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HomeMy WebLinkAboutItem 9 - AdHoc Sub-Committee Recommendations ADMINISTRATIVE APPEALS BOARD STAFF REPORT DATE: June 26, 2024 SUBJECT: VACATION RENTAL ORDINANCE UPDATES RECOMMENDED BY THE ADMINISTRATIVE APPEALS AD HOC SUBCOMMITTEE. FROM: Ad Hoc Subcommittee Members BACKGROUND: Recent cases where out of town owners of a vacation rental property had assigned responsibility for licensing and management of their short-term vacation rental to a property management company raised some issues, and this sub-committee was asked to explore possible ordinance changes for board approval and subsequent presentation to Council. This discussion also prompted a look at the entire administration process, and we’d like to visit that first. RECOMMENDATION: 1. Review and discuss the vacation rental ordinance updates presented by the Administrative Appeals Board Ad Hoc Subcommittee; and, 2. Recommend that the City Council consider the approval of the vacation rental ordinance updates recommended by the Administrative Appeals Board Ad Hoc Subcommittee. BOARD ANALYSIS: ADMINISTRATIVE PROCESS Over the previous two-year period, .05% of cases heard were overturned (2 of 35 cases). While we’re not suggesting the cases upheld were not valid, it does prompt questions about how well the community understands the ordinances and how they are administered, especially considering the fee one pays to appeal a case. As a result, the following process enhancements are put up for discussion for possible recommendation to Council. • Ensure prospective appellants are more aware. o Ask escrow & title companies to add an addendum to their process, that recommend STR investors visit the city’s website to educate themselves AND that they check with any applicable HOA, to see if short-term rentals are permitted in the community. Administrative Appeals Board Staff Report June 26, 2024 -- Page 2 Vacation Rental Ordinance Updates Recommended by the AAB Ad Hoc Subcommittee o Ask city staff to conduct a public informal session “What to Do if you’re considering the short-term vacation rental business”. o Reach out to Palm Springs Board of Realtor’s to ask if they can incorporate city requirements into their client discussions. PROPERTY MANAGEMENT COMPANY ENