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term rentals. In certain cases, one or two weeks of short-term rental revenue may equal the average monthly rent of a standard dwelling, motivating property owners to remove dwellings as a “residence” and shift them into permanent short-term rentals. This is a serious issue in a time when demand for housing already substantially exceeds supply. Additional concerns include effects on residential character, and how a rotating series of guests may lead to a lack of neighborliness, with the associated noise, parking and traffic impacts. These potential impacts are discussed in more depth in the following section. Despite these drawbacks, there are also benefits with permitting short-term rentals in the community. Income from short-term rental may be important to homeowners and residents. Supplemental rental income can assist seniors with fixed incomes or residents who are trying to make ends meet. The short-term nature of the rental adds flexibility, allowing homeowners to adjust the rental schedule as needed. Related transient occupancy taxes can be important to fund critical City priorities. Currently, the City charges a transient occupancy tax of 12 percent of the nightly room rate, which currently brings in approximately $6.5 million dollars a year. Additional TOT associated with short-term rentals could bring in an additional $400,000 dollars per year, which staff is proposing to dedicate to affordable housing projects and programs and related administrative costs. For these reasons, the proposed Zoning Ordinance amendment would allow short-term rentals on a limited basis (Attachment 1). The operating restrictions include: · Primary Residence – Short-term rentals would only be allowed in primary residences, where the homeowner usually lives and can provide evidence such as a driver’s license, income tax statement or property tax statement with a homeowner’s exemption. This would ensure that short-term rentals are not displacing residents from existing housing stock. A homeowner cannot buy multiple properties and rent them on a short-term basis under the proposed requirements. As you will note in the Alternatives section, the Planning Commission recommended exempting accessory dwelling units (ADUs) from the primary residency requirement and allowing ADUs to be used for unlimited short- term rentals by the resident of the main home. However, staff remains concerned this may be inconsistent with recent Council direction on ADUs and the ordinance’s purpose of preserving housing stock for residents. Staff continues to recommend that ADUs be subject to the primary residency requirement, and not be rented on an unlimited basis as a short-term rental. · Limited Number of Nights – If the homeowner offers hosted rentals where they continue to live in the dwelling and rent a portion of the house, there is no limit on Host – Person who is the owner or lessee (renter) of the property Hosted Rental – Any short-term rental where the host is present on the premises between the hours of 10 p.m. and 6 a.m. Unhosted Rental – Any short-term rental where a host is not present. 7.B. - Page 3