SHORT-TERM RENTALS (STR)
Current Status of STR’s
No Current Regulations
• STR’s are not currently regulated within
the city.
Revenue Potential
• Lack of regulation results in missed
opportunities to collect Transient
Occupancy Tax (TOT)
Management Proposals
• The City has received proposals from
third-party vendors to manage and
enforce an STR program, including TOT
collection.
Why Create an
Ordinance?
Generate Revenue
• Implement TOT collection like Chula Vista
• Potential revenue stream
Address Community Concerns
• Mitigate common complaints
Ensure Compliance
• Create a framework
Enhance Oversight
• Data-driven insights to inform policy
decisions
• Compliance monitoring and enforcement
Proposed Framework
Vendor-Managed Program
• Reduce administrative burden on
City staff
TOT and Licensing
• Require STR operators to obtain
licenses
• Seamless TOT collection
Zoning Considerations
• Limit STRs to specific zones or
establish restrictions
Community Engagement
• Host public meetings for feedback
and input
Implementation Timeline
• Phased approach
Proposed Ordinance
Chapter 6.30
• Business & Franchise Taxes
Eligibility
• Primary residence in the City
• No ADUs, restricted units
• Limit of 1 nonprimary residence STR
Requirements
• Business license
• STR permit
• No change of ownership
• TOT
Proposed Ordinance
Operations
• Only zones that allow residential use
• Compliance with local laws
• No public nuisance
• 2 ppl/room +1
• Rental agreement
• Inspections
• No events
• Quiet time 10 p.m. to 9 a.m.
• Minimum 2-night stay
• Local 24-hour contact
• Good neighbor handout/letter
• Fines: $500/$1,000/$1,500
• Revocation: 3 citations in 12 months
• No reapplication for 12 months
June 17 discussion
• Limitations on short-term rentals per Council District • Staff is suggesting a maximum of 60 (or one third of the maximum allowed) in any one district.
• Criminal background checks
• Not prevalent in short-term rental ordinances for other cities. • Regardless of a background check, a permittee must adhere to the operating standards of any permit regulations.
• Permit costs in other jurisdictions
• Chula Vista charges $250 for a permit, plus $175 per year thereafter for renewal. Vista charges a flat fee of $250 per year.
June 17 discussion (cont.)
• Bedroom storage requirements
• Definition modified to allow for cabinet storage in lieu or in addition to a closet (6.30.020).
• Rentals not used for business purposes
• Requirement that short-term rentals be used only for residential purposes and not for any business purpose has been incorporated into the draft ordinance (6.30.080 M).
• Location of primary residence
• It was suggested that the permittee’s primary residence be in the City or within a quarter-mile of the short-term rental if outside the City. This has been incorporated into the draft ordinance (6.30.040 A).
June 17 discussion (cont.)
• Number of total rental days per year
• Hosted short-term rentals not limited.
• Un-hosted short-term rentals limited to 90 days per calendar year. • Creates feasibility issues for property owners considering purchasing a property for purposes of operating a short-term rental. • 90 days would mean that property would sit vacant or be more likely to be used for non-sanctioned purposes.
• Other option would be to switch from a short-term to long-term rental situation.
• Difficult to manage and unpredictable.
• However, 90-day limitation would protect long-term rental housing more effectively.
June 17 discussion (cont.)
• Number of total rental days per year
• Limit on maximum number of short-term rentals is 180. • Based on the City’s Transient Occupancy Tax rate of 10%, 180 rentals at an average of $500 per night would equate to approximately $9,000 per day, or around $3.3 million annually.
• However, limiting non-hosted short-term rentals to maximum of 90 days would reduce number by up to 75%.
• While public safety and neighborhood livability are paramount, ensuring that the program pays for itself and for impacts on City resources, it is suggested that one of these limitations be modified to increase revenue potential.
June 17 discussion (cont.)
• Short-term rental property may be considered as a “hosted unit” even if owner’s primary residence is on a separate property.
• In this case the primary residence must be immediately adjacent to the short-term rental property.
• There are current owners in the City that have multiple short-term rentals, most of which likely function without issue.
• Would only be able to continue if they are located next door to or behind (immediately adjacent to) the primary residence. • Long-term rentals (more than 30 days) would be permitted as they are currently, subject to appropriate permits.
• Long-term rentals do not generate Transient Occupancy Tax.
Options
Provide feedback to staff and/or introduce the ordinance entitled, “an Ordinance of the City Council of the City of National City adding Chapter 6.30 (Short-Term Rentals) to the National City Municipal Code.”
➢ Staff is recommending introduction of the draft attached Ordinance.