HomeMy WebLinkAboutCOW 2018-04-09 Item 5B - Discussion - Short-Term RentalsCOUNCIL AGENDA SYNOPSIS
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Meeting Date
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Council review
04/09/18
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ITEM INFORMATION
ITEM No.
5.B.
STAFF SPONSOR: NORA GIERLOFF
ORIGINAL AGENDA DATE: 04/09/ 18
AGENDA ITEM TITLE
Update to Short Term Rental Regulations
4/9/18
❑
Mtg
Motion
Date
❑ Resolution
Mtg Date
❑ Ordinance
Mtg Date
❑ Bid Award
Mtg Date
❑ Public Hearing
Mtg Date
❑ Other
Mtg Date
CATEGORY /1 Discussion
Mtg Date
SPONSOR Council ❑Mayor
DCD ❑Finance ❑Fire ❑TS ❑P&R ❑Police ❑PIF ❑Court
❑HR ►1
SPONSOR'S A review of Tukwila's short term (less than 30 day) rental housing regulations for
SUMMARY accessory dwelling units, single family houses, multi -family units, and boarding houses.
Council consensus is requested to choose to allow or prohibit the different types of short-
term rentals, and send the issue to the Planning Commission for a public hearing and
recommendation.
REVIEWED BY ❑ C.O.W. Mtg.
❑ Trans &Infrastructure
DA1E: 3/13/18
A
CDN Comm
❑ Finance Comm. 1 1 Public Safety Comm.
❑ Parks Comm. ❑ Planning Comm.
COMMIT"1r.E CHAIR: KRULLER
❑ Arts Comm.
RECOMMENDATIONS:
SPONSOR/ADMIN.
COMMII'1'EE
Department of Community Development
No Recommendation, Forward to Full Council
COST IMPACT / FUND SOURCE
EXPENDITURE REQUIRED AMOUNT BUDGETED APPROPRIATION REQUIRED
$ $
Fund Source:
Comments:
MTG. DATE
RECORD OF COUNCIL ACTION
MTG. DATE
ATTACHMENTS
4/9/18
Informational Memorandum dated 3/6/18 with attachments, updated 3/23/18 after CDN
Minutes from the Community Development and Neighborhoods Committee of 3/13/18
C4
62
City of Tukwila
Allan Ekberg,
INFORMATIONAL MEMORANDUM
TO: Community Development and Neighborhoods Committee
FROM: Jack Pace, DCD Director
BY: Charlotte Archer, Asst. City Attorney; Nora Gierloff, Deputy DCD Director;
Minnie Dhaliwal, Planning Supervisor
CC: Mayor Ekberg
DATE: March 23, 2018
SUBJECT: Short-term Rental Regulations (Updated after CDN Committee)
ISSUE
Should Tukwila update its short-term residential rental regulations to address ADUs and single
family houses?
BACKGROUND
In conjunction with the City's discussions pertaining to detached accessory dwelling unit (ADU)
regulations, which began in March 2017, the City Council requested a review of the City's
regulation of short-term (defined as a period of less than thirty days) rentals within the City.
This review was intended to focus on the use of single-family and multi -family residences, as well
as both attached and detached ADUs, for the purpose of obtaining rental income, commonly via
an online marketplace such as HomeAway, Vacation Rental By Owner ("VRBO") or AirBnB.
Anecdotally, property owners in the City are using their residential structures for both short- and
long-term rentals on a regular basis (see Attachment A). The intention for this project was to
review and revise, where necessary, the standards for rentals.'
A. Existing Regulations for Short and Lona -term Rentals.
Whether a particular residential building located within the City may be used as a short-term or
long-term rental is determined by the regulations set out in Title 18 TMC Zoning Code. Currently,
multi -family dwellings shall not be used for a rental tenancy of less than one month. See TMC
18.06.247. There is no prohibition on the use of a multi -family dwelling as a long-term rental.
1 Beyond the scope of this analysis are the following, which are subject to distinct regulations: Assisted
Living Facilities (TMC 18.06.058); Continuing Care Retirement Communities (TMC 18.06.170);
Convalescent/Nursing Homes (TMC 18.06.173); Correctional Institutions, including transitional housing
(TMC 18.06.178); Extended -Stay Hotel or Motels (TMC 18.06.287); Hotels (TMC 18.06.440); Motels (TMC
18.06.585); Secure Community Transitional Facilities (TMC 18.06.706); Senior Citizen Housing (TMC
18.06.708); Shelters (TMC 18.06.743); commercial properties used for the purposes of short-term and
extended -stay housing, such as motels, hotels, and extended stay motels.
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INFORMATIONAL MEMO
Page 2
There is no restriction on the use of a single-family dwelling as a short- or long-term rental.
