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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 09/05/2017 - ITEMS RELATING TO SHORT TERM RENTAL ORDINANCE AMENAgenda Item 23 Item # 23 Page 1 AGENDA ITEM SUMMARY September 5, 2017 City Council STAFF Ginny Sawyer, Policy and Project Manager Brad Yatabe, Legal SUBJECT Items Relating to Short Term Rental Ordinance Amendments. EXECUTIVE SUMMARY A. First Reading of Ordinance No. 127, 2017, Amending Chapter 15 of the Code of the City of Fort Collins Regarding Short Term Rental Licensing Regulations. B. First Reading of Ordinance No. 128, 2017, Amending the City of Fort Collins Land Use Code Short Term Rental Regulations. The purpose of this item is to consider Code amendment options to allow:  Short term rentals (STRs) that were in existence prior to March 31, 2017, but did not acquire sales and lodging tax licenses to apply for a STR license.  A property in an allowable Primary STR zone to operate a Primary STR on an abutting property.  A grandfathering provision for tenants who were operating a STR prior to March 31, 2017, with the property owner’s permission to apply for a STR license. STAFF RECOMMENDATION Staff recommends adoption of both Ordinances on First Reading. BACKGROUND / DISCUSSION The City of Fort Collins implemented a STR licensing program in March 2017. These regulations were put into effect following a 2-year process involving ongoing public engagement, six Council work sessions, and two Council hearings. Following the adoption of the licensing program, the City contracted with Host Compliance, a vendor capable of scrubbing and analyzing over 20 on-line websites. Host Compliance is able to capture listing details including listing location and owner information on approximately 70-75% of all listings. Through Host Compliance, the City issued a first notification letter to all identified listings in late April. The mailing went to 299 listings. The licensing ordinance contains a grandfathering provision that allows lawful non-conforming STRs that were operational prior to March 31 and that had City sales and lodging tax licenses to apply for a STR license. Soon after the first notification mailing, staff and Council began to hear from numerous STR hosts who were unaware of the regulations and/or the sales and lodging tax requirement. The bulk of these contacts fall into the following categories:  Those who have been operating STRs long before the March 31 deadline and were completely unaware of Agenda Item 23 Item # 23 Page 2 the regulatory conversation and outcomes until they received the notification letter.  Those who were operating prior to the March 31 deadline and who believed they were collecting City sales and lodging tax (due to language on the listing sites) but who did not have City licenses and were only paying state taxes.  Those who had started either purchasing or remodeling homes with the express intent of operating a STR without becoming aware of the ongoing the regulatory conversation or the March 31 deadline and continued forward without obtaining sales and lodging tax licenses prior to the deadline. (Proposed amendments do not address this group.) City Council discussed the STR ordinance and licensing implementation at the July 11, 2017, work session and requested staff return with code amendments for formal consideration. Key Points 1. Extending grandfathering for existing units.  This amendment allows STRs in prohibited zones that were operational prior to March 31, 2017, to apply for a license by October 31 (22 business days after effective date [September 29th]).  Licensees would be required to pay all back taxes.  This amendment only allows existing units to be grandfathered and it does not open the door to new STRs in prohibited zones. 2. Abutting property STRs.  This allowance was considered early on in the STR regulatory conversations.  This provision would only apply in zones that allow primary STRs and “abutting” is clearly defined as sharing a physical property line. 3. Grandfathering provision for tenants.  This provision is only applicable to those STRs that were operational prior to March 31, 2017. Licensing Update As of August 17, 2017: 273 - Applications 126 - Licenses Issued 141 - Licenses Pending 6 - Licenses Denied Of the 273 applications: 144 - Primary STR / 82 Grandfathered (Potentially) 129 - Non-Primary / 108 Grandfathered (Potentially) CITY FINANCIAL IMPACTS The City will pursue back taxes from those STRs that have been operational without City sales and lodging tax licenses. How much this would be is unknown. BOARD / COMMISSION RECOMMENDATION The Land Use Code amendments were considered by the Planning and Zoning Board at its August 17, 2017, regular meeting. There was much discussion and deliberation on all proposed amendments. Draft notes are attached. Agenda Item 23 Item # 23 Page 3 1. Extending grandfathering for existing units. The Board did not support extending the grandfathering extension (5-2.) The Board noted this was more in line with a Council policy decision and were hesitant to support with no letters or speakers in favor of the amendment. 