Item 08 2024-00745 Ordinance Amending Various Sections of Chapter 5.114 of the City Code Relating to Short-Term Rentals

City of Sacramento
City Council - 2PM Report
915 I Street Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2024-00745 4/30/2024 Consent Item 8.

Ordinance Amending Various Sections of Chapter 5.114 of the City Code Relating to Short- Term Rentals
File ID: 2024-00745
Location: Citywide
Recommendation: Adopt an Ordinance amending various sections of chapter 5.114 of the Sacramento City Code, relating to short-term rentals.

Contact: Peter Coletto, Director of Finance, (916) 808-5416, [email protected], Department of Finance; Jackie Rice, Revenue Manager, (916) 808-5844, [email protected], Department of Finance
Presenter: None.

Attachments:
1-Description/Analysis
2-Ordinance (Redline)
3-Ordinance (Clean)
Description/Analysis
Issue Detail: On April 2, 2024, Council adopted a resolution to renew the Sacramento Tourism Marketing District (STMD) for a new ten-year term. The STMD was formed by business owners to fund marketing and sales services for assessed lodging businesses with the intent to increase tourism and to market Sacramento lodging businesses as a tourist, meeting, and event destination.

The STMD was initially formed in 2012 for a five- year term and then subsequently renewed in 2017 for a ten-year term and was set to expire in 2027.

The Sacramento lodging businesses petitioned the City to renew the district early for a ten-year term to adjust the assessment rates and district boundaries. The renewed district will deliver marketing and promotional services to each specific zone within the STMD. The assessment and services are further detailed in the Management District Plan (MDP) on file with the Infrastructure Finance Division of the Finance Department, designated by the City Clerk to be the repository for documents related to business improvement districts. The new assessment rates will be effective July 1, 2024.

The Sacramento Tourism Infrastructure District (STID) is an assessment district formed in 2018 to provide funding for capital improvements and marketing activities designed to increase room night

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File ID: 2024-00745 4/30/2024 Consent Item 8.
sales for assessed businesses. It is levied on all lodging businesses within the boundaries of the City of Sacramento.

Sacramento Short-Term Rental (STR) permittees are subject to STMD and STID assessments.

Because City code does not currently require STR hosting platforms to collect STMD and STID, payments are made monthly by each permittee. To promote compliance with STMD and STID assessments, and to align hosting platform collection responsibilities with those of the transient occupancy tax (TOT), staff recommend amending City code. While this change requires collection by the hosting platform, the STR permittee is ultimately responsible for the assessments and must remit payment if hosting platforms are not utilized or if the platform does not remit the fee on their behalf.

Though there are other recommended changes to the code relating to STRs, staff are prioritizing these changes now to ensure alignment with the renewed STMD. Staff anticipates the additional proposed changes to the STR ordinance to come to the Law & Legislation committee in early Fiscal Year 2025.

Policy Considerations: None.

Economic Impacts: None.

Environmental Considerations: This action is not a “project” subject to California Environmental Quality Act (CEQA) because it involves administrative matters and will not result in new physical development, direct changes to the physical environment, and any reasonably foreseeable indirect physical change in the environment. (CEQA Guidelines § 15378(b)(5)).

Sustainability: Not applicable.

Commission/Committee Action: None.

Rationale for Recommendation: Shifting collection responsibilities from STR permittees to the hosting platforms encourages compliance with assessment requirements. Additionally, it reduces the administrative burden on permittees and City staff processing multiple payments from STR permittees. Since hosting platforms currently collect TOT on behalf of STR permittees, the infrastructure is in place for assessment collection and remittance.

Financial Considerations: The STMD and STID are self-supporting and have no impact on the General Fund. Financing is provided from the levy of assessment rates upon lodging businesses.

The City of Sacramento retains a fixed percentage of the STMD assessment collected from businesses within the City to cover the costs of collection and administration.

Local Business Enterprise (LBE): None.

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1 ORDINANCE NO.

Adopted by the Sacramento City Council
[Date Adopted]
AN ORDINANCE AMENDING SECTIONS 5.114.010 AND 5.114.210 OF, AND ADDING SECTION 5.114.410 TO, THE SACRAMENTO CITY CODE, RELATING TO

SHORT-TERM RENTALS
BE IT ENACTED BY THE COUNCIL OF THE CITY OF SACRAMENTO:

SECTION 1.

A. Section 5.114.010 of the Sacramento City Code is hereby amended as follows:

1. The definition of “assessment” is added to read as follows:
“Assessment” has the same meaning as in California Streets and Highways Code section 36606.5.

2. The definition of “district” is added to read as follows:
“District” means the Sacramento Tourism Marketing District established by Resolution No. 2012-141 and the Sacramento Tourism Infrastructure District established by Resolution No. 2018-0419 and their subsequent renewals pursuant to the Property and Business Improvement District Law of 1994 (Cal. Sts. & Hy. Code, § 36600 et seq.) B. Except as amended by subsection A above, all provisions of section 5.114.010 remain unchanged and in full effect.

SECTION 2.

Section 5.114.210 of the Sacramento City Code is hereby amended to read as follows:

5.114.210 Annual limit.

If the short-term rental dwelling unit is not the primary residence of the permittee, no permittee shall, for compensation, provide lodging for more than an aggregate of ninety (90) days in any calendar year during the term of the short-term rental permit.

SECTION 3.

Section 5.114.410 is hereby added to the Sacramento City Code to read as follows:

5.114.410 District short-term rentals.
2 A. Except as provided in subsection C, if a host is required to pay a district assessment and utilizes a hosting platform to collect any fee from lodgers—

1. The host shall inform the hosting platform that the hosting platform must collect the district assessment from the lodger; and

2. The hosting platform shall, on behalf of the host, collect the district assessment from the lodger and remit it to the city. A hosting platform’s obligations under this paragraph are in addition to any district-assessment obligations of the host, regardless of the host’s compliance with subsection A.1.

B. A host remains obligated to remit its district assessments even if a hosting platform fails to discharge the obligation described in subsection A.2.

C. Subsection A does not apply if the host provides the city an affidavit, signed by the host under penalty of perjury, verifying that the host will pay the district assessments directly to city.