CITY OF PACIFICA
COUNCIL AGENDA SUMMARY REPORT
2/13/2023
1 SUBJECT:
Introduction of an Ordinance to amend Article 49, “Short-Term Rentals” of the City of Pacifica Zoning Regulations (Title 9, Chapter 4 of the Pacifica Municipal Code [“PMC”]) to establish a cap of 150 short-term rental permits issued citywide and various other conforming amendments (File No. 2022-036 – Text Amendment TA-123-22). Recommended California Environmental Quality Act (CEQA) status: Exempt pursuant to CEQA Guidelines § 15061(b)(3)).
RECOMMENDED ACTION:
Move to waive the first reading and introduce by title only “An Ordinance of the City Council of the City of Pacifica Amending Article 49 (Short Term Rentals) of Chapter 4 of Title 9 of the Pacifica Municipal Code (Text Amendment TA-123-22) and Finding adoption of the text amendment exempt from the California Environmental Quality Act (CEQA).” STAFF CONTACT:
Christian Murdock, AICP - Planning Director - (650) 738-7341 [email protected]
BACKGROUND/DISCUSSION:
The term “short-term rental” (“STR”) refers to the use of all or a portion of a residential dwelling unit for a rental of less than 30 consecutive days. The popularity of STRs has increased steadily over the past decade due in part to the convenience of booking provided by companies such as Airbnb and VRBO and the increased availability of STRs as an alternative to a traditional hotel or motel. STRs can also provide a source of income for owners and occupants of the residential dwelling units offered for rent as STRs.
The increasing number of STRs in Pacifica led the City Council to adopt Ordinance No. 835- C.S. (“Ordinance”) in 20181. The Ordinance established a permit requirement for operation of an STR, certain operating requirements, and permit revocation and enforcement processes (“STR Program”). The Ordinance appoints the Assistant City Manager or designee as the responsible City official for administration of the STR permit process. The City engaged a consultant, HdL, in July 2021 to assist the Finance Division with reviewing the annual filings for the transient occupant tax (“TOT”) returns, including TOT compliance verifications for STRs.
On June 13, 2022, City staff provided a comprehensive update to the Council on implementation of the City’s STR Program2. At that meeting staff provided a detailed report on implementation of the STR Program, which included information regarding STR locations in Pacifica, the TOT collections from STRs, the impact STRs have on the City’s housing stock, unpermitted STRs and City enforcement activities. The City Manager’s recommendation, at that time, was to not undertake any modifications to the STR Program and to continue to gather data on the number and types of STRs, continue to work to identify unregistered STRs and assess and enforce as necessary any Accessory Dwelling Units (“ADUs”) being utilized as STRs. 1 City Council Ordinance No. 835-C.S.
2 City Council June 13, 2022 Agenda Report, Item No. 14.
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Ultimately, the City Council did not direct any changes to the STR Program but did direct that potential revisions to the STR Program be revisited during the Council goal setting in 2023 3 .
Following the June 13, 2022 City Council meeting, members of the public expressed their concerns relating to the sale of residential property in Pacifica for the singular purpose of using the property as an STR. These types of purchases can have a negative impact on the community as they remove an entire housing unit from the housing stock available for long-term residential use. As a result, at the October 10, 2022 City Council meeting, staff presented to Council information about residential property sales resulting in subsequent STR use and asked for direction on whether amendments to the STR Program regulations were warranted4. The public comments received during the meeting ranged from neighbors of STR properties expressing their complaints of STRs that are impacting their neighborhoods to a STR host detailing the affordability benefits their STR brings to their housing situation. As presented at the meeting, based on data from HdL, 101 STR permits were issued in Pacifica, 24 STRs were identified as unregistered, and 47 STRs were closed and ceased any rental activity as of September 2022. One method of ensuring that housing stock is available for long-term residential use and to maintain affordable housing in the City is to regulate the number of shortterm rentals through a maximum limit on the number of short-term rental permits issued by the City.
In response to concerns that increasing STRs would impact the City’s housing stock, a majority of the Council provided direction to amend the STR Program regulations to impose a cap on the total number of STR permits issued in Pacifica to 150 and that whether or not to undertake in the future further potential revisions to the STR Program be revisited during the Council goal setting in 20235.
Proposed Text Amendment
The proposed text amendment would revise various sections of Article 49 “Short-Term Rentals” of Title 9, Chapter 4 of the PMC. The text amendment is summarized below:
Definitions. A definition for “Permit,” “Permittee,” and “Short-term rental permit cap” would be added to provide clarity of the terms as used in Article 49.