2. Abutting property STRs. The Board supported this amendment (4-3.) There was concern regarding the potential for situations where an owner could buy all abutting properties for STR use. 3. Grandfathering provision for tenants. The Board did not support this amendment (5-2.) While recognizing this would impact very few STRs there was concern that this was “managing by exception” and that the previous public outreach and the existing ordinance were clear that STRs only be allowed by property owners. PUBLIC OUTREACH Emails detailing both the July 11 work session and the September 5 regular Council meeting were sent to the STR listserv which has 110 subscribers. Letters with Council dates and information were also drafted for Host Compliance as they continue to send notification letters to STR listings. ATTACHMENTS 1. Planning and Zoning Board minutes, August 17, 2017 (draft) (PDF) 2. Powerpoint presentation (PDF) Planning & Zoning Board August 17, 2017 DRAFT minutes 1. Short-Term Rentals: Land Use Code Revision – Recommendation to City Council Project: Short-Term Rentals: Land Use Code Revision – Recommendation to City Council Project Description: This is a request for a Recommendation to City Council regarding various revisions, and one new provision, to the Land Use Code regarding Short-Term Rentals (STRs). The affected sections are Section 3.2.2(K)(1)(k) – Parking; Section 3.8.34 – Supplemental Regulations for Short-Term Rentals; and to Section 5.1.2 - Definitions. Recommendation: Approval Secretary Cosmas reported that 4 citizen emails had been received since the work session with concerns about potential consequences if the current ordinance is further expanded before it is fully enforced. Staff and Applicant Presentations Ginny Sawyer, Policy and Project Manager and the lead for the short-term rental project, gave a presentation on this item, including a discussion of current concerns, the time line for implementation after revisions are addressed, and several alterations that include operation options. She discussed the public outreach and how the “hosts” had been contacted. She also discussed the grandfathering provision and the collection of sales taxes. At their July 11, 2017, work session, City Council directed Ms. Sawyer to review an option to extend the June 30th licensing date to October 31st. Revisions being considered tonight include:  Extension of grandfathering allowance to October 31st (only for those who were operational prior to March 31st);  Allowing a homeowner living in a property abutting an STR to operate with a primary short-term license; and  Grandfathering the extension to tenants with permission from the landlord (only for those who were operational prior to March 31st). Member Carpenter asked whether the expansion of the regulations were part of the original process or a result of later discussion; Ms. Sawyer responded that each situation type is being considered individually, adding that each grandfathering issue could have a specific framework. Restrictions will limit the number of short-term rentals operating in Fort Collins. Ms. Sawyer stated that there are less than 5 STRs currently being operated by tenants. She added that not all properties have been identified, and there could be as many as 100 unidentified operators. Member Hobbs asked for clarification on who could be grandfathered into this provision; Ms. Sawyer responded that there were some non-compliant operators that would benefit from this extension, adding that the provision of collecting sales tax has been in the tax code from the beginning. Member Heinz asked whether operators would be responsible for paying back- taxes; Ms. Sawyer confirmed that they would. Vice Chair Hansen asked how new STRs could be created, but only in properly zoned areas; Ms. Sawyer responded that 273 applications have been received, the majority of which are non-primary and are being grandfathered. Member Rollins asked whether a significant number of operators have become compliant since March 30th; Ms. Sawyer confirmed this to be the case. Member Heinz asked how many operators ATTACHMENT 1 Planning & Zoning Board August 17, 2017 DRAFT minutes requested an extension; Ms. Sawyer could not give a specific number. Member Hobbs asked for clarification on whether the March ordinance deadline allowed non-compliant people to be grandfathered in; Ms. Sawyer confirmed this. Member Whitley asked how many operators who have primary abutting properties applied for the extension; Ms. Sawyer responded that only a few operators live directly next door to the primary STR. Chair Schneider asked whether an operator that sold their primary residence could still operate the abutting property as an STR; Assistant City Attorney Yatabe responded that the abutting property would have to remain abutting to the eligible operator. Member Heinz asked for clarification on the rules in the event an operator sold their STR and the purchaser wanted to continue the STR; Ms. Sawyer confirmed that the purchaser has a 30-day period to apply for an STR transfer. Member Hobbs asked for clarification on the definition of abutting; Assistant City Attorney Yatabe responded that the term “abutting” under the LUC is that the other lot is touching the dwelling unit lot. Public Input (3 minutes per person) Eric Sutherland, 3520 Golden Currant Blvd, posed the question, “what is our use by right”? He has a concern with the ambiguity of the STR policies, adding that the “use by right” was ignored during the development of these policies, citing the Colorado Revised statutes as proof. He pointed out that the City did not adhere to the established legal principles, concluding that he would support a revision to this ordinance. Michelle Haefele, 2703 Stanford Road, also has a concern that lodging taxes were collected in zones where lodging was not allowed, asking the Board to reject most of this ordinance and accept the grandfathering provision if the operator can prove operations prior to March 31s. She asked that the Board recommend that City Council strike the clause allowing tenants to operate a primary STR, saying she feels that would allow future occupancy violations. She also asked that the Board strike the clause allowing an adjacent property to be operated as a primary, which would extend the number of primary STRs to open new, primary STRs. She feels that this ordinance should only grant a small extension to those operators who were previously operating prior to March 31st. Finally, she feels that if an operator cannot be identified, they should be disqualified. Margaret Mitchell, 809 E. Elizabeth, has a concern with the City providing sales tax numbers to illegal operators, saying that the zoning wasn’t always properly verified, so she is not in favor of allowing an extension to non-compliant operators. Kathryn Dubiel, 2936 Eindborough Drive, has concerns with this ordinance, saying that the City seems to manage by exception, adding that it was the City’s error and processing inefficiency that led to the issuance of lodging and sales/use tax licenses, which continued until enactment of the STR ordinance in March 2017. She believes that the City has now created an exception process, continuing to inaccurately administer the STR licensing process. She cited several examples of STRs that are currently operating in prohibited zones. She requested that the P&Z Board deny alterations to the ordinance until processes can be audited to determine compliance with the current ordinance. She also questioned some remarks made by Chief Planner Shepard at the P&Z work session that directly conflict with the ordinance. Paul Patterson, 2936 Eindborough Drive, has a concern about allowing renters to become primary STRs; he also discussed his concern with the ordinance allowing renters to operate a primary STR, asking the Board to disallow this. Planning & Zoning Board August 17, 2017 DRAFT minutes Colleen Hoffman, 1804 Wallenberg Drive, has a concern with properties within HOAs, which could be a resource to finding some of the operators that are still unidentified. She believes that HOA covenants may not allow STRs to operate within the same limits granted by the City. She feels that not granting leasehold interests the same rights as owners could be difficult in the future. She also asked whether an abutting property could lead to future issues. Finally, she stated that the “grandfathering” right should be terminated once an operator sells their property. Lloyd Walker, 1756 Concord Drive, is representing the Neighborhood Action Coalition, and he feels that the regulations passed in the spring were reasonable, but he thinks that the “grandfathering” issue is really just “management by exception”. He questions the reason for enacting this exception, saying that this further removes the accountability of the owner so they can realize more profit of their rental property, thereby compromising neighborhood stability. Liz Derbyshire, 709 Garfield, asked the Board to reject this proposal, saying that she has researched the Board’s involvement in STRs and feels that simply paying sales and lodging tax does not legitimize the STR operator. At the stakeholder’s meeting, the operators stated that they had been given permission, but they couldn’t remember how it had transpired. She also recounted that Chief Planner Shepard stated at that meeting that, “if it’s not prohibited in the LUC, we allow it”. Martha Denny, 1756 Concord Drive, stated her surprise that this topic has been resurrected, saying the first process was thorough and well-vetted. She has a concern with “grandfathering” (which assumes pre-existing circumstance), saying that non-compliant operators should not be eligible. She does not support the notion of allowing renters to operate as landlords, which would increase the lack of accountability and places an unfair burden of responsibility on neighbors. She asked the Board to reject this proposal. Board Questions and Deliberation Ms. Sawyer confirmed that the allowable tenants must already be existing, rather than any tenant in a primary zone being allowed to operate an STR. There was more clarifying discussion on the applicability of tenants becoming operators. Assistant City Attorney Yatabe clarified that the license to operate an STR is maintained with the property, so the use is with the property, not the person who lives there. Member Heinz inquired as to the number of “grandfathered” operators that currently exist; Ms. Sawyer is only aware of 2 at present. She stated that the owner must apply for an operator license, but the tenant could be the operator, with owner permission. Vice Chair Hansen asked about City code provisions; Assistant City Attorney Yatabe confirmed that it is principally in the City Code regarding licensing. Member Rollins asked whether there is a way to address the HOA concern; Ms. Sawyer responded that the City does not enforce HOA covenants, so this would not be pertinent. Vice Chair Hansen explained that the City is only responsible for enforcing its own regulations, not HOA regulations. Assistant City Attorney Yatabe offered City Code provision 3.8.34(F)(2) to support the process for a renter who has obtained a “grandfathered” license to be able to pass on that license to the next renter. Member Hobbs asked about subletting individual units within a multi-family dwelling and whether that designates the entire building or just that particular unit as an STR; Assistant City Planning & Zoning Board August 17, 2017 DRAFT minutes Attorney Yatabe responded that the STR status is designated only for that unit. The Board members discussed several different scenarios in order to get a better understanding of the “abutting” clause; Assistant City Attorney Yatabe provided clarification for each scenario. Member Heinz asked whether the