CITY OF PACIFICA
COUNCIL AGENDA SUMMARY REPORT
12/5/2024
1 SUBJECT:
Direction on Potential Revisions to the City’s Short-Term Rental Regulations RECOMMENDED ACTION:
Receive updates on the Short-Term Rental Program and provide direction on potential revisions to the City’s Short-Term Rental regulations based on City staff’s consultation with Coastal Commission staff.
STAFF CONTACT:
Kevin Woodhouse, City Manager
(650) 738-7409
[email protected]
Mike Janusek, AICP, Senior Planner Consulting with M-Group (650) 738-7341
[email protected]
BACKGROUND:
During 2024, the City has taken numerous steps toward completion of the City Council’s strategic priority of updating the City’s Short-Term Rental Program ordinance. These steps included a comprehensive evaluation of the program’s status and enforcement activity, presented in a February 2024 report, preparation for a City Council Study Session held on June 24, 2024, to receive the City Council’s input on potential ordinance provisions for City staff to research and analyze and bring back to Council, and then preparation of a comprehensive report for the Council to consider and decide preferred ordinance provisions at a Council meeting in August 2024. Throughout the year, City staff have also been focused on compliance and enforcement of the STR program.
At the City Council’s August 26, 2024, meeting (and its continued deliberations on September 9, 20241) the Council considered and provided direction on provisions for the updated STR Ordinance. The City Council also provided direction to the City Manager to begin consultation with California Coastal Commission staff concerning the provisions directed by Council for the ordinance update. The City Manager informed the Council that a consultation process with CCC staff will take time and that the outcome of the consultation process would determine whether further direction from the Council would be needed before drafting the STR ordinance update and beginning Planning Commission and City Council hearings for approval of the ordinance.
In mid-October the City Manager updated the Council that staff had been working on securing a meeting date with CCC staff and preparing the information for the meeting. Staff subsequently heard back from CCC staff that they were not available to meet until the first week of November. 1 Referred to collectively as the August 26, 2024 Study Session.
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The purpose of this December 4, 2024, Special Council Meeting is for the City Council to hear a presentation about the outcome of the November 5, 2024, CCC staff-City staff meeting, and to receive further direction from City Council based on CCC staff feedback on several of the ordinance provisions. Depending on the direction provided by the Council, City staff can complete drafting the ordinance update and prepare for Planning Commission review in early 2025. Alternatively, if Council needs additional information prior to making its decision on the several CCC staff comments, staff can continue research and return to Council at a date in early 2025 for final direction before drafting the ordinance for Planning Commission review.
DISCUSSION
Council’s direction from the August 26 Study Session is summarized below, divided into three categories: policy considerations, regulatory compliance matters, and streamlining the procedures for enforcing program requirements.
A. Policy Considerations:
• Hosted vs. Unhosted Rentals: Council directed that the updated Ordinance differentiate between Hosted and Unhosted STRs and set limits on the number of days an Unhosted STR could operate during a calendar year. The rental of Unhosted STRs would be limited to 90 days per calendar year. The updated Ordinance would contain no limitation on hosted stays.
• Primary Residence Requirement: The updated Ordinance should contain a provision to ensure that the STR property is being used by the STR operator as a primary residence. At least two forms of documentation verifying eligibility will be required as an STR permit requirement to obtain an STR permit. Documentation could include proof of homeowner's tax exemption, voter registration card or certificate, proof of vehicle registration, or the most recent utility bill. • Occupancy Limits: The updated Ordinance should contain a provision restricting STR occupancy to a maximum of two occupants per bedroom. The maximum occupancy requirement would not apply to children under the age of twelve.
• Parking Requirements: The updated Ordinance would contain a provision requiring STR operators to maintain a minimum number of off-street parking spaces consistent with the City’s Zoning Code with all parking spaces made available for renters of Unhosted STRs, and at least one space available for Hosted STRs. For STR properties that do not conform to the zoning district’s minimum parking requirements, and propose to allow Unhosted rentals, one covered or uncovered parking space on site (property) would be required, with other vehicles having to use on-street spaces.