Similarly, there is no restriction on the use of mobile home dwellings in mobile home parks for
short- or long-term rentals. Moreover, Tukwila's current standards for attached ADUs permit the
rental of the ADU but require owner -occupancy of the either the primary residence or ADU. The
draft ADU ordinance that allows detached ADUs has a placeholder ban on rentals of Tess than 30
days. That could be modified based on the Council's overall decision about short-term rentals.
There are other categories of uses that may be used for short- and long-term rentals, including:
• Dormitories defined as "a residential building or use which provides housing for students
attending an affiliated school or housing for members of a religious order."
• Boarding House defined as "a residential building which provides housing on a short-term
commercial basis for tenants" is a conditional use in the MDR and HDR zones.
• Bed and breakfast facilities defined as "an owner occupied dwelling unit that contains
guest rooms where lodging is provided for compensation," are permitted in the LDR, MDR
and HDR zones as conditional uses (for up to twelve guests), and guests shall be limited
to a 14 -day maximum length of stay. Tukwila has never received an application for a bed
and breakfast conditional use permit.
Two other residential uses currently not identified in the TMC may also be affected by an
amendment to the City's existing regulations for short- and long-term rentals. First, adult family
homes (AFH)2 could arguably be considered residential properties used for rental purposes;
however, state law prohibits the City from enacting regulations that put up a road -block to the
placement of AFHs in all areas zoned for residential purposes. Second, the same analysis would
likely apply to a residence used to house people with disabilities, including the recovery from a
drug addiction.3
B. Existina Licensure Requirements for Rental Properties.
Tukwila's Residential Rental Business License and Inspection Program, codified at Chapter 5.06
of the Tukwila Municipal Code (TMC), establishes an annual rental licensure requirement for all
"units" intended for rent. Each dwelling unit must be inspected for life safety issues every four
years and a Certificate of Compliance is issued by the City for those units that meet all
requirements. The code is silent about whether it applies to short-term rentals.
C. Regulation of Short -Term Rentals by Neiahborina Jurisdictions.
Staff analyzed the methods other cities in Washington utilize to regulate short-term rentals to
develop a proposed model for Tukwila, see Attachment B. This issue is currently being debated
in many jurisdictions in Washington in light of the dramatic recent growth of major companies in
the short-term rental industry, as well as the housing crisis in the greater Seattle area.
2 Adult family homes are defined by state law as "a residential home in which a person or persons provide
personal care, special care, room, and board to more than one but not more than six adults who are not
related by blood or marriage to the person or persons providing the services." RCW 70.128.010.
3 See RCW 36.70.990.
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INFORMATIONAL MEMO
Page 3
On December 11, 2017, Seattle adopted new regulations to prevent property owners from
operating short-term rentals as if they were hotels, as part of a larger effort to ensure an adequate
supply of long-term rental stock for the City's permanent residents, see Attachment C. The new
regulations limit hosts to two dwelling units each and requires a special license to operate said
rentals. The City also requires short-term rental platforms, such as AirBnB, HomeAway and
VRBO, to obtain a special "platform license" to facilitate bookings in Seattle. In advance of
adopting these regulations, the City approved a new tax on short-term rentals, again designed to
prevent property owners from operating short-term rentals as if they were hotels.
Similarly, in October 2017, the City of Kirkland adopted Ordinance 0-4607, which regulates
rentals lasting for less than thirty days. Properties must be owner -occupied at least 245 days per
year and a "Short -Term Rental Business License" from the City is required. The use of an ADU
as a short-term rental is allowed for up to 120 days per year, as long as the property owner (or
authorized agent) occupy the primary residence for at least 245 days per year. A property
manager must live within 15 miles of the residence when residence is used for short-term rental
purposes. The City further dictates terms that must be included in the rental agreement, including
a provision that "encourages renters to exercise best efforts to avoid conflicts with neighbors
related to issues such as noise, littering, parking and trespass." The City also requires a business
license for long-term rentals, including owner -occupants with a roommate.
ANALYSIS
Council is being asked to set a policy direction on short-term rentals.
A. Advantaaes of Permitting Short -Term Rentals.
Given the results of Staff's search (see Attachment A), there appears to be an existing
marketplace for the short-term (defined as 29 days or less) rental of single- and multi -family
dwellings in the City. This is occurring despite the codified prohibition on the use of multi -family
dwellings for this purpose.
From a policy perspective, short-term rentals can bring -numerous, benefits to those who operate
them, their visitors, and the surrounding neighborhood. ""^r, ind1 :duels Some homeowners use
short-term rentals to help afford the cost of their own home, oitherincluding renting out a
b cer^ent a -pare room; or the entire home . , .. , , t,", ^r_ T. - Kent,
for example, adopted regulations to allow the rental of ADUs "Riomake homeownership more
affordable because it will be easier to buy both new and existing homes with the help of an
accessory dwelling unit."4 SeaTac likewise currently permits the use of ADUs for rent to "increase
opportunities for home ownership and allow older homeowners to remain in their homes and
obtain extra income. companionship. and security."5 Some iurisdictions_find that ADUs may
increase the supply of affordable rental units and may provide a variety in affordable rental units.