intent of the primary STR is to have the owner in close proximity; Assistant City Attorney Yatabe confirmed this is the case for both primary and non- primary. There was more discussion regarding the sales tax licensing; Noah Beals, Senior Planner, clarified the difference between short-term and long-term rentals, with the earlier distinction of STRs related to residential use. As a result of the ambiguity, on March 31, 2017, STRs were defined and zoned, and the “grandfathering” clause was put in place. Vice Chair Hansen acknowledged the overlap between the City code and the Land Use Code (LUC). Chair Schneider reviewed the main issues to address at this hearing:  Grandfathering clause allowing the tenant to be the operator;  Abutting property rights; and  Extension of the October 31st deadline; Vice Chair Hansen asked if the City Council has already taken action on the extension of the “grandfathering” allowance; Assistant City Attorney Yatabe responded that City Council will hear this topic on first reading on September 5, 2017. Member Carpenter commented that she doesn’t feel the “grandfathering” clause is ready for adoption, so she does not support this component at this time. Chair Schneider asked Ms. Sawyer if this was discussed and vetted. Ms. Sawyer confirmed that, while these items were previously discussed and public information was distributed, public outreach and collaboration was not performed. Member Heinz stated that the Board members do not appear to be supportive of the tenant proposal. Member Rollins asked why there is a lack of input from people who want this extension; Ms. Sawyer responded that people may be unfamiliar or unengaged with the City process. Member Hobbs is confused about how some people are ignorant of deadlines and why the City is proposing an extension. Assistant City Attorney Yatabe clarified that the City Code language allows for renters to obtain an operator’s license under the “grandfathering” allowance; otherwise the general requirement for a STR must be from the owner. There was more discussion on the details of when the City Code versus the LUC was in effect and how the proposed “grandfathering” clause would be involved. Member Heinz asked for more clarification of how licenses are granted and how personal rights are involved; Assistant City Attorney Yatabe clarified that, under the LUC, a “right” is attached to a property, not to a person. More discussion followed to clarify the landowner vs tenant responsibilities (i.e. a license is given to the operator, not the property). Member Heinz made a motion that the Planning and Zoning Board recommend that City Council deny extending the “grandfathering” rights to tenants who were operating an STR prior to March 31, 2017. Member Carpenter seconded. Vice Chair Hansen has an issue with this motion, saying that this would apply to only a few tenant operators, and this could affect those landlords who have been operating legally. Ms. Sawyer clarified that there are 3 licenses required to operate to STRs: lodging license, sales tax license, and an STR operator license. Member Whitley doesn’t feel that this proposal was properly vetted, so he will not support it. Vice Chair Hansen reiterated his desire not to take away a right that was previously legal. Member Hobbs will not support the motion. Member Heinz clarified the consequences of Planning & Zoning Board August 17, 2017 DRAFT minutes the motion. Member Rollins and Chair Schneider will support the motion. Vote: 5:2, with Members Hansen and Hobbs dissenting. Member Heinz made a motion that the Planning and Zoning Board recommend that City Council approve the homeowner, in a zone that allows primary STRs, to obtain a license for a primary STR on an abutting property. Vice Chair Hansen seconded. Member Hobbs and Member Whitley do not support this proposal. Ms. Sawyer stated that this topic was previously discussed but was not included in the first ordinance. Member Heinz supports this proposal, as she feels that this proposal agrees with the intent to have engaged homeowners. Member Rollins will be supporting this proposal. Member Carpenter will not support this proposal. Member Whitley asked more about how abutting properties be touching. Vice Chair Hansen asked about the plans for providing parking to renters; Ms. Sawyer stated that a certain number of off-street parking spaces would be required. Vice Chair Hansen will support this proposal. Chair Schneider will also support this proposal. Vote: 4:3, with Members Hobbs, Whitley, and Carpenter dissenting. Member Hobbs made a motion that the Planning and Zoning Board recommend that City Council deny extension of the “grandfathering” allowance to October 31st, 2017, for those operational STRs prior to March 31st, 2017. Member Whitley seconded. Members Hobbs, Rollins, and Carpenter will support the motion. Member Heinz will not support the motion because she feels that this shouldn’t be so restrictive. Member Whitley is in favor of this motion, saying it is hard to understand ignorance. Vice Chair Hansen will not support this motion, saying he feels this extension is not under the purview of the LUC. Chair Schneider will support. Vote: 5:2, with Members Hansen and Heinz dissenting. September 5, 2017 City Council Regular Meeting-Short Term Rentals Ginny Sawyer ATTACHMENT 2 Purpose Consider Code amendment options to allow: § STRs that were in existence prior to March 31, 2017, but did not acquire sales and lodging tax licenses to apply for a STR license. § A property in an allowable Primary STR zone to operate a Primary STR on an abutting property. § A grandfathering provision for tenants who were operating a STR prior to March 31, 2017, with the property owner’s permission to apply for a STR license. 