• Multifamily Properties: The updated Ordinance would contain a provision that would allow only 10% of the units of a multifamily building to operate as an STR (i.e. 20 unit multifamily building is allowed to have 2 STR operations and each operation shall be registered as an individual STR operation), and only one STR in 2-4 unit complexes. Said another way, multifamily properties with 2-19 units can have one STR, 20-29 can have two, 30-39 can have 3, etc. The ordinance would include clearly defined terms to distinguish between multifamily and condominium buildings.
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• STR Density: Staff was directed to explore options and to obtain further direction from the Council regarding proximity buffers between STRs (i.e. 55-200’ between STRs, measured from a radius or parcel line) and/or potential percentages of STR operations within a neighborhood, block, street, or other physical area (i.e. 15% of STRs on a street with “x” length, within a neighborhood, within three blocks, etc.).
• Minimum Rental Duration: The updated Ordinance would contain a provision that requires a minimum two consecutive night stay; and prohibit events in STR units with approved STR Permits.
B. Regulatory Compliance:
• Permit Limits: The updated Ordinance would contain a provision to require one STR per entity/person, and include definitions for the terms “entity” and “person” in the draft ordinance. The updated Ordinance would retain the existing cap of 150 permits to be issued by the City.
• Inspections and Permit Processing: The updated Ordinance would contain a provision that requires:
1. On-site inspections from Building Division and Code Enforcement for Unhosted STRs; and proof of self-inspection (per criteria prepared by the City for Hosted STRs); and
2. Review of existing permits, violations, and other items prior to issuance of an STR permit.
• Grandfathering Permits: Once the new ordinance is in effect, the implementation of it may vary depending on the particular provision. Certain safety requirements and protocols may go into effect right away while other more substantial provisions that significantly affect STR business operation may go into effect at the next renewal and be required to comply with the new ordinance after renewal. Staff plans to notify permit holders of potential ordinance provisions that may affect their operations.
• 24/7 Contact Requirement: The updated Ordinance would contain a provision that requires STR operators to list a contact person that must be available 24/7, and respond to complaints by phone and in person within one hour (if in person resolution is necessary).
C. Streamlining Procedures for Enforcing Program Requirements:
• Enforcement Procedures for Unpermitted STRs: Consider developing formalized protocols either administratively or through the formal enactment in the new ordinance. Among the areas to be considered are enhanced cost recovery provisions and more formal enforcement protocols. Protocols would include a courtesy notice followed by a fourteen (14) day deadline to correct, followed by formal warning letter advising that fees and penalties will be imposed 14 days later in a Notice of Violation. A Notice of Violation is then issued. Unless the violation is appealed, liens and penalties are then administratively applied.
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Council also suggested that staff enhance its cost recovery protocols by including staff time and other administrative costs in the enforcement process. • Revocation Procedure: “Three-strikes” provision for non-compliant permit holders. Any permit holder with three uncorrected violations or citations issued by Police or Code Enforcement for nuisance activity will be subject to suspension or revocation and ineligible for Permit renewal.
Following the Council’s direction from the August 26 Study Session, staff met with CCC staff to discuss the feasibility of these recommended ordinance amendments. Based on City staff’s meeting with CCC staff, and should the Council desire to consider CCC staff’s feedback, the City Manager has identified the following four ordinance provisions as needing further discussion and direction from Council before the draft ordinance can be finalized and brought to the Planning Commission:
1. Parking requirements;
2. Density;
3. Multi-family dwellings; and
4. Minimum rental duration.
Each of these provisions are presented in further detail below.
It should also be noted that CCC staff also offered opinions on the following other provisions of the ordinance. CCC staff opinion in these areas did not indicate these areas were expected to be a major concern to the Commission (with the caveat that Coastal Commissioners could have concerns that CCC staff had not predicted). Since Council has already provided its policy direction on these provisions, the City Manager is not requesting the Council to revisit them, but rather just to be aware of the CCC staff-level comments. However, it is the Council’s prerogative whether to revisit any of these provisions:
• Hosted and Unhosted STRs;
• Primary Residence Requirement;
• Occupancy Limits;
• Permit limits per person/entity.