Additionally, short-term rentals may provide a f exib!e mens for her &owners to earn more menet'
than, by renting cNt their pr: pertygreater return on investment for homeowners looking to rent, as
short-term rental rates often outpace rates for rentals on a long-term basis. _For visitors, short-
term rentals often offer a r' ^fer-l^b!e cp+°c^, cr:d short rert3! may cost less than
4 Kent Citv Code § 18.08.350(3).
5 SeaTac Municipal Code § 15.465.100(A)(4).
65
INFORMATIONAL MEMO
Page 4
traditional hotels or motels. which in turn provides a means to bring tourists and their =v:
spending power to Tukwila.
B. Disadvantages of Permitting Short -Term Rentals.
TheSome jurisdictions have recently studied the rise in the use of rental properties as short-term
rentals has also hadand the negative impacts +r such rentals have had to communities throughout
Washington. ShoFtFor example. Seattle recently studied the impact short-term rentals can
ccst had on affordable housing within the City, and found that the more
commercial use of short-term rental platforms hoc tc kcr entire (by commercial operators, rather
than traditional single-family homeowners) has resulted in the removal of houses, condos and
apartments offrom the Tong -term housing market. Scmc short term rentals See Attachment C.
The significant impact of short-term rentals on affordable housing availability was also the subiect
of a Harvard Law and Policy Review article. which concluded
So lona as a property owner or leaseholder can rent out a room on
Airbnb for cheaper than the price of a hotel room. while earning a
substantial premium over the residential market or rent -controlled
rent. there is an overpowering incentive to list each unit in a building
on Airbnb... In tight housing markets with near -zero vacancy rates,
a sudden reduction in supply naturally increases rents. particularly
because neither the market nor the public sector can swiftly add to
the housing stock.6
In addition. some iurisdictions have found that some short-term rentals can attract disruptive
visitors ,._he 2. re essen+is!!y vacationing visitors to residential areas, and can which may
have a negative impact on property values. A study commissioned by the hotel industry indicated
some short-term rentals may have negative impacts on N cperty __ai ,ems Same stud.ics hove
.rdicc tc`1 somo commercialized short term , crtsis impact the hotel/motel industry and.' Short-
term commercial rentals are likely subiect to the to City's business ccmrri'_:rty, bylicensure
and tax requirements. but do not pay thereby circumventing traditional lodging taxes. ShortThere
is also some evidence in the aforementioned studies that short-term rentals may also contribute
to creating a transient community, and +ncreasccreate an increased parking demand in residential
areas.
Some of these negative effects may be mitigated by placing restrictions on commercial short-term
rental operators, or by only allowing rentals of rooms within owner occupied dwellings as opposed
to entire units. However, regulating the short or long-term rental of individual rooms within an
owner -occupied dwelling would be a significant expansion of the Residential Rental Business
License program. Additionally, without cooperation from the online rental platforms it is difficult to
identify properties and enforce the current short-term rental regulations. We receive lodging tax
as a lump sum and AirBnB only reports aggregate rental data, rather than by address.
Currently, the City has no permitted Bed and Breakfast facilities. This appears to be a somewhat
antiquated form of residential use, with the rise of AirBnB and other online alternatives. The City
6 Full article available at http://harvardlor.com/wo-content/uploads/2016/02/10.1 10 Lee.pdf.
Full article available at htto://www.cbrehotels.com/EN/Research/Pa:?es/An-Analvsis-of-Airbnb-in-the-United-
States. a spx.
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INFORMATIONAL MEMO
Page 5
is aware of a few Boarding Houses within the City and there are ongoing code enforcement
complaints relating to un -permitted Boarding Houses in the LDR zoning district (where this use is
prohibited). The existing definition of a Boarding House makes this regulation difficult to enforce,
given its use of undefined terms like "short-term" and "commercial basis." Similarly, there is no
cap on the number of tenants that may reside in one residential building, no requirement that the
building is owner -occupied, and no other relevant regulations such as higher parking standards.
C. Options.
With this context in mind, the City could opt to prohibit short-term rental of all dwelling units within
the City, including entire single-family residences, rooms within owner -occupied residences,
multi -family residences, ADUs (attached and detached), mobile and manufactured homes, Bed
and Breakfast facilities, and Boarding Houses.
Alternatively, the City could permit the use of some or all types of dwelling units as short-term
rentals, subject to restrictions such as:
(1) limitations on the number of lease agreements per dwelling unit;
(2) caps on the number of occupants per bedroom;
(3) the length of time the dwelling unit may be occupied by a tenant within a calendar year;
(4) require certain amount of parking stalls for the property, if used for rental purposes;
and/or
(5) owner -occupancy requirements.