2 STR Licensing Background § 6 Council work sessions, 2 hearings, variety of public outreach § Licensing ordinance effective March 31, 2017 § City contract with Host Compliance (HC) mid-April § First notification letter sent through HC to 299 identified listings in early May 3 Current Concern § Operating STR prior to deadline & completely unaware of regulatory conversation and outcomes until notification letter. § Operating prior to deadline and believed they were collecting City sales and lodging tax but who did not have City licenses. § Operating prior to deadline but not the owner of the property. § Interest in operating a primary STR next to primary residence. 4 July 11 Council Work Session Direction to bring forward: § A September 30 deadline for STRs that were operational prior to March 31, 2017 to obtain City Sales and Lodging tax licenses, apply for a STR license, and remit all back taxes. § An allowance for a property in an allowable Primary STR zone to operate a Primary STR on an abutting property. § A grandfathering provision for tenants who were operating a STR prior to March 31, 2017 with the property owners permission to apply for a STR license. 5 Revisions § Extend grandfathering allowance to October 31 for those operational prior to March 31. Payment of back taxes required. § Allow a homeowner in a zone that allows primary STRs to obtain a license for a primary STR on an abutting property. § Extend grandfathering to tenants who were operating a STR prior to March 31 with landlord permission. 6 Extending Grandfathering Extending grandfathering for existing units: § Allows STRs in prohibited zones that were operational prior to March 31, 2017, to apply for a license by October 31. § Licensees would be required to pay all back taxes. § This amendment only allows existing units to be grandfathered and it does not open the door to new STRs in prohibited zones. 7 Abutting Properties Abutting property STR: § This allowance was considered early on in the STR regulatory conversations. § This provision would only apply in zones that allow primary STRs and “abutting” is clearly defined as sharing a physical property line. § No more than 3 Primary STR licenses. 8 Tenants Grandfathering provision for tenants: § This provision is only applicable to those STRs that were operational prior to March 31, 2017. 9 Purpose Consider Code amendment options to allow: § STRs that were in existence prior to March 31, 2017, but did not acquire sales and lodging tax licenses to apply for a STR license. § A property in an allowable Primary STR zone to operate a Primary STR on an abutting property. § A grandfathering provision for tenants who were operating a STR prior to March 31, 2017, with the property owner’s permission to apply for a STR license. 10 -1- ORDINANCE NO. 127, 2017 OF THE COUNCIL OF THE CITY OF FORT COLLINS AMENDING CHAPTER 15 OF THE CODE OF THE CITY OF FORT COLLINS REGARDING SHORT TERM RENTAL LICENSING REGULATIONS WHEREAS, licensing regulations regarding the rental of dwelling units for periods of less than thirty days (“Short Term Rental” or “Short Term Rentals”) were adopted into Chapter 15 of the Code of the City of Fort Collins on second reading by Council on March 21, 2017, concurrently with Short Term Rental regulations adopted into the Land Use Code; and WHEREAS, subsequent to the adoption of the Short Term Rental regulations, the need for additional changes has arisen including an extension of the date by which Short Term Rental operators may obtain City tax licenses in order to obtain a Short Term Rental license for a dwelling unit deemed to be a lawful nonconforming use, an allowance for renters of Short Term Rentals to obtain Short Term Rental licenses for dwelling units deemed to be lawful nonconforming uses, and an allowance for a dwelling unit to be considered a primary Short Term Rental if it is located on a lot abutting a lot containing another dwelling unit eligible to be a primary Short Term Rental and where both dwelling units are owned by the same owner; and WHEREAS, such changes were discussed at the July 11, 2017, Council work session and City staff was directed to prepare amendments for Council consideration; and WHEREAS, Council is concurrently considering similar amendments to the Short Term Rental regulations adopted into the Land Use Code. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT COLLINS as follows: Section 1. That the City Council hereby makes and adopts the determinations and findings contained in the recitals set forth above. Section 2. The changes adopted herein to the Short Term Rental licensing regulations contained in the Code of the City of Fort Collins are in the best interests of the citizens of Fort Collins and are adopted for the purposes of promoting the health, safety, morals, and general welfare of the community. Section 3. That Section 15-641 of the Code of the City of Fort Collins is hereby amended to read as follows: Sec. 15-641. - Definitions. The following definitions shall apply to this Article: Abutting shall mean touching. An abutting condition shall not be affected by the parcelization or division of land that results in an incidental, nonbuildable, remnant lot, tract or parcel. -2- . . . Short term primary rental shall mean a dwelling unit that is a primary residence of which a portion is leased to one (1) party at a time for periods of less than thirty (30) consecutive days. A carriage house, as defined in the Land Use Code, that is not a primary residence is deemedeligible to be a short term primary rental and may