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Home My WebLink AboutCOUNCIL - AGENDA ITEM - 03/26/2019 - SHORT-TERM RENTAL REGULATIONS AND BUILDING AND FIRDATE: STAFF: March 26, 2019 Ginny Sawyer, Policy and Project Manager WORK SESSION ITEM City Council SUBJECT FOR DISCUSSION Short-Term Rental Regulations and Building and Fire Codes. EXECUTIVE SUMMARY The purpose of this item is to inform and update Council of conflicting code requirements that impact short-term rentals (STRs) in multifamily buildings and to present potential options to resolve the conflicts. GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED 1. What additional information would be helpful to Council? 2. What direction would Council like to see moving forward? BACKGROUND / DISCUSSION Between 2015-2017, the City, Council, and the community went through a multi-year process to develop a regulatory framework and licensing program for STRs. At the time, STRs were on the rise and there was concern from neighbors for neighborhood quality issues and concern from the hospitality industry for a more even playing field in terms of taxes paid. Through the outreach and policy development process a very “Fort Collins” specific framework was created including: • Delineating between Primary and Non-Primary STR use. • Limiting both STR types by zone and prohibiting the use in any low-density residential neighborhoods. • Requiring STR, sales tax, and lodging tax licenses. • Restricting STR licenses to owners-only (no tenants.) • Submitting a self-certify safety checklist. The STR licensing program has been in full operation since November 2017. STR numbers following the December 2018-January 2019 renewal period include: Total Licenses: 376 Primary STR: 219 (117 grandfathered) Non-Primary STR: 156 (102 grandfathered) Total 2018 sales and lodging tax use: March 26, 2019 Page 2 Type Taxes Paid LODGING 1,793,693 Non-Short Term Rental 1,652,787 Short Term Rental 140,906 SALES 2,723,798 Non-Short Term Rental 2,543,294 Short Term Rental 180,504 GRAND TOTAL 4,680,365 Concern While the STR licensing framework addressed tax collection, limitations through zoning, and basic safety assurances it did not incorporate Building and Fire codes specific to buildings that have three or more dwelling units. When considering these types of buildings, the Building Department and Poudre Fire Authority utilize the International Building Code (IBC) which categorizes these buildings into two types of “occupancies”: • R-1: these are hotel/motel type buildings that have transitory occupancy defined as less than 30- days. • R-2: These are multifamily buildings (condos/apartments) where residents are non-transitory (more than 30-days.) Each of these occupancies have different code requirements with the R-1 (transient dwellings) requiring higher safety standards since transient occupants are likely to be less familiar with the building layout and emergency safety measures than permanent residents. More stringent standards include fire safety (fire sprinkler systems), egress, accessibility standards, etc. Under the existing Building and Fire codes, it is possible that one unit in a multifamily building operating an STR triggers the entire building to change occupancy (from and R-2 to an R-1.) To change building code occupancies the IBC requires the building to be modified with a building permit and to meet the new code requirements required for that occupancy. This process and the required modifications are likely to be very costly and/or unachievable for many existing buildings. The City has 60 STR licenses in multifamily buildings that would currently be subject to changing to an R-1 occupancy. Since this issue came to light, no STR licenses have been issued in multifamily buildings. Staff believes that in the next few years the IBC is likely to address STRs in a less restrictive manner than the current R-1 requirements. In 2018, a draft proposal was brought to the IBC and staff has based a recommend option on that draft. Options The current STR regulations require STRs to comply with all City regulations, which would include Building and Fire codes. As mentioned previously, compliance with R-1 standards could be cost prohibitive or physically impossible for some buildings. Building and Fire staff firmly believe that additional safety measures are critical in buildings where the majority of occupancy is transitory. March 26, 2019 Page 3 Option 1: Full compliance with codes as they exist today. • This option would impact all 60 licenses (32 properties). • With this option, staff recommends developing a timeline for existing licenses to phase out or to meet the R1 requirements. Option 2: Staff is proposing an option that looks at multifamily buildings as a whole. If the primary use of a building is non-transitory (full-time residents) the building could remain at the R-2 occupancy level. Rather than consider 49% or 50% of units (which is what the draft to the IBC proposed) a more conservative 25% of the units as STRs is being proposed to stay under the requirement for any change. Triplexes would be allowed one STR unit. Total Building Units * Allowable STR Units at 