As discussed briefly above, there are additional restrictions from state law on regulations for adult
family homes and inpatient substance abuse facilities. The City Attorney would craft language for
these uses based on the overall direction from Council.
FINANCIAL IMPACT
Allowing short-term rentals and requiring them to be licensed would modestly increase the
revenue to the Rental Housing Program. Enhanced enforcement of short-term rental restrictions
would require additional resources.
RECOMMENDATION
The Council is being asked to review Tukwila's short-term residential rental regulations, chose to
allow or prohibit the different types of short-term rentals, and send the issue to the Planning
Commission for a public hearing and recommendation.
ATTACHMENTS:
A. Results of Staff Review of Rental Listings.
B. Table of Neighboring Jurisdictions' Regulation of Short-term Rental Properties
C. Regulating Short Term Rentals Seattle Policy Brief
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INFORMATIONAL MEMO
Page 6
ATTACHMENT A
Staff Research Regarding Existing Short -Term Rental Stock
Staff reviewed the inventory of short-term rental properties (as advertised on Craigslist,
VRBO and AirBnB), in order to determine the scope of the existing use of these services. A
review of AirBnB and VRBO, on December 28, 2017, found approximately 35 short-term rentals
offered in Tukwila, including the following:
Three bedroom home, for $149/night
Private room in single family home, for $38/night
Towne and Country Hotel, Furnished 3 bedroom suite for $250/night
Two bedroom condo, for $135/night
One bedroom condo, for $85/night
- Studio cabin (ADU), for $55/night
Guesthouse (ADU), for $65/night
Room in single family home with private bath, for $40/night
Private room in single family house, for $56/night
Private room in three-bedroom apartment, for $60/night
Single family home, for $112/night
Detached ADU (Cottage), for $80/night
Private room in single family home, for $45/night
Two bedroom apartment, $120/night
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INFORMATIONAL MEMO
Page 7
ATTACHMENT B
Neighboring Jurisdictions' Regulation of Short -Term Rentals
Jurisdiction
Single -Family
Residences
ADUs
(Detached or
Attached)
Multi -Family
Residences
Licensure
Requirements
(if any)
Relevant Code
Citations
Tacoma
Permitted: (1)
Permitted, up
May rent 3-9
Must obtain a
TMC 13.06.575 —
may rent the
to 4 people in
guest rooms.
Business
Short Term
entire dwelling
all Residential,
after
License; must
Rentals: TMC
to one family or
Commercial.
receiving an
obtain a
13.06.150.C.7 —
a Group of up to
Mixed -Use,
approved
Transient
Short Term
6 people in all
and Downtown
Conditional
Accommodation
Rental in ADUs;
Residential,
Districts
Use Permit
License if
TMC 6B.20 —
Commercial,
Mixed -Use, and
(CUP), in R-
renting 3 or
Annual Business
3, R -4L, R-4,
more rooms.
License: TMC
Downtown
R-5, RCX,
66.140 —
Districts: (2)
and NRX
Transient
may rent 1-2
Districts
Accommodations
quest rooms
(these are
within an owner-
generally
occupied
residential
dwelling in all
districts that
Residential
allow duplex,
Districts,
triplex, and
including single-
multifamily
family districts.
dwellings).
SeaTac
No prohibition,
Permitted,
No
prohibition.
N/A
SMC Ch. 15.465
no regulation
owner-
occupancy
no regulation
requirement
and maximum
occupancy
restrictions
(based on
size)
Renton
No prohibition,
Permitted, with
RMC 4 -2 -
no regulation
conditional use
080(A)(7)
;permit and
owner -
occupancy
Kent
"Dwelling unit"
Permitted,
No
prohibition,
Business
KCC 15.02.130;
defined to imply
owner-
occupancy
License
KCC Ch. 5.14
rental of entire
no regulation
Required
unit can be on a
requirement
weekly,
for six months
monthly, or
every calendar
longer basis
year.
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INFORMATIONAL MEMO
Page 8
Puyallup
Bed and
Permitted,
PMC 20.20.015:
Breakfast
owner-
PMC
House
occupancy
20.20.010(11)
permitted,
requirement
subiect to owner
occupancy and
occupant cap
with conditional
use permit)
Sumner
Presumably
Permitted,
No
prohibition
N/A
SJC 18.04.0940:
permitted (no
owner-
SMC 18.10.030
express
occupancy
prohibition,
requirement
although
and maximum
restriction that
occupancy
dwelling shall
restrictions
be used for "one
(based on
family")
size)
Bothell
Bed and
Permitted,
BMC 12.06.110
Breakfast
owner -
occupancy (for
facilities
permitted in
6 months)
most zones,
required and
capped at four
cap on
bedrooms and
occupancy
subiect to
parking
restrictions and
owner -
occupancy
Poulsbo
Permitted
Prohibited
Prohibited
None
PMC 18.70.070
San Juan
County
Permitted, no
more than 38
guests per
bedroom;
parking required
Permitted
(attached
only), max 3
guests per
bedroom;
parking
required;
owner must
occupy ADU
or primary
residence
Permitted in
Commercial
zone only
"Vacation
Rental Permit"