be licensed as a short term primary rental if it is located on a lot containing a primary residence. A dwelling unit of a two-family dwelling, as defined in the Land Use Code, that is not a primary residence is deemedeligible to be a short term primary rental and may be licensed as a short term primary rental if the connected dwelling unit is a primary residence and both dwelling units are located on the same lot. A dwelling unit located on a lot abutting another lot containing a dwelling unit that qualifies for licensing as a short term primary rental is itself eligible to be a short term primary rental and may be licensed as a short term primary rental so long as both dwelling units are owned by the same owner. No more than three dwelling units total on the same or abutting lots may be deemed to be short term primary rentals and each such dwelling unit must be located in a zone district that allows short term primary rentals. The term short term primary rental shall not include the rental of a dwelling unit to the former owner immediately following the transfer of ownership of such dwelling unit and prior to the former owner vacating the dwelling unit. Section 4. That Section 15-644 of the Code of the City of Fort Collins is hereby amended to read as follows: Sec. 15-644. - Licensing requirements. (a) The following are the minimum requirements that must be satisfied by the applicant for the issuance of a short term primary rental license. (1) The applicant must provide documentation satisfactory to the Financial Officer that the applicant is the owner of the dwelling unit and that the dwelling unit is his or her primary residence, or in the case of a non-owner applicant for a license pursuant to § 15- 646, that such non-owner applicant is authorized by the owner to utilize the dwelling unit as a short term rental. . . . (8) The dwelling unit must be located in a zone district that allows short term primary rentals as specified in the Land Use Code. Alternatively, the dwelling unit must satisfy the requirements contained in § 15-646 for short term primary rentals established in restricted zone districts prior to March 31, 2017. . . . (b) The following are the minimum requirements that must be satisfied by the applicant for the issuance of a short term non-primary rental license. -3- (1) The applicant must provide documentation satisfactory to the Financial Officer that the applicant is the owner of the dwelling unit, or in the case of a non-owner applicant for a license pursuant to § 15-646, that such non-owner applicant is authorized by the owner to utilize the dwelling unit as a short term rental. . . . (8) The dwelling unit must be located in a zone district that allows short term non- primary rentals as specified in the Land Use Code. Alternatively, the dwelling unit must satisfy the requirements contained in § 15-646 for short term non-primary rentals established in restricted zone districts prior to March 31, 2017. Section 5. That Section 15-645 of the Code of the City of Fort Collins is hereby amended to read as follows: Sec. 15-645. - Issuance of licenses. Upon compliance with the requirements of this Article, the Financial Officer shall issue a license to the applicant authorizing the short term rental of the licensed premises. The license issued shall allow only the short term primary rental or the short term non-primary rental of the licensed premises. Licenses issued for short term primary rentals shall specify the areas of the dwelling unit that may be rented. Each license shall be applicable to a single dwelling unit and no license issued shall be transferable. A license shall terminate upon transfer of ownership of the licensed premises or in the case of a renter issued a license pursuant to § 15-646, upon the ending of the rental occupancy of the renter holding the license. Section 6. That Section 15-646 of the Code of the City of Fort Collins is hereby amended to read as follows: Sec. 15-646. - Licensing of short term primary and non-primary rentals existing prior to Land Use Code restrictions. (a) A dwelling unit used as a short term primary or non-primary rental that is located in a zone district in which the Land Use Code prohibits such use is eligible for a license pursuant to this Article provided that prior to March 31, 2017, such dwelling unit was actually utilized as a short term primary or non-primary rental prior to March 31, 2017, and a pursuant to valid sales and use and lodging tax licenses issued was obtained prior to October 31, 2017, for such dwelling unit in accordance with Chapter 25, Art. IV, of the Code of the City of Fort Collins. (b) In addition to satisfying (a) above, the applicant must satisfy the requirements set forth in § 15-644 in order to be eligible for a license. The applicant for a short term rental license may be a person other than the owner of the dwelling unit provided written permission from the owner allowing such person to utilize the dwelling unit as a short term rental is provided to the City upon application. License applications submitted pursuant to this Section on or before June 30, 2017,October 31, 2017, do not need to comply with the parking requirements in Land Use Code § 3.2.2(K)(1). -4- (c) In order to be eligible for a short term rental license pursuant to this Section, subject to (e) below, the applicant must submit an application for a license pursuant to this Article on or before June 30, 2017October 31, 2017. No application submitted after June 30, 2017October 31, 2017, shall be eligible for a license pursuant to this Section unless submitted pursuant to (e) below. (d) Any license issued pursuant to this