Provisions Requiring Further Discussion and Direction from the Council based on CCC Staff input:
1. Parking Requirements: Council directed staff to draft a provision that requires STRs to 1) Maintain a minimum number of off-street parking spaces and incorporate the requirements of the City’s Code for Off-Street Parking Standards & Design; 2) Require that all parking spaces be made available for renters of unhosted rentals with at least one space available for hosted rentals ; 3) For properties that do not conform to the zoning district’s minimum parking requirements and proposing an unhosted stay, STRs will be required to provide one covered or uncovered parking space on site (property) and one parking space on the street.
California Coastal Commission staff expressed concern whether the provision, as drafted, would find sufficient support for the required LCP Amendment. Specifically, Coastal Commission staff recommended a provision requiring one parking space per STR bedroom as a requirement that would be more likely to be supported for LCP Amendment approval. In addition, Coastal Commission staff recommended the consideration of STR parking policies adopted by Half Moon Bay and Marin County.
City staff has reviewed Half Moon Bay’s and Marin County’s short-term rental Pacifica City Council 5
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regulations relating to parking. Both require one parking space per bedroom dedicated and available to guests during the period of the rental. When comparing Pacifica with Half Moon Bay or Marin County regarding parking requirements, the Council may want to consider the extent to which the “built form” of these communities are different. Half Moon Bay and Marin County each contain more developable areas of unconstrained land, whereas Pacifica’s neighborhoods are built out at greater densities constrained by coastline and topography. Difference in built form is an important variable if considering whether to require additional off-street parking for STRs.
The City Manager is seeking direction from Council as to whether Council wishes to change its current direction regarding STR parking requirements.
2. Multifamily Properties: The updated Ordinance would contain a provision that would allow only 10% of the units of a multifamily building to operate as an STR (i.e. 20 unit multifamily building is allowed to have 2 STR operations and each operation shall be registered as an individual STR operation), and only one STR in 2-4 unit complexes. Said another way, multifamily properties with 2-19 units can have one STR, 20-29 can have two, 30-39 can have 3, etc. The ordinance would include clearly defined terms to distinguish between multifamily and condominium buildings.
California Coastal Commission staff’s primary concern with imposing this was whether the provision would result in a reduction of relatively affordable housing stock. Ultimately, Coastal Commission staff recommended a provision that would prohibit STRs in multifamily buildings altogether.
The City Manager is seeking direction from Council as to whether Council wishes to change its current direction regarding multifamily properties.
If the Council wishes to reconsider its current direction based on CCC staff feedback, but does not wish to entirely prohibit STRs in multifamily buildings, staff provides the following information that could serve as a compromise alternative.
There are fifteen multi-unit parcels with two or more STR permits currently. A figure of a list of properties is provided below (Figure 1). An alternative approach the Council could consider would be a similar land use allowance to Half Moon Bay’s to protect the neighborhood character, preserve housing stock, and reduce the potential nuisance of multiple STRs on one property. This approach would be a land use allowance provision for STR operations to ensure there is only one STR permit per property (legal lot of record) or parcel (APN) in single unit parcels. In addition, this approach would limit multifamily residential buildings with five (5) or more units to one STR permit. In other words, complexes with 2+ units could only have one STR.
Staff would implement this provision during the registration or renewal of the STR and verify that:
1) Only one STR operating per legal lot of record or parcel; and 2) Limit one (1) STR permit per multifamily residential buildings with 2 or more units;
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Figure 1: List of STR Properties with Multiple Units
3. STR Density: Council directed staff to explore potential neighborhood density provisions such as buffers between STRs (i.e. 55-200’ between STRs, measured from a radius or parcel line) and/or potential percentages of STR operations within a neighborhood, block, street, or other physical area (i.e. 15% of STRs on a street with x length, within a neighborhood, within three blocks, etc.).