required
SJCC 18.40.270
8 San Juan County Council is currently considering legislation to reduce this to two guests per bedroom.
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INFORMATIONAL MEMO
Page 9
Clyde Hill
I Iwaco
Permitted, with
limits on
occupancy,
parking, and
use (for lodging
only, can't be
used for events)
Permitted, with
limitations on
occupancy,
parking, and
use (for
lodging only,
can't be used
for events)
Conditional use
in single-family,
zones with
limits on
occupancy and
parking.
Permitted,
with limits on
occupancy,
parking, and
use (for
lodging only,
can't be
used for
events)
Business
License
Required
Ch. 5.20 CHMC
Permitted use
in certain
specified
zones
Leavenworth
Prohibits use of
entire dwellings
as vacation
rentals; permits
short-term
rental of a
portion of a
home when the
property owner
lives on-site
throughout the
visitor's stay
with appropriate
permits,
including a
business
license
Westport
Permitted,
subject to
occupancy cap,
parking and
other standards
Permitted
use in
certain
zones
Business
License
Required
Ch. 15.41 IMC
Permitted,
subject to
owner -
occupancy
requirement
and permitting
Prohibited
Business
License
Required
LMC 18.52.120
Permitted, but
only 1
vacation rental
unit per
"property"
Prohibited
Business
License
Required
Ch. 17.22 WMC
71
72
73
;• r
• • •
•.• ,.:...mro.;-...e..
w�r
•
•
•••
• • • :•
•
11
;
"My landlord is a nice guy, he has kept the rent relatively reasonable for me and my
partner, but he's recently informed us we will need to leave in a few months because he
wants to rent out the property on Airbnb."
-K., Seattle resident
Benefits and Challenges of
Short Term Rentals
Short term rentals bring numerous benefits to those who operate them,
their visitors, and the surrounding neighborhood. Many individuals use
short term rentals as a way to help afford their own home, either renting
out a basement, a spare room, or the entire home when they are out
of town themselves. In a housing market that presents affordability
challenges, there is no doubt short term rentals alleviate the housing
burden for the many families that operate them.
For visitors, short term rentals often offer a more affordable option. Short
term rentals bring tourists, wedding parties, visiting family members and
their collective spending power to neighborhoods across Seattle. Airbnb
recently estimated the economic impact of its visitors in Seattle was $178
million from August 2014 to July 2015, supporting 1,700 jobs.8
At the same time, the more commercial use of short term rental platforms
has taken entire houses, condos and apartments off of the long term
housing market. One external website estimates that roughly one-third
of Airbnb's listings in Seattle are from hosts with multiple listings. These
could be multiple rooms in a house or completely separate units; hosts
with multiple listings are more likely to be commercial operators not
renting portions of their own primary residence.' A recent report published
by CBRE Hotels' American Research found that 79 percent of Airbnb's
revenue in Seattle comes from entire home listings and the revenue
generated by hosts with multiple entire -home listings increased by 183
percent between 2015 and 2016.10 Commercial enterprises utilizing
online rental platforms to market multiple units in multiple locations
further exacerbate the housing crisis facing Seattle.
Without regulation, this practice could continue to rapidly expand. As a
3
75
0
Any strategy the City
can pursue to put more
units into the long
term market is worth
examination.
4
76
recent Harvard Law and Policy Review article explains, "So long as
a property owner or leaseholder can rent out a room on Airbnb for
cheaper than the price of a hotel room, while earning a substantial
premium over the residential market or rent -controlled rent, there is
an overpowering incentive to list each unit in a building on Airbnb...
In tight housing markets with near -zero vacancy rates, a sudden
reduction in supply naturally increases rents, particularly because
neither the market nor the public sector can swiftly add to the
housing stock." 11
The extent of Seattle's housing crisis is well known. Lower income
renters are being pushed further from the center city as prices
rise; home buyers face an extreme lack of options and strong
competition for every purchase offer.
In 2015, Mayor Murray's Housing Affordability and Livability Agenda
(HALA) taskforce put forward recommendations to achieve his goal
of 50,000 new units of housing over the next 10 years, with 20,000
of these units designated as affordable. Short term rentals are not
the leading cause of the severe shortage of housing (at all levels
of affordability), but they have exacerbated an existing crisis. Any
strategy the City can pursue to put more units into the long term
market is worth examination.
