February 23, 2021 Short Term Rental Study Session Planning Commission Meeting

RECOMMENDATION

In study session continued from the February 9, 2021, receive a presentation featuring a preliminary draft short-term vacation rental ordinance (Attachment 1), an update to the home occupation ordinance (Attachment 2), and related code sections (Attachment 3); provide for public comment; and hold a discussion regarding options for regulating short-term vacation rentals.

BACKGROUND

A short-term vacation rental (STRs) is a room, home, apartment, or condominium dwelling unit rented for short periods, generally for vacation use, from one to 30 nights. STRs currently operate in the City and are required to pay transient occupancy tax (TOT) and obtain a business license. The Planning Commission has been studying potential zoning regulations to address community and City interest in ensuring that STRs operate compatibly with their surrounding neighborhoods.

At their February 9, 2021 study session, the Planning Commission received public comments and discussed a preliminary draft STR ordinance.

 

The February 9 report reviewed past Planning Commission study session and community engagement including a survey that led to developing the draft ordinance. That report and its attachments are available here:

 

Planning commission Agendas | Half Moon Bay, CA (half-moon-bay.ca.us)

 

The Commission also reviewed Coastal Commission guidance and City Land Use Plan policy applicable to STRs.

In response to the Commission’s discussion and public comment, the draft ordinance has been updated and staff has continued to reach out to interested parties. The home occupation ordinance and portions of the mixed-use designations are being updated in parallel with the STR ordinance to ensure consistency and to modestly update their standards (Attachments 2 and 3). At the February 23, 2021 study session, the Planning Commission will be asked to confirm the form, scope, and details of the draft ordinance in preparation for a future public hearing.

DISCUSSION: The study session will focus on changes made to the preliminary draft STR and home occupation ordinance (Attachments 1 and 2), time for public comment, and Planning Commission discussion. The preliminary ordinance was revised to incorporate Planning Commission direction. The changes include the following:

 

• Primary Residence

• • Exceptions: The Planning Commission expressed concern about evaluating exceptions to the primary residence requirement though Use Permit review and furthermore indicated a preference for requiring primary residency for all STRs. The proposed exceptions were removed from the draft ordinance.
  • Existing STRs: Upon Coastal Commission certification of the ordinance, operators would have one year (instead of three years) to meet the primary residence requirement.

 

• Urban Reserve

The draft ordinance was amended to prohibit STRs in the Urban Reserve zoning district. The Urban Reserve zoning code is very limited, and it is premature to incorporate this use in that zone. This will be revisited when the forthcoming zoning code for the areas designated as Rural Coastal in the Land Use Plan update is developed. A new zoning district will replace Urban Reserve and to implement the Land Use Plan, it will provide for a range of uses supplemental and complimentary to agricultural uses. This will include various types of lodging and STRs could well be accommodated within these policy allowances, as illustrated by Land Use Policy 2-89, currently pending Coastal Commission certification:

Policy 2-89. Rural Coastal Permitted Supplemental Uses. Allow for a wide range of supplemental uses to support long-term viability of agriculture, including: a. Agri-tourism uses that enhance the link between the agriculture use and tourism, such as farm-totable establishments and tasting rooms; b. Small-scale lodging such as farm-stays and other overnight accommodation options; c. Educational opportunities for adults and children such as tours, classes, and day camps; d. Temporary events and seasonal uses, including those that support coastal recreation provided that such uses do not include significant permanent structures; e. Research and development facilities and clinical uses connected to the primary use, including boarding for researchers and students and modest facilities for conducting basic laboratory functions or on-site veterinary care; and f. Boarding and care of horses including training and demonstration clinics. (Emphasis added.)

 

• State and Local Laws and Orders

A performance standard was added to specifically address requirements to abide by all State and local laws and orders. This standard would directly apply to health orders that limit STR use, such as those that have been imposed throughout the last year to address COVID. This provision is consistent with the draft revocation provisions in the ordinance and would serve to further emphasize the importance of abiding by such requirements and supports the City’s ability to educate about and enforce violations.

 

• Ordinance Relationship to Homeowner’s Association Regulations:

Members of the public expressed concern that the City’s ordinance would preempt more restrictive homeowner’s association (HOA) regulation of short-term vacation rental use. The proposed ordinance, however, is not intended to preempt such private regulation. To address these concerns, the proposed ordinance has been updated to require operators to provide proof of HOA approval as part of the registration process.

 

• Fines/Bonds:

The Planning Commission directed staff to look into options for setting higher fines for violations. The City Attorney has determined that the City is limited to imposing only the fines as established in Title 4 of the Municipal Code which escalate according to specified criteria (starting at $100 and advance to $200 and $500, or up to $1000 if criminal enforcement is applicable). This year proposed State legislation SB 60, if passed, would allow fines for short-term rental ordinance violations of $1,500/$3,000/$5,000, but only for those cases that pose a threat to public health and safety. The City Attorney is tracking this legislation. The City Attorney also evaluated the possibility of using a bonding mechanism to ensure compliance, but such a requirement would likely be limited by state laws on fines as well.

 

• Fees

The revised ordinance would provide for a tiered registration fee structure. Staff initially envisions that new STRs registering for the first time, or existing STRs that have not been in good standing with respect to payment of TOT or for which code violations have been documented, would pay a fee equivalent to that collected for processing a permit requiring a similar amount of staff time, such as a use permit (e.g. 2020-2021 master fee schedule $1,018). The fee will be established to cover the cost of inspections, notification, staff time to confirm compliance with requirements and ability to meet performance standards, and preparation of template binder materials for the operator to maintain on site. For existing STRs that have been operating in good standing, as well as for re-registration in future years, a lower fee, such as for a coastal development permit exception (e.g. 2020-2021 mater fee schedule $451) would cover the cost to administer such applications. Staff will refine this proposal for City Council consideration and then City Council will establish the fees in its approval of an updated master fee schedule which much be done at a noticed public hearing. Council may determine that a different approach to fees is more appropriate.

• Special Events: The definition of special events was expanded and also tuned to address commercial uses that might be conducted in addition to overnight vacation use. The intent of this approach is to address special events of noted concern (e.g. various types of retreats, conferences and classes). Any commercial use in addition to using an STR for lodging would need to be conducted by the operator and must comply with home occupation requirements. This revision would thereby prohibit commercial events generating more trips or including more employees than allowed per the home occupation ordinance.

• Parking: The draft ordinance requires one vehicle per one-bedroom unit, two vehicles per two- or three-bedroom unit, and one additional vehicle per bedroom for four or more bedrooms; and on-site parking spaces shall be provided for at least fifty percent of the maximum allowed number of vehicles. Revisions to the draft ordinance language maintain these vehicle limits and parking requirement for a 24-hour period, and not just overnight. Language was added to disallow vehicles for overnight occupancy.

 

• Water Demand

Reporting of annual water use has been added to the draft ordinance as a registration requirement to track the water demand of these uses over time and require action in the case that water demand exceeds that for typical residential use. For context, the average water demand for single-family homes in Half Moon Bay is 160 gallons/day. Staff reviewed the water demand of 14 STRs as an initial check to see if they are using substantially more than the average and/or a higher water demand that was conservatively modeled in the Land Use Plan update which set single-family homes set at 200 gallons/day and houses with accessory dwelling units at 300 gallons/day. Most of the STRs in the sample are larger homes that are offered as whole house rentals. The 2019 water use of the sampled STRs averaged 178 gallons/day with a wide range from 78 to 246 gallons/day. This range is well within the range of water use of single-family homes in Half Moon Bay that do not have STRs. The properties with higher water demand tended to be larger homes with relatively large landscaped areas.

 

• Sensitive Receptors

Half Moon Bay’s neighborhoods and the sensitive environmental setting have at times suffered from STR use. Numerous components of the draft ordinance address community impacts. The draft ordinance also cites the need to align with all other laws. That said, the Commission wishes to ensure greater awareness about the potential impacts visitors can have on sensitive coastal resources, especially habitat areas and public open spaces including beaches and bluffs. The draft ordinance requires STR operators to provide an informative “binder” at booking and upon check in addressing local laws and regulations broadly and for specific neighborhood and locational sensitivities. The City will prepare a template for these binder materials that can be customized for each operator. The contents of the binder will not be fully codified so that it can be updated from time to time. The template will cover at least the following:

• • Coastal Resource Education: The significant of habitat areas and fragile environmental conditions such as the eroding coastal bluffs; the importance of staying on established trails, using designated beach access ways, complying with beach use rules, and the deleterious effects of litter on the waterways and in the ocean.
  • Hazard Education: Tsunamis (test alarms and evacuation), fire hazards, dangerous surf conditions
  • Good Neighbor Guidance: Noise (e.g. requirements for “quiet hours”), parking, trash/recycling.
  • Special requirements: Fire safety and the illegality of all fireworks; leash laws and dog friendly beaches, the City’s smoking ordinance.

 

Home Occupation Ordinance

The home occupation ordinance is proposed to be updated to accomplish the following (Attachment 2):

• Update language to be consistent with STR language;

• Allow modestly more employees and visitors to enable home occupations to thrive and comply with the code;

• Serve as a backstop to the STR ordinance in cases where STR operators also seek to conduct commercial activities with the STR. These updates are supported by recent LUP policy addressing home occupations:

Policy 2-75. Home Occupations. Permit home occupations within residences for business types and activities that are compatible with the residential living environment and subservient to the primary residential use of each property. Establish performance standards in the IP for traffic, parking, noise, and other considerations with respect to home occupations.

Conclusion

The revised draft ordinance includes the structure and regulations that the Planning Commission should expect in a final draft for public hearing. A completed draft STR Ordinance will be ready for public hearing review within the next two months. In parallel with finalizing the ordinance, staff will continue to reach out to current STR operators to make sure they are well-informed that the ordinance is coming forward and to help them register as soon as possible. Since the February 9 study session, staff has met with representatives of Ocean Colony Partners, sent emails to all STR operators, presented to the San Mateo County Realtor Association, and corresponded with many residents.

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