best practices, a current cost and revenue analysis, and further community outreach. Generally, the proposal to permit and regulate could consist of the following sections:
Permitted Zones Definitions
STR Regulations Business License
Regulations
Host
Requirements
Hosting Platform
Requirements
Enforcement
[Intentionally left
blank]
4 Hosted Stays are STRs where only a portion of a residential unit is rented and the host is present. 5 Un-hosted Stays are STRs where the entire residential unit is rented and the host is absent. 4 Option 1 would impose operational requirements to ensure accountability and responsible practices to help protect and preserve the City’s residential neighborhoods. This option would also include provisions to revoke individual STR business licenses if issues and violations persist. The City would be able to collect revenue from TOTs, business license application-related fees, and increased penalty fees (Attachment 10). However, t his option could indirectly result in diverting long-term housing units to the STR market.
Budgetary considerations for this option include the expenses of acquiring consulting services to administer business licenses, monitoring licensed and unlicensed STRs, and potentially providing staff support. To find the most suitable program and compare costs, the City would have to issue a Request for Proposal (RFP).
Option 2: Expressly Prohibit STRs
This option would expressly prohibit STRs in the BMC and could include higher penalty fees and other enforcement capacity to deter unpermitted STRs. The explicit prohibition would establish clear er community expectations and penalties as STRs are currently prohibited only by omission. This option consists of two different approaches:
Approach A (Expressly Prohibit with Monitoring): This approach would proactively enforce a ban on STRs in the City . Under this approach, the City could consider contracting with a consulting company to monitor the websites of STR platforms to identify unpermitted STRs and assist staff in actively enforcing the ban. Budgetary considerations for this option include a potential increase to operational costs to access the tools necessary to proactively monitor and enforce a ban, offset by revenue from increased penalty fees. The City could also consider fully undertaking the task of monitoring and enforcing the ban, which would require an analysis of the extent and cost of the work, and may be less efficient than utilizing a contracted company.
Approach B (Expressly Prohibit without Monitoring) : This approach would expressly prohibit STRs in the BMC and would include higher penalty fees and other enforcement ability to help discourage unpermitted STRs in the City .
However, it would not include the mechanisms and tools to proactively monitor and enforce the ban . The degree of the unpermitted STR activity in the C ity would remain unknown, and staff would continue the existing reactive complaint process to existing STRs that are unpermitted by omission. Budgetary considerations for this option include a potential increase to operational costs for processing a higher volume of violations with a partial offset of some revenue from increased penalty fees.
Option 3: Status Quo (Prohibit by Omission)
This option maintains the status quo , where the BMC remains silent on STR s, and unpermitted STRs would continue to be addressed in a reactive manner as complaints are filed. The extent of unpermitted STR activity in the City would remain fully unknown.
Minimal budgetary impacts would occur under this option as operational costs and the revenue from the existing penalty fees would stay the same. STRs would continue to be unmonitored, and regulation would be limited to public nuisance and safety violations as they are reported and documented.
5 Transient Occupancy Tax
The City requires guests of hotels and motels to pay a Transient Occupancy Tax ( TOT) of 10% for stays of less than 30 days . Currently, the City cannot levy the TOT on STRs, as they are not permitted in Burbank. It is estimated that collecting the TOT on STRs would generate approximately $470,000 annually. This estimate is based on the conservative assumption of 250 STRs operating at a 21% occupancy rate per year, which equates to 77 days at an average price of $244 per night, based on the data provided by the STR consultant.
Additional Factors to Consider
Since the 2021 STR proposal to Council, the C ity adopted the 2021-2029 (6th Cycle) Housing Element in 2022, which included programs and general guidance not only to accommodate more housing in the City but to preserve the existing affordable housing stock that may be impacted by rent increases or reduc ed availability. Additionally, the City’s ongoing tenant protection efforts that include recent updates to relocation assistance and anti -retaliation provisions also need to be considered . Expressly permitting STRs may inadvertently divert current or future housing stock or increase long- term rental rates . In terms of the City’s hospitality industry, it is estimated that hotels/motels in the City have an average occupancy of 74. 4%6. It is also worth noting that there are four hotel projects that are currently under review, have been entitled, or have obtained building permits, with a combined total of 1,003 rooms/suites7.
Council may also consider the City’s recently adopted five-year Economic Development Strategic Plan 2024-2028, Goal 4, which aims to retain and preserve tourism in the City.
Lastly, there are major upcoming international events in the Los Angeles area in the next two to four years: the 2026 World Cup and the 2028 Olympic Games. These events are likely to increase the demand for short-term stays in the C ity due to its proximity to regional transportation networks and the Hollywood-Burbank Airport, as well as to the Los Angeles area and major attractions.
ENVIRONMENTAL REVIEW
This report has no potential for resulting in a direct or reasonably foreseeable indirect physical change to the environment and falls outside the definition of a “project” under the California Environmental Quality Act (CEQA) and is therefore not subject to CEQ A pursuant to § 15378 of Title 14 of the California Code of Regulations. The staff report was prepared for informational purposes to provide an overview on previous City efforts to implement STR regulations in the City and a discussion of future options to consider.
There is no lead agency action to approve or adopt an action. If the Council directs staff to proceed with an Ordinance, adoption of the Ordinance will be independently reviewed pursuant to CEQA.
6 August 16, 2024, Visit Burbank Monthly Report.
7 Hotels in the Pipeline: a dual-Marriot brand hotel at 2500 N. Hollywood Avenue with 203 short-term stay rooms (Aloft) and 217 long- term stay rooms (Residence Inn) that is currently under review, Home2 Suites by Hilton at 29 E. Providencia Avenue with 83 long- term stay rooms that is currently under review, AC Hotel at 550 N. Third Street with 193 short-term stay rooms that recently obtained building permits, and a mixed-use project that includes 307 short-term stay hotel rooms at 777 N. Front Street (La Terra) of which only the mixed-use building is under construction and the hotel portion has only been entitled. 6 FISCAL IMPACT
There is no fiscal impact associated with consideration of the information contained in this report.
CONCLUSION
STRs continue to be a popular alternative to standard lodging options and remain unregulated and un monitored in the City. There are benefits and potential undesired impacts to consider regarding STRs. B enefits include increased lodging options in the City, creation of an additional source of income for homeowners and occupants, and new City revenue from TOT and application fees. The implementation of a regulatory system can ensure accountability and responsible practices by guests, hosts, and hosting platforms. However, this should be considered against impacts that may include a reduced housing stock, potential rent increases , neighborhood disturbances , and competition with the existing hospitality industry.
Staff is recommending that Council direct staff to commence work on establishing STR regulations in the City, specifically noted as Option 1. Additional research, analysis, and community outreach will be necessary to provide a comprehensive proposal to best fit the City’s needs and provide clearly defined rules and regulations that protect Burbank’s housing and residential neighborhoods.
ATTACHMENTS
Attachment 1 – June 16, 2020, City Council Study Session Staff Report Attachment 2 – June 16, 2020, City Council Meeting Minutes Attachment 3 – December 14, 2020, Planning Board Staff Report Attachment 4 – December 14, 2020, Planning Board Meeting Minutes Attachment 5 – Summary of 2020 Proposed STR Ordinance
Attachment 6 – August 23, 2021, Planning Board Staff Report Attachment 7 – August 23, 2021, Planning Board Meeting Minutes Attachment 8 – Summary of 2021 Proposed STR Ordinance
Attachment 9 – 2024 Survey of Cities in California
Attachment 10 – Budgetary Comparison