One of the recommendations from the HALA taskforce focused
on short term rentals. Specifically, the taskforce recommended
that the City pursue collecting taxes on this activity and dedicating
those tax dollars to affordable housing. Currently, the City lacks the
taxing authority to implement this recommendation. The sales tax
is collected by the State and the hotel -motel tax in Washington is
revenue carved out from the State's portion of the sales tax and
remitted to local jurisdictions; state law dictates how this revenue
can be spent. Facing this lack of options for new taxing authority,
we have focused on regulatory actions that would align with the
HALA goal of putting more units into the long term market.
"The only unit 1 have rented through a short term rental service, Airbnb, has been
my primary residence, a single family home located in an SF 5000 zone. I utilize the
service for times when I will be on vacation, and my rental days have never exceeded
thirty days per year."
- G., landlord and AirBnB host
While secondary to the housing concern, short term rentals
also pose challenges to a fair economic playing field in the
vacation market as it is unclear how many operators apply for the
necessary business license and pay all applicable taxes. Further,
many neighbors of units that have been converted to short term
rentals raise legitimate questions about neighborhood livability.
Regulatory Systems in
Other Cities
A review of the regulatory approach taken by other jurisdictions
reveals a wide range of regulatory responses. On one end of
the spectrum, some jurisdictions have focused exclusively on
collecting the appropriate taxes that apply to short term rental
transactions. On the other end, cities ranging from New York City
to Santa Monica have enforced much stricter regulations; in New
York City, apartments cannot be rented out for less than 30 days.
Per a new law in Santa Monica, short term rental operators will
have to live on the property during any short term rental stay.
Other cities have attempted to find a middle ground. Philadelphia
allows for short term rentals up to 90 cumulative days a year
without a permit, requires a permit and owner occupancy of the
unit for rentals from 90-180 cumulative days a year, and prohibits
short term rentals for more than 180 cumulative days a year. San
Jose allows short term rentals of up to 180 days a year without
a host present and year-round with a host present. Both cities
were cited by Airbnb's Public Policy Team as positive examples for
Seattle to explore.
5
77
Taxation and Regulatory
Context in Seattle
Short term rental transactions currently operate outside of a solid
regulatory framework in Seattle. Any person providing lodging
services is required to collect and remit retail sales tax, meaning that
anyone who offers their home or a portion of their home for short
term rental should be paying this tax. Airbnb recently announced an
agreement with the Washington State Department of Revenue to
pay sales tax on behalf of its hosts, but it is unclear how many other
owners pay the retail sales tax (9.6% in Seattle) on their units if they
are not offering the units through Airbnb's website.
"Last year a [neighboring townhouse] unit was sold.... One neighbor found
that the owner is now renting out all three bedrooms in the house and
apparently runs it as an AirBnB.... When I mentioned this to a couple of
friends living in other parts of the city two of them said they were aware of
similar situations in their areas."
-E., concerned neighbor
The Convention and Trade Center tax (15.6% when combined
with sales tax) only applies to lodging businesses with 60 or more
units. The sales tax is the only applicable tax to a short term rental
transaction, because the basic hotel/motel tax in Washington State
is collected as part of the state's portion of the sales tax and then
remitted to local jurisdictions.
The vast majority of short term rental operators do not have
business licenses, which are currently required . While most if not
all short term rental operators would fall under the Business and
Occupation Tax minimum threshold of $100,000 in gross revenue,
they are still required to get a license and report their revenue.
With the exception of Bed and Breakfasts, commercial lodging
(hotels and motels) are not allowed in residential zones. In single
family zones, bed and breakfasts are allowed with conditions
6
78
outlined in Seattle Municipal Code 23.44.051. They must
have a business license, adhere to dispersion requirements,
establish quiet hours, must be operated by the principal
owner and the owner must live on site, must notify neighbors,
have limited signage, and meet parking requirements. In
multifamily zones, bed and breakfasts have similar but slightly
less restrictive requirements (SMC 23.45.545G).
Regulatory Role for
Government
While some elements of the current short term rental market
are novel, including the technology and the flexibility it offers,
many aspects of this market are simply business operations.
The City has always played a regulatory role when it comes
to business and determining what level of operations is
appropriate in residential areas.
Any City government regulations should support one of these
three goals:
Balance the economic opportunity created by short
term rentals with the need to maintain supply of
long-term rental housing stock available at a range of
prices.
Ensure a level playing field for individuals and
companies in the short term rental market.
Protect the rights and safety of owners, guests and
neighbors of these units.
As explained in the Benefits and Challenges section, the
first goal is the most pressing for Seattle City government.
The primary elements of the regulatory scheme proposed
below were built to address this issue. At the same time, the
proposed regulations also either directly or indirectly support
the second and third goals.