Short-term Rental Permit Cap. A new section would be added to establish a cap of 150 STR permits. The section also would identify a waitlist that would be created for applications received after the issuance of 150 STR permits.
Junior Accessory Dwelling Unit (JADU). Language would be added to clarify that no STR shall operate within a JADU. This language is complementary to existing language in Pacifica Municipal Code section 9-4.454(a)(6).
Term and Renewal. The text amendment would change the stated expiration date of STR permits from December 31 to October 31, which mirrors the City’s expiration date for all business licenses. This will align currently inconsistent deadlines for permittees, which are required to get a business licenses renewed for a STR two months before they are required to get their STR permit renewed.
The proposed text amendment would not impact any of the existing STR permit application standards, STR operating requirements, or implementation of the STR permit revocation and 3 City Council Minutes June 13, 2022.
4 City Council October 10, 2022 Agenda Report, Item No. 10 5 City Council Minutes October 10, 2022
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enforcement provisions of the STR Program. Tracked changes of the proposed text amendment are shown in attached Planning Commission staff report packet (Attachment B of Attachment B).
Local Coastal Program
Ordinance amendments would not become effective in the Coastal Zone until the California Coastal Commission (“CCC”) certifies an amendment to the City's local coastal program (LCP) pursuant to Section 30514 of the California Public Resources Code. The CCC has found that outright bans or undue restrictions on STRs are inconsistent with Coastal Act policies prioritizing public access and visitor-serving uses.
The proposed Ordinance is consistent with the California Coastal Act and the City’s certified Local Coastal Land Use Plan which includes policies addressing residential land use, short-term vacation rentals, affordable housing, coastal access and the need for lower cost visitor serving accommodations. Coastal Policy No. 5 specifically provides that “Lower cost visitor and recreational facilities and housing opportunities for persons of low and moderate income shall be protected, encouraged, and, where feasible, provided. […].” Removing housing units from the Coastal Zone, even temporarily, to allow STRs to operate at a greater pace than development of new long-term housing will conflict with this policy and will significantly impact the availability of housing.
The Planning Commission staff report (included as Attachment B) includes additional information about non-STR visitor-serving accommodations in the Coastal Zone.
Planning Commission Review
At the January 17, 2023 Planning Commission meeting, the Planning Commission voted to recommend approval of the text amendment to the City Council by a vote of 5-0 (with two absences). The staff report, resolution adopted by the Planning Commission, and meeting minutes are included as Attachments B through D.
The Planning Commission included in Resolution No. 2023-001 several additional areas of STR regulation that it recommended for City Council consideration as part of a future ordinance update beyond the cap that was presented by staff. Additionally, several members of the public provided comments at the meeting and their statements are summarized in the meeting minutes.
California Environmental Quality Act
The Ordinance is exempt from the California Environmental Quality Act (CEQA). The text amendment would be exempt from CEQA pursuant to the “General Rule” exemption in CEQA Guidelines § 15061(b)(3)). The General Rule exemption provides that “The activity is covered by the common sense exemption that CEQA applies only to projects which have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA.”
The text amendment would make amendments to the existing STR Program to, among other things, establish a limit the number of STRs that would be permitted within the City. The limitation of STRs would not have a significant effect on the environment.
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ALTERNATIVE ACTION:
The Council may decline to adopt the Ordinance or direct that a different cap on the number of permitted STRs be included in the Ordinance.
RELATION TO CITY COUNCIL GOALS AND WORK PLAN:
• “Fiscal Sustainability” The City’s efforts to ensure registration of all STRs should increase tax revenues in a manner consistent with this City Council Goal. • “An Engaged Community” Consideration of the Ordinance in a public forum expands public participation in a manner consistent with this City Council Goal. • “A Healthy and Compassionate Community” Evaluating the relationship of STRs to the City’s housing stock and potential impacts of too many STRs is consistent with this City Council Goal.
FISCAL IMPACT:
The FY 2022-23 Adopted Budget includes $2.1 million in TOT revenues. About half of TOT revenue will come from STRs. Staff projects to receive approximately $1.2 million in TOT revenue from STRs annually if all STRs identified as active on the current market are brought to compliance.
ORIGINATED BY:
Planning Department
ATTACHMENT LIST:
Attachment A - Draft Ordinance (DOCX)
Attachment B - Planning Commission Staff Report and Attachments (January 17, 2023) (PDF) Attachment C - Planning Commission Resolution No. 2023-001 (PDF) Attachment D - Planning Commission Minutes January 17, 2023 (PDF)