Section shall expire at such time that the ownership of the licensed premises changes or the renter holding the license ceases renting the dwelling unit. Should a license issued under this Section be revoked, not be renewed, or lapse for any period of time, the owner or renter shall no longer be eligible for a license for such dwelling unit pursuant to this Section. (e) Should a dwelling unit ownership of issued a dwelling unit licensed pursuant to § 15-646 be transferred ownership of the dwelling unit, or should a dwelling unit renter issued a license pursuant to § 15-646 cease renting the dwelling unit, and if such license was continuously valid until the transfer of ownership or end of the rental, the new or current owner or renter is eligible for a license identical in scope to the previously issued license provided: (1) the new owner or renter applies for a short term rental license within thirty (30) days of the transfer of ownership or the last day of the rental by the renter who held the license; (2) the dwelling unit complies with the parking requirements in Land Use Code Section 3.2.2(K)(1)(k); and (3) any license issued pursuant to § 15-646 is continuously maintained. Should a license issued to the new or current owner or renter under this Section be revoked, not be renewed, or lapse for any period of time, the new or current owner or renter shall no longer be eligible for a license for such dwelling unit pursuant to this Section. (f) Any license issued pursuant to this Section shall correspond to the type of short term rental conducted, either primary or non-primary, prior to March 31, 2017. Introduced, considered favorably on first reading, and ordered published this 5th day of September, A.D. 2017, and to be presented for final passage on the 19th day of September, A.D. 2017. __________________________________ Mayor ATTEST: _______________________________ Chief Deputy City Clerk -5- Passed and adopted on final reading on the 19th day of September, A.D. 2017. __________________________________ Mayor ATTEST: _______________________________ Interim City Clerk -1- ORDINANCE NO. 128, 2017 OF THE COUNCIL OF THE CITY OF FORT COLLINS AMENDING THE CITY OF FORT COLLINS LAND USE CODE SHORT TERM RENTAL REGULATIONS WHEREAS, on December 2, 1997, by its adoption of Ordinance No. 190, 1997, the City Council enacted the Fort Collins Land Use Code (the "Land Use Code"); and WHEREAS, at the time of the adoption of the Land Use Code, it was the understanding of staff and the City Council that the Land Use Code would most likely be subject to future amendments, not only for the purpose of clarification and correction of errors, but also for the purpose of ensuring that the Land Use Code remains a dynamic document capable of responding to issues identified by staff, other land use professionals and citizens of the City; and WHEREAS, Land Use Code regulations regarding the renting of dwelling units for periods of less than thirty days (“Short Term Rental” or “Short Term Rentals”) were adopted on second reading by Council on March 21, 2017, concurrently with Short Term Rental licensing regulations adopted into Chapter 15 of the Code of the City of Fort Collins; and WHEREAS, subsequent to the adoption of the Short Term Rental regulations, the need for additional changes has arisen including an extension of the date by which Short Term Rental operators may obtain City tax licenses in order to be deemed a lawful nonconforming use, an allowance for renters of Short Term Rentals to continue the use of a Short Term Rental deemed to be lawful nonconforming uses, and an allowance for a dwelling unit to be considered a primary Short Term Rental if it is located on a lot abutting a lot containing another dwelling unit eligible to be a primary Short Term Rental and where both dwelling units are owned by the same owner; and WHEREAS, such changes were discussed at the July 11, 2017, Council work session and City staff was directed to prepare amendments for Council consideration; and WHEREAS, the Fort Collins Planning and Zoning Board at its August 17, 2017, regular meeting considered the proposed amendments to the Short Term Rental regulations and recommended that Council: 1. Not extend the date by which Short Term Rental operators may obtain City tax licenses on a 5-2 vote; 2. Not allow renters of Short Term Rentals to operate Short Term Rentals deemed to be lawful nonconforming uses on a 5-2 vote; and 3. Allow abutting dwelling units to be considered as primary Short Term Rentals on a 4- 3 vote. WHEREAS, pursuant to Colorado Revised Statute §31-23-301, the City has been specifically granted the power to regulate the use of buildings for trade, industry, residence, or -2- other purposes for the purposes of promoting health, safety, morals, or the general welfare of the community; and WHEREAS, Council is concurrently considering similar amendments to the Short Term Rental licensing regulations adopted into the Code of the City of Fort Collins. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT COLLINS as follows: Section 1. That the City Council hereby makes and adopts the determinations and findings contained in the recitals set forth above. Section 2. The Land Use Code changes adopted herein are in the best interests of the citizens of Fort Collins and are adopted for the purposes of promoting the health, safety, morals, and general welfare of the community. Section 3. That Section 3.2.2(K) of the Land Use Code is hereby amended to read as follows: 3.2.2 - Access, Circulation and Parking . . . (K) Parking Lots - Required Number of Off-Street Spaces for Type of Use. . . . (k) Short term non-primary rentals and short term primary rentals: The minimum number of off-street parking spaces required are as follows: Number of Bedrooms Rented Number of Off-Street Parking Spaces 1—2 1 3—4 2 5—6 3 The number of additional off-street parking spaces required for more than six (6) bedrooms rented shall be calculated in the same manner used in the above chart (e.g. 7-8 bedrooms rented requires four (4) off-street parking spaces). Short term rentals licensed pursuant to the Code of the City of Fort Collins § 15-646 and for which the license application was submitted prior to June 30, 2017October 31, 2017, are exempt from compliance with these parking requirements so long as such license remains continuously valid. Subsequent licenses issued pursuant to § 15-646 shall comply with these parking requirements. . . . -3- Section 4. That Section 3.8.34 of the Land Use Code is hereby amended to read as follows: 3.8.34 - Short Term Rentals . . . (F) Nonconforming Use. A dwelling unit utilized as a short term primary or non-primary rental that is located in a zone district where such use is prohibited, and such short term rental was a lawfully established use as defined in (3) below prior to March 31, 2017, is considered deemed to be a nonconforming use. Such nonconforming use shall correspond to the type (either primary or non-primary) of short term rental conducted, either primary or non-primary, prior to March 31, 2017the above date. (1) In addition to complying with the nonconforming use regulations in Land Use Code Division 1.5, the owner of the dwelling unit must obtain a license pursuant to the Code of the City of Fort Collins § 15-646 and continuously maintain such license to maintain nonconforming use status. Failure to apply for such license by June 30, 2017 October 31, 2017, shall be considered abandonment of the nonconforming use. Should such license be revoked, not be renewed, or lapse for any period of time, the nonconforming short term rental use shall be considered abandoned or otherwise terminated. (2) Should ownership of a dwelling unit owner issued a licensed pursuant to § 15-646 be transferred ownership of the dwelling unit, or should a dwelling unit renter issued a license pursuant to § 15-646 cease renting the dwelling unit, and if such license was continuously valid until the transfer of ownership or end of the rental, the new or current owner or renter maymust comply with the following in order to continue the nonconforming use only if said new or current owner or renter: (1) appliesy for a short term rental license pursuant to § 15-646 within thirty (30) days of the transfer of ownership or the last day of the rental by the renter who held the license; (2) compliesy with the parking requirements contained in § 3.2.2(K)(1)(k) of this Code; and (3) continuously maintains any license issued pursuant to § 15-646. Should any license issued to the new or current owner or renter be revoked, not be renewed, or lapse for any period of time, the nonconforming short term rental use shall be considered abandoned or otherwise terminated. (3) To be considered deemed a lawful use, a dwelling unit must have, prior to March 31, 2017, been actually utilized as a short term primary or non-primary rental prior to March 31, 2017, and pursuant to valid sales and use and lodging tax licenses issued for such dwelling unit must have been obtained prior to October 31, 2017, in accordance with Chapter 25, Art. IV, of the Code of the City of Fort Collins. -4- Section 5. That the definition “Short term primary rental” contained in Section 5.1.2 of the Land Use Code is hereby amended to read as follows: Short term primary rental shall mean a dwelling unit that is a primary residence of which a portion is leased to one (1) party at a time for periods of less than thirty (30) consecutive days. The term party as used in this definition shall mean one (1) or more persons who as a single group rent a short term primary rental pursuant to a single reservation and payment. A carriage house that is not a primary residence is deemedeligible to be a short term primary rental if it is located on a lot containing a primary residence. A dwelling unit of a two-family dwelling that is not a primary residence is deemedeligible to be a short term primary rental if the connected dwelling unit is a primary residence and both dwelling units are located on the same lot. A dwelling unit located on a lot abutting another lot containing a dwelling unit that qualifies for licensing as a short term primary rental is itself eligible to be a short term primary rental so long as both dwelling units are owned by the same owner. No more than three dwelling units total on the same or abutting lots may be deemed to be short term primary rentals and each such dwelling unit must be located in a zone district that allows short term primary rentals. The term short term primary rental shall not include the rental of a dwelling unit to the former owner immediately following the transfer of ownership of such dwelling unit and prior to the former owner vacating the dwelling unit. Short term primary rental is a distinct use from short term non-primary rental under the Land Use Code. Introduced, considered favorably on first reading, and ordered published this 5th day of September, A.D. 2017, and to be presented for final passage on the 19th day of September, A.D. 2017. __________________________________ Mayor ATTEST: _______________________________ Chief Deputy City Clerk -5- Passed and adopted on final reading on the 19th day of September, A.D. 2017. __________________________________ Mayor ATTEST: _______________________________ Interim City Clerk