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Home My WebLink AboutCOUNCIL - AGENDA ITEM - 07/11/2017 - SHORT TERM RENTALSDATE: STAFF: July 11, 2017 Ginny Sawyer, Policy and Project Manager WORK SESSION ITEM City Council SUBJECT FOR DISCUSSION Short Term Rentals. EXECUTIVE SUMMARY The purpose of this item is to provide an update on the short term rental (STR) licensing implementation and to provide proposed options to address existing STRs that failed to acquire sales and lodging tax licenses prior to March 31, 2017 which was the requirement to be grandfathered. GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED 1. Does Council support maintaining existing regulations? Or, extending the deadline for existing STRs that missed the grandfathering requirements to September 30? 2. What, if any, changes would Council like to see? BACKGROUND / DISCUSSION The City of Fort Collins passed and implemented an STR licensing program in March 2017. These regulations were put into effect following a 2-year process involving 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 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 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 most directly involved staff are receiving 10-20 calls, emails, and walk- ins a week and are currently tracking 17 specific STR situations. A quick review of Council emails shows approximately 60 emails since April from at least 10 distinct residents seeking a means to be licensed. 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 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 regulatory conversation or the March 31 deadline and continued forward without obtaining sales and lodging tax licenses prior to the deadline. July 11, 2017 Page 2 o Some of these cases involve residents completing separate dwelling units and duplex units in zones that do not allow this use. This is a separate issue unrelated to the STR license regulations. Based on the above circumstances and situations, staff is presenting an option to address some of these cases. It is also an option to stay the course and not make any changes at this time. Should Council opt to address those that missed the deadline, staff recommends extending the deadline to a date in September for those that were operational prior to March 31, 2017 and collecting back taxes on previous stays. This option serves to allow those that were operating without a license by the deadline to apply for a license without opening the program to new STRs. This option does not address those with properties in non-allowable zones who had not begun to operate and had not obtained sales and lodging tax licenses. Licensing Update Prior to the adoption of the licensing ordinance the City had issued approximately 170 sales and lodging tax licenses for STRs. As of early July numbers show: 195 - Applications 89 - Licenses Issued 104 - Licenses Pending 3 - License Denied 96 - Primary STR/ 71 grandfathered 96 - Non-Primary/ 83 grandfathered The Host Compliance dashboard shows the following: July 11, 2017 Page 3 ATTACHMENTS 1. Zoning Matrix (PDF) 2. Ordinance No. 045, 2017, Amending City Code to Add Short Term Rental Licensing Regulations (PDF) 3. Powerpoint presentation (PDF) ZoneDistrict Lodging Establishments Bedand Breakfast BedandBreakfast (Lessthan6beds) PrimarySTR NonͲPrimarySTR RuralLands(RUL) UrbanEstate(UE) XX ResidentialFoothills(RF) LowDensityResidential(RL) LowDensityMixedͲUseNeighborhood(LMN) XX MediumDensityMixedͲUseNeighborhood(MMN) X X HighDensityMixedͲUseNeighborhood(HMN) X X NeighborhoodConservation,LowDensity(NCL) NeighborhoodConservation,MediumDensity(NCM) XX NeighborhoodConservation,Buffer(NCB) X X PublicOpenLands(POL) RiverConservation(RC) DowntownͲOldCityCenter(DOC) X X X X DowntownͲCanyonAvenue(DCA) X X X X DowntownͲCivicCenter(DCC) X X X X RiverDowntownRedevelopment(RDR) X X X CommunityCommercial(CC) X X X X CommunityCommercialͲNorthCollege(CCN) X X X X CommunityCommercialͲRiver(CCR) X X X X GeneralCommercial(CG) X X X X GeneralCommercialͲIͲ25/SH392CorridorActivityCenter(cacCG) X X X ServiceCommercial(CS) XX XX NeighborhoodCommercial(NC) LimitedCommercial(CL) X X X X HarmonyCorridor(HC) X X X X Employment(E) X X X X Industrial(I) XX ŽŶŝŶŐDĂƚƌŝǆͲEĞǁ ATTACHMENT 1 ATTACHMENT 2 1 City Council Work Session July 11, 2017 Short Term Rentals (STRs) ATTACHMENT 3 Direction Sought 1. Does Council support maintaining existing regulations? Or, extending the deadline for existing STRs that missed the grandfathering requirements to September 30? 2. What, if any, changes would Council like to see? 2 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 § STRs in a non-allowable zone that have obtained sales and lodging tax licenses and have collected required taxes prior to licensing being implemented (3/31) may apply for a STR license. § STRs eligible for grandfathering must submit an application by June 30, 2017. § Letter stating this sent to all sales and lodging tax holders in early April. 4 Grandfathering 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. § Purchasing or remodeling homes with the express intent of operating a STR without becoming aware of the on-going the regulatory conversation or the March 31 deadline and continued forward without obtaining sales and lodging tax licenses prior to the deadline. 5 Options § Stay the course and not make any changes. § Extend the deadline to a date in September for those that were operational prior to March 31, 2017 and collect back taxes on previous stays. 6 Current Status Applications 195 Licenses Issued 89 Licenses Pending 104 License Denied 3 Primary STR 96 (71 grandfathered) Non-Primary 96 (83 grandfathered) 7 Direction Sought 1. Does Council support maintaining existing regulations? Or, extending the deadline for existing STRs that missed the grandfathering requirements to September 30? 2. What, if any, changes would Council like to see? 8