STAFF REPORT TO THE CITY COUNCIL
DATE: Regular Meeting of September 27, 2022
TO: Members of the City Council
VIA: Dante Hall, City Manager
SUBMITTED BY: Tim Rood, Community Development Director SUBJECT: Discussion of Potential Short-Term Rental Ordinance RECOMMENDED ACTION:
Provide direction to staff regarding the development of an ordinance and procedures for the regulation of short-term rentals (STRs).
COMMISSION/SUBCOMMITTEE ACTION AND RECOMMENDATION:
No Commission or Subcommittee actions or recommendations are yet applicable for this action. If an ordinance were to be considered, it would require Planning Commission review.
FISCAL IMPACT OF RECOMMENDATION:
If the Council desires that an ordinance be drafted, additional but unknown staff and attorney time will be needed to conduct public outreach, draft the ordinance, notify the public, and hold required public hearings. If an ordinance regulating short-term rentals were to be adopted, additional but unknown staff and vendor resources would be needed to conduct enforcement and permitting.
BACKGROUND:
At the July 26, 2022, City Council meeting, the Council requested a discussion of short-term rental regulations. The Council referred to the existing Voluntary Collection Agreement between the City and Airbnb regarding collection of Transient Occupancy Tax (TOT) for short-term rentals in Hercules, which was authorized by Council on October 22, 2019. Since the City’s agreement with Airbnb went into effect in late 2019, the City has received $16,408.34 in TOT from Airbnb.
The City does not currently have any regulations addressing the rental of residential properties for a period of less than 30 calendar days (short-term rentals) as a land use separate and distinct from a residential land use. However, residents who rent out part or all of their property on a listing platform such as Airbnb are required to obtain a City business license.
As of July 2022, there appeared to be 14 Airbnb listings in the City of Hercules, listed as follows:
9 - “private room”
1 – “entire rental unit”
3 – “entire guesthouse”
1 – “entire guest suite”
The addresses of Airbnb listings are proprietary to Airbnb and are not revealed to guests until a booking is confirmed.
Airbnb requirements do not require hosts to be present on site for any type of rental, whether of an entire property or a room within a property. Many hosts provide guest entry using keypads, combination locks, or lockboxes and communicate with guests as required through the hosting platform, texting, or email.
There are several other short-term rental platforms, including Booking.com, Vrbo, Expedia, and Vacasa. As of July 2022, none of these other services appeared to have any current listings in the City of Hercules.
LARGE GATHERINGS:
At the July 26, 2022, City Council meeting, a member of the Council referenced disruptive parties held at an Airbnb listing in the past. Hercules Police Department records indicate that large, disruptive parties were held on July 28, 2017, and September 23, 2017 at a house on the 400 block of Violet that had been rented through Airbnb. Both parties were shut down by the Hercules Police Department due to extreme noise levels, numerous complaint calls, and general overcrowding.
As of August 20, 2020, Airbnb’s policies prohibit gatherings of more than 16 people and all disruptive parties and events. Guests who are reported for throwing a disruptive party or violating Airbnb’s rules on gatherings of more than 16 people are subject to suspension or removal from Airbnb’s platform. In August 2020, Airbnb also announced new anti-party technology intended to reduce the ability of bad actors to throw unauthorized parties which negatively impact hosts, neighbors, and the communities Airbnb serves. For example, this system looks at factors like history of positive reviews (or lack of positive reviews), length of time the guest has been on Airbnb, length of the trip, distance to the listing, weekend vs. weekday, among many others. This anti-party technology is designed to prevent a reservation attempt from going through. Guests who are unable to make entire home bookings due to this system will still be able to book a private room (where the host is more likely to be physically on site) or a hotel room through Airbnb.
POLICY CONSIDERATIONS:
If the Council were to give direction to develop a short-term rental ordinance, many policy questions would need to be considered as part of the public outreach effort, potentially including the following:
Restrictions on “entire home” STRs versus “private room” STRs Restrictions on number of “private room” listings allowed on a property Restrictions on length of stay
Restrictions on total number of days rented
Restrictions on gatherings
Disclosure requirements for hosting platforms
Treatment of ADUs
Effect of a STR ordinance on the City’s Housing Element compliance Taxes and fees for STRs
Fines/penalties and collection processes
Enforcement processes and staff resources
Given the many potential directions an ordinance could be taken, staff requests that the Council confirm whether an ordinance is desired, and if so, discuss the purposes of the proposed regulations to provide context for how the above policy considerations should be addressed.
ATTACHMENTS:
Voluntary Collection Agreement with Airbnb for the collection of TOT 2 Date Page 1