California Coastal Commission staff indicated they would need further analysis in order to support such a provision, stating they have been unable to locate a local jurisdiction in the Coastal Zone that imposed STR proximity restrictions based on distance between STR properties. If the buffer approach is what the City prefers, considerable supporting analysis and documentation would be needed. Further, CCC staff questioned how priority would be granted in the event two existing permit holders within the same regulatory buffer reapplied for permits under the new ordinance.
CCC staff provided feedback that if the Council were interested in a density provision, then a neighborhood-based density provision modeled after Marin County’s adopted STR ordinance would be preferable. Marin County’s Short Term Rental Ordinance contained caps on the total number of STR licenses in all of unincorporated Marin County. From the total number of authorized permits, a suballocation of available licenses was then capped from the countywide total to limit the number of permits available for specific townships.
However, further analysis and data would be needed for Coastal Commission consideration, as a provision that limits the number of STRs per neighborhood would likely reduce the number of STR operations where the City has some of the highest coastal visitations and coastal tourist attractions, e.g., West Sharp Park (pier, Beach Blvd promenade, Sharp Park Golf Course berm and northern access to Mori Point, etc.), combined with minimal hotel capacity,
Additionally, CCC staff questioned how a neighborhood density provision would be implemented when there are many active and legal STR operations in one Pacifica City Council 7
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neighborhood and the STR permits are only issued for one-year periods. For example, if three STR properties operate within the same area and apply for their renewal at the same time, how will the City determine which STR property gets to operate if a neighborhood density limitation only allows one? City staff agrees with CCC staff that this type of neighborhood density provision would add significant administrative complexity and would require development of a fair and clear timestamping STR permit application process, or a lottery system, both of which would take significant staff resources or consultant assistance. The City may also need to consider investment in permit tracking software for the annual renewal process in order to fairly grant renewals or new permits each year.
Another challenge in attempting to apply a neighborhood density provision is that there is no way to know what the attrition of STR operations may be at this time under all of the other ordinance provisions directed by the Council. While West Sharp Park may have the highest density of STRs now, other ordinance restrictions are likely to reduce this density in West Sharp Park (i.e., adoption of certain parking requirements, primary residency requirements, etc. may reduce the number of STRs). Moreover, City staff understands that the cap of 150 STRs would continue to apply, which will limit all STRs throughout the City to 150 maximum. An approach the Council may wish to take regarding neighborhood density is to see what the effect of these other restrictions are on the program prior to committing staff and financial resources to the design of a complex neighborhood density provision.
The City Manager is seeking direction from Council as to whether Council wishes to direct further research and evaluation of a neighborhood density provision at this time.
Note: During the Council’s discussion of this item, staff will have available an interactive map on the screen that shows STR locations in neighborhoods.
4. Minimum Rental Duration: The Council directed staff to add a provision that 1) Allows and enforces a 2 consecutive night stay; and 2) Prohibit events in STR units with active STR Permit.
California Coastal Commission staff expressed concerns about this provision, which could impact visitors who may not have the means to afford a two-night minimum stay and raised concerns about coastal access. CCC staff also recommended adding a definition of “event,” to more specifically target parties and other large gatherings.
The City Manager is seeking direction from Council as to whether Council wishes to change its current direction regarding minimum rental duration.
CCC Staff Feedback on Other Items:
CCC staff also provided the following feedback on other ordinance provisions, as follows:
1. Hosted and Unhosted STRs:
CCC staff were generally supportive with limiting rentals to 90 days per permit year, and requested clarifications on the City’s preference of a 90 day over a 60 day limitation.
CCC staff has requested clarification regarding maintaining the 150 cap in the updated ordinance, and its relationship with the ratio of hosted/unhosted within the cap. The updated Ordinance would contain narratives and provisions to clarify these comments.
2. Primary Residence Requirement:
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CCC staff were supportive of a requirement in the updated ordinance requiring STR operators to be primary residents of the property being used as an STR and requiring at least two forms of documentation to prove primary residency prior to issuance of an STR permit.