Primary goal
Providing economic
opportunity while
maintaining rental
housing stock
O
7
79
Proposed Regulations for
Seattle Short Term Rental
Operators
With any regulation, one must start by defining the activity
being regulated. In this case, we are defining short term
rentals as any stays of 29 nights or fewer in duration. Stays
longer than 29 nights in duration would not be subject to this
proposal or be part of any cumulative short term rental stay
calculations. We believe any stays of 30 nights or more fill a
need in our housing market for households in transition. One
benefit of the technology that facilitates the marketing and
booking of short term rentals is that it expanded this niche in
the housing market.
Requirements
Primary Residence
Short term rental operator resides
on-site
1
Business License
Existing Requirement
Short Term Rental Operator's
License
New Requirement
Not Primary Residence
Short term rental operator resides
off-site
Business License
Existing Requirement
Short Term Rental Operator's
License
New Requirement
Limited to 1 dwelling unit in addition
to the operator's primary residence
located in the City of Seattle
New Requirement
The basic proposed framework for short term rentals in
Seattle would look like this:
You will be :
1. limited to renting your primary residence (including
an in-law unit or backyard cottage associated with
your primary residence) and a maximum of one
additional dwelling unit and
2. required to register with the City and get a new
Short Term Rental Operator license as well as a
business license, an existing requirement. You will
also be subject to a few more standards, including
providing:
• proof that the unit is your primary residence,
• the license number on any short term rental listing,
• a local contact number for guests, and
• a signed declaration that the unit is up to code
This proposed limit on the number of units is designed
to meet the goal of maintaining our long term housing
supply.
This requirement will impact those who use these
platforms commercially, not homeowners trying to make
a little extra income on the side. The proposal would
allow an exception to the proposed limits for operators
of existing short-term rentals located in the Downtown,
South Lake Union, and Uptown Urban Centers (areas
where many of the City's lodging uses are located) while
not allowing this commercial activity to expand.
We also propose leveling the regulatory playing field for
traditional bed and breakfasts, which still operate under
regulations from the pre -online short term rental era.
By lessening some the regulatory burden they currently
face, the City can bring traditional bed and breakfasts in
line with the new regulations for short term rentals.
0
The affected operators
will be those who
use these platforms
commercially, not
homeowners trying
to make a little extra
income on the side.
9
81
A Summary of \ew
Regulations / requirements
Regulations Facing Operators
Operator's primary Operator resides
residence
off-site
Applicable policy goal
Title 5 Business License (existing
requirement)
x
x
0 0
Pay all applicable taxes (existing
requirement)
x
x
0 0
Prohibit evidence of STR use
from exterior for except for signs
as permitted by the sign code
x
x•
Limit # of units to the primary
residence and one additional
dwelling unit
x
O
Provide proof that the dwelling
unit offered for short term rental
is their primary residence
x
NA
O
Provide a local contact to all
guests
x
x
co
Require operators declare that
the unit meets the requirements
of the Housing and Building
Maintenance Code
x
x
0
Require posting of basic safety
information for guests within
rental units
x
x0
10
82
Proposed Regulations for
Seattle Short Term Rental
Platforms
After surveying practices in other jurisdictions, it became clear
that receiving data from the online platform companies is vital
to an effective enforcement structure. In order to facilitate the
enforcement, the City will need to collect basic information from
the Short Term Rental Platforms like VRBO or Airbnb. To do
so, these companies will need to register for a new regulatory
license with the City.
"I am a residential cleaner and have cleaned for several Airbnb renters and have
thought for a very long time that this was severely adding to the housing problem in our
city. I find it unfair how people could sit on empty apartments and rent them out for
income while my friends, who are willing to pay a monthly rent, can't find an affordable
apartment in the city"
-S., residential cleaner
The only requirements for the license will be
a) to provide information about Seattle's regulations to
operators using the platform
b) to share basic data with the City on a quarterly basis,
including the total number of short term rentals listed on the
platform and the total number of nights each listing was rented
through the short term rental platform and
c) provide booking services only with operators who have been
issued a short-term rental operator's license.
11
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Concluding Remarks and
Comments on Equity
Inevitably, no citywide policy can best meet the individual
needs of every short term rental operator. The proposed
regulations detailed above attempt to strike a balance that
recognizes both the benefits and challenges offered by short
term rentals. They also attempt to focus on this issue through
an equity -based lens: while there are a variety of stakeholders
and interests in this area, those looking for an affordable
home in this city are more in need of supportive local
government intervention than those offering their second (or
third or fourth) homes to out-of-town visitors.
After these regulations are translated into legislation, they will
be vetted through the full public process of the City Council,
where input is eagerly accepted and further revisions robustly
debated.