25% Allowable STR Units at 33% Allowable STR Units at 50% 3 1 1 2 4 1 1 2 6 2 2 3 8 2 3 4 10 3 3 5 25 6 8 13 100 25 33 50 • 25% would impact 8 properties and 12 license holders. • 33%, 7 properties and 8 license holders are impacted. • At all percentages, staff recommends developing a process and a timeline for all units to come into compliance. Outreach Staff met with some of the major apartment/condo developers in town to discuss these options. There was support for a 25% STR model. This group also recommended outreach and education to local architects. Meetings were also held for existing STR license holders. For those not impacted there were generally no strong feelings and an understanding of the rationale. For license holders and property owners that would be subject to either a reduction in number of STR licenses at a property or a change of occupancy to R1 standards there was great concern and numerous questions regarding the cost of compliance, timeframe to comply and if grandfathering would be an option. There was also a general informational meeting. Participants strongly favored compliance with the existing R1 standards. The Building Review Board was updated on February 28, 2019 and supported the 25% proposal. Next Steps March 26, 2019 Page 4 • Conduct additional outreach based on Council direction. • Ensure information is available at Development review Center. • Reach out to local architect chapter. ATTACHMENTS 1. PowerPoint (PDF) March 26, 2019 Short Term Rental - Multifamily Buildings Ginny Sawyer ATTACHMENT 1 Direction Sought 1. What additional information would be helpful to Council? 2. What direction would Council like to see moving forward? 2 Background STR regulations developed 2015-2017 • Neighborhood quality • Zoning restrictions • Parking requirements • Local contact • Appropriate sales and lodging tax • Required 3 Current Activity Total Licenses: 375 Primary: 219 Non-Primary: 156 2018 Sales and Lodging Tax: 4 Type Taxes Paid LODGING 1,793,693 Non-Short Term Rental 1,652,787 Short Term Rental 140,906 SALES 2,723,798 Non-Short Term Rental 2,543,294 Short Term Rental 180,504 GRAND TOTAL 4,680,365 “Occupancies” R1-Transient dwellings • Less than 30-day stays • Typically hotels/motels • Transient boarding houses with more than 10 occupants R2- Non transient dwellings • 30 days or more • Typically apartments/condos • Fraternities/sororities/dorms • Extended stay motels • Vacation timeshares 5 Building Code Occupancy Definitions – Apply to buildings with 3 or more dwelling units • Property-line townhomes do NOT fall under definition “Occupancies” R1:short-term R2:long-term A change of occupancy permit process is required when changing an “occupancy” such as R-2 to R-1 (Non-transient to transient dwelling). Requirements: • Development review. • Building permit application, required changes, and inspections. 6 Building/Fire Codes R1- Code Requirements Include (partial list) • Fire sprinkler system • Fire alarm • Smoke and CO alarms (in units & corridors) • Visible alarms • Exit signage • 1-hour occupancy separations • 1-hour walls and floors between units • Accessible route to the unit. For units above or below the 1st floor this usually required a ramp/lift/elevator 7 International Building Code & Fire Code • Updated every 3 years • Draft proposal addressing STRs in 2018 • Proposed maintaining R2 (long-term) status unless 50% or more of building was transitory • Proposal failed - Majority of committee felt 50% was too high a concentration of transient occupants • Likely to continue to see STR proposals 8 Staff recommending 25% transitory threshold 9 Total Building Units Allowable STR Units at 25% * Allowable STR Units at 33% Allowable STR Units at 50% 3 112 4 112 6 223 8 234 10 335 25 6813 100 25 33 50 Current Impacts Full Compliance with existing codes: • 60 STR licenses in apartments/condos (32 properties) 25% option: • 8 properties and 12 license holders impacted 33% option: • 7 properties and 8 license holders impacted 10 Outreach 3 meetings geared to STR license holders • Concern for costs, timeline to comply, and possible unfeasibility of compliance General informational meeting • Desire to require existing codes Multifamily Developers • No concerns, suggested reaching out to architects 11 Direction Sought 1. What additional information would be helpful to Council? 2. What direction would Council like to see moving forward? • Option 1: R1 Compliance • Option 2: A 25% threshold to trigger R1 compliance 12 Draft Code Language What the Building Code Language would look like: Fort Collins Amendments to the 2018 International Building Code SECTION 310 RESIDENTIAL GROUP R 310.3 Residential Group R-2. Residential Group R-2 occupancies containing sleeping units or more than two dwelling units where the occupants are primarily permanent in nature, including: Apartment houses Apartment houses where a maximum of 25% of the units/dwellings include occupants that are transient in nature. A three unit R-2 building is allowed to have one unit/dwelling with occupants that are transient in nature. Congregate living facilities (nontransient) with more than 16 occupants Boarding houses (nontransient)… 13