3. Occupancy Limits:
CCC staff were supportive of a provision to allow an STR a maximum of two occupants/bedroom and the max would not apply to children under the age of twelve.
4. Permit Limits:
CCC staff were supportive of a provision to require one STR per person/entity.
Summary of STR Permits and Enforcement Activity
Staff developed with HdL an updated summary of Pacifica’s STR Permits, including information regarding the current cap, compliant STRs, in process, non-compliant, and others. The summary is included as Attachment A to this report. As shown in HdL’s most recent report, there are only 18 permits still available before hitting the 150 permit cap. During the recent permit renewal process, staff reviewed the past STR permit holders with the City’s regulations, eliminating verified non-compliant properties from renewal. Additionally, revocation proceedings instituted prior to the renewal period resulted in the cessation of operation of an existing permit holder. As the report summarizes, since June 2024 staff have successfully resolved roughly two-dozen enforcement operations against unpermitted STR operators by issuing citations and notices of violation. The vast majority responded by obtaining permits, paying their fees and taxes, and legalizing their operations. Further, staff have been working with Airbnb to successfully delist non-compliant and unpermitted STR operators from their platform. As a result of these efforts, the City has now successfully closed 102 non-compliant accounts over the past two years of enforcement activity.
Next Steps
If no additional research, or minimal research, is required pursuant to Council’s direction at the December 5, 2024, meeting, staff anticipates being able to draft the ordinance and prepare to bring it before the Planning Commission on Tuesday, January 21, 2025 (due to the Martin Luther King Jr. holiday on that Monday). Depending on Planning Commission action, the ordinance introduction may appear before City Council in February, followed by adoption in February/March. The ordinance would go into effect outside the coastal zone 30 days following adoption. The ordinance would not go into effect in the coastal zone until processing and approval by the Coastal Commission, which is an uncertain timeline that the City does not control. It is not unusual for approval of a Local Coastal Program (LCP) Amendment by the Coastal Commission, which is required for the ordinance to apply within the Coastal zone, to take up to a year, at minimum.
If more research is necessary, or it is necessary to return to the Council again for final direction, the City Manager would anticipate such a return to Council to occur in late January 2025, and the Planning Commission hearing to occur in February, followed by the City Council introduction/adoption hearings in late-February to April timeframe, and then followed by the Coastal Commission process.
CONCLUSION:
Ongoing collaboration with CCC staff is an important component to applying an improved STR Ordinance within the Coastal Zone. An LCP Amendment for the STR Ordinance Amendment is required by the CCC. While this step contains uncertainty, preliminary review of the ordinance Pacifica City Council 9
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provisions and consistent coordination with CCC staff should help reduce additional comments and/or requested modifications by the Coastal Commission.
The City Manager seeks direction from the City Council on the above four STR ordinance provisions based on CCC staff feedback.
ALTERNATIVE ACTION:
No additional alternatives have been identified at this time, other than the ordinance provision variations/alternatives discussed in each section in this report.
RELATION TO CITY COUNCIL GOALS AND WORK PLAN:
The Short-term rental program study session is consistent with the following item in the Counciladopted Strategic Plan and Priority Work Plan for FY2024-25:
• Goal 3: Prioritize protection and development of affordable housing. o Strategy B: Update the Short-Term Rental Ordinance.
FISCAL IMPACT:
There is no fiscal impact associated with this recommendation. The overall fiscal impact to the City of implementing the new STR Ordinance will depend on variables such as how STR Hosts respond to the new ordinance (i.e., whether they continue to operate as an STR under the new restrictions), how long it takes the Coastal Commission to approve the ordinance and what provisions they finally approve, and what the tracking and enforcement costs end up being over time (either increased or decreased). These are difficult impacts to estimate, however staff will attempt to estimate the fiscal impact of as many variables as possible once the ordinance is drafted and prepared for Planning Commission and City Council hearings in 2025.
ORIGINATED BY:
City Manager's Office
ATTACHMENT LIST:
Attachment A: City of Pacifica Status and Count of Short-Term Rental Properties (PDF)