Endnotes
1 http://techcrunch.com/2009/03/04/y-combinators-airbed-and-
breakfast-casts-a-wider-net-for-housing-rentals-as-airbnb/
2http://www.wired.com/2015/12/airbnb-confirms-1-5-billion-funding-
round-now-valued-at-25-5-billion/
3https://www.airbnb.com/about/about-us
4https://www.homeaway.com/info/media-center/presskit
5http://www.nyti mes.com/2015/11/05/business/dea l book/exped is-to-
acqu i re-homeaway-for-3-9-bi ll ion.htm l?_r=0
6https://www.homeaway.com/info/about-us
7See https://www.airdna.co/sample/us/washington/seattle or http://
insideairbnb.com/get-the-data.html
8http://blog.airbnb.com/economicimpactsinseattle/
9http://insideairbnb.com/seattle/
10 https://www.ahla.com/sites/default/files/CBRE_AirbnbStudy_2017.
pdf
11 http://harvardlpr.com/wp-content/uploads/2016/02/10.1_10_Lee.pdf
Community Development& Neighborhoods Minutes March 13, 2018
• Whereas, the City wishes to provide more affordable housing for its residents; and
• Whereas, the City wishes to minimize impact on surrounding single family homes
by limiting ADUs and DADUs to one per lot and requiring documented homeowner
occupancy of at least one of the units 100% of the time; and
Councilmember Hougardy noted that she has been researching the impact of ADUs on
affordable housing and there are differences of opinion. She suggested it would be helpful to
contact an organization like A Regional Coalition for Housing (ARCH) to see if their policy efforts
toward increasing ADUs are quantifiably helpful with increasing affordable housing stock. Staff
offered that providing smaller units can naturally alleviate some housing pressure. All three
Councilmembers expressed concern with getting the parking requirement right. Staff suggested
that one solution could be to link parking requirements to number of bedrooms rather than
square footage, as that may more accurately reflect occupancy. Councilmember McLeod stated
that would make sense for Tukwila. Councilmember Robertson requested the addition of a
specific size limit to the waiver request for maximum permitted area for all ADUs. Staff noted
that with regard to waivers it is important to incentivize compliance with regulations, or people
could continue to provide illegal ADUs and life safety concerns of the City will continue to go
unaddressed.
The Committee requested the following for the Committee of the Whole discussion:
• Amend to link parking requirements to number of bedrooms rather than square
footage
• Add pages illustrating lot sizes with varying examples of ADUs
• Remove the parking waiver option
• Flag the maximum square footage for a discussion item
• Include in the COW packet the table showing other cities' regulations
NO RECOMMENDATION. FORWARD TO APRIL 9, 2018 COMMITTEE OF THE WHOLE.
D. Short -Term Rental Regulations
Staff is seeking Committee direction on whether to prohibit or regulate short-term rentals for
ADUs and single-family dwellings. The code currently prohibits short-term (less than 30 days)
rentals in multi -family dwellings but is silent on single-family and mobile -home dwellings.
Dormitories, boarding houses, and bed and breakfast facilities are also unrestricted for short and
long-term rentals. Due to the growth of such companies as Airbnb and Vacation Rental by Owner,
many cities are working to implement regulations in this area, with Seattle and Kirkland taking
action at the end of 2017. Short-term rentals are already occurring, even in multi -family
dwellings, with a December 28, 2017 online search revealing around 35 listings for Tukwila. If the
City Council were to allow short-term rentals, property owners would be licensed through the
Rental Housing Program which would provide a modest revenue increase, although there would
be additional work associated with enforcement. Councilmember Robertson spoke about a
short-term rental on his block that was advertised on Airbnb and made his neighbors very
unhappy due to bringing more strangers and vehicles around. Councilmember McLeod spoke in
85
Community Development & Neighborhoods Minutes March 13, 2018
favor of allowing short-term rentals with appropriate regulations. Councilmembers Hougardy
and Robertson spoke in favor of prohibition due to neighborhood impacts and the loss of ADUs
for longer term housing relief. The Committee requested that this policy discussion be brought
to the full Council prior to staff drafting an ordinance for the Planning Commission. They also
requested information on other short-term rental regulations in South King County, if any exist.
TO APRIL 9, 2018 COMMITTEE OF THE WHOLE.
II. MISCELLANEOUS
Staff asked if the Committee had any questions on the South King Housing and Homelessness
Partnership's 2017 Annual Report. Councilmember Hougardy noted that the 3 -year program is
coming to an end and asked if there are next steps. Human Services staff noted that the program is
in flux due to a staffing change. Councilmember Hougardy stated that the SKHHP seems to have
focused on homelessness and shelters, but the larger issue of housing diversity and affordability
should also have a regional approach, such as ARCH in East King County. Staff mentioned that the
Mayor meets with other South King County Mayors to talk about regional coordination around
homelessness and poverty, and that collaboration is key for suburban cities who have to compete
for resources. The area's Human Services providers also share a collaborative approach regarding
strategies and funding.
Adjourned 7:34 p.m.
Committee Chair Approval
Minutes by LH
86