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Attachment 4 - DCA 23-01 Short-Term Rentals PP

Mayor and City Council
June 5, 2024

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Attachment 4 - DCA 23-01 Short-Term Rentals PP
Meeting
June 5, 2024
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Mayor and City Council
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Development Code Amendment 23-01
Short-Term Rental Program

Presented By: Stephanie Castro, Project Manager
Background:

December 13, 2022:

Planning Commission forwarded a recommendation to Council to support the development of regulations
January 18, 2023:

Mayor & City Council directed staff to develop regulations February 27, 2023:

Planning Commission STR Workshop
February 21, 2024:

Mayor & City Council directed staff to conduct analysis on enforcement  measures and the impact to the housing market.

Program Overview:

Program Type
Whole Home/Property Vacation Rental Only
Must be a “Primary Resident” Property – No Commercial
Properties
Cities with “Primary Resident” requirement:
• Los Angeles
• Malibu
• San Francisco
• New York
• Portland
• Denver
• Boulder
• New Orleans
From the Experts:
• Easier to enforce
• Does not deplete housing
stock
• Remains eligible for
Homestead Exemption
Program Overview:

Registration Permit:

Annual Permit Required
1 License Per Property Owner / Primary Resident
Property can be owned by Individuals & Non-Individuals if proof of connection to the property owner can be established (Corp., LLC or Trust) Fees:

Permit fee estimated to range between $500 - $775*
*Fee is based on cost recovery and is subject to change Fees will be established by Resolution at a future Mayor &  City Council meeting Program Overview:

Density:
4 Bedroom / 8 Occupancy Max
NTE 8 Occupants Per Stay
NTE 12 People Per Day at one time
Length of Stay:

No Minimum # of Days
Maximum 29 Day Stay / NTE 120 Days in a Calendar Year
Property Type:

SFR, SFR w/ Guest House and Condo
Properties within a High Fire Zone DO NOT qualify to participate Program Overview:

Property Type - High Fire Zone
CalFire Public Zoning Map

Program Overview:

Inspection:

In-Person Property Inspection to be conducted with each new Application Inspection to be done annually with each Renewal Application Transit Occupancy Tax:

All permits subject to TOT
Voter Ballot Initiative during the next Eligible Election Program Overview:

Noise:

Default to Municipal Code
Noise Control
Quiet Hours from 10pm – 8am
Outdoor Noise Monitoring Device
Required
Device notifications start between
70dB – 75dB

Program Overview: Enforcement
Platform Enforcement:

STR Property Identification
• Prior to accepting applications, properties identified to be operating as a STR will be notified of the program, new regulations, and be given an opportunity to come into compliance.
24hr Concern / Complaint Line:
• Supported by Platform
• Communicates directly with the Property Owner/Agent
• Property Owner/Agent must respond to concerns/complaints within 60 minutes
• Can route/direct calls to the Police Department (Noise Complaints) after previous steps have taken place.

Program Overview: Enforcement
City Enforcement:

Code Enforcement acts as the 3rd level of Enforcement
1 Registered/Booked Stay = 1 Notice of Violation (NOV) @ No Cost • Property Owner not responding to Noise Monitoring Device • Property Owner not responding to Platform Notifications • Exceeding the number of people allowed on site
• Parking in excess of allowed spaces
Other NOV’s can include
• Properties operating out of compliance / without a permit Notice of Violations serve as a warning to correct activity.

Program Overview: Enforcement
City Enforcement:

Progressive Administrative Citation Penalties
• 1st Admin Citation (Per Violation) = $100
• 2nd Admin Citation (Per Violation) = $200
• 3rd Admin Citation (Per Violation) = $500 & Non-Renewal of Permit • Ex. 1st Admin Cite (3 Violations) = $300
3 Admin Citations, while permit is active, will result in Non-Renewal of Permit Police Department:

Police Department will follow the established call procedures for noise complaints and other reported criminal activity.

Program Overview:

Additional Items:
• Good Neighbor Brochure required to be provided to renter, and kept on-site • Copy of Permit w/# of guests allowed to be posted at the house • In-Person or Virtual Check-In
• Must have a 24hr phone number listed for Property Owner/Agent • Cannot have a restricted affordable housing covenant
• Change of property ownership requires a new application • Evidence of Property Insurance / Commercial Insurance specifically for STR $500k min limit/occurrence
Additional Analysis
San Bernardino STR Market:
 Estimated 270 Short Term Rentals in San Bernardino
 Properties / Listings
 During months of January, March, August & October historically there has been a spike of an estimated 20 to 40 additional STR’s.  This would represent an 8% to 15% increase during those months.  *Historical data does not necessarily dictate future results.
 Insomniac Events in the City
 Countdown - January
 Beyond Wonderland – March
 Hard Summer – August
 Escape - October
Additional Analysis
Air BnB
April 12-14
Filters:

Entire Home
House
41 listings
Price Range
$120 - $975

Additional Analysis
Air BnB
Memorial Day Weekend
May 24-27
Filters:

Entire Home
House
48 listings
Price Range
$90 - $975

Additional Analysis:
 Based on a national average, STR’s increase rent in a jurisdiction by $125 per month.
 National Bureau of Economic Research, UCLA, and University of Southern California, published a research paper concluding that “a 10% increase in Airbnb listings leads to a 0.42% increase in rents and a 0.76% increase in house prices.

Moreover, we find that the effect of Airbnb is smaller in zip codes with a larger share of owner-occupiers, a result consistent with absentee landlords taking their homes away from the long-term rental market and listing them on Airbnb.”  STR’s have had a conservative growth of 17% annually since 2011.  While past results don’t necessarily determine future trends, there are some estimates that show STR’s will grow by an estimated 11% to 19% annually through 2032. This means STR’s will continue to effect rent prices & home prices in their respective jurisdictions.

Additional Analysis:
 Harvard Business Review – February 2024
“Short-Term Rentals are not the biggest contributor to rising rents” Lack of Housing Units
Growing Demand for Housing
Heightened Construction Costs
“Governments wishing to ensure Short-Term Rentals won’t reduce housing affordability can  design regulations…” to do just that Primary Resident Property
 UCLA Anderson Review – February 2024
“Hotels across categories and sizes benefited when laws restricted short-term rentals, according to the study findings. On average, hotels in areas with restrictions on short- term home rentals reported a 3.5% larger revenue increase than in places without  restrictions.

Program Processing:

1. City Staffing:
• Economic Development
• Planning
• Building & Safety
• Code Enforcement
• Business Registration
• Police Department

2. Software Platform:
• Electronic Application Process
• STR Property Identification
• Continued Monitoring
Next Steps:

Draft
Regulations
Software
Platform
Fee Study
Planning
Commission
Mayor &
City Council
Program
Implementation
Ballot
Nov 2024
Implementatio
n of TOT in
2025
Platform Selection
Recommendation:

It is recommended that the Mayor and City Council:

1. Introduce for first reading, read by title only, and waive further reading of Ordinance No. MC-1628 of the Mayor and City Council of San Bernardino, California, adopting the Short-Term Rental Program, and approving Development Code Amendment 23-01; and

2. Schedule the adoption of the above Ordinance to the regularly scheduled meeting of the Mayor and City Council on July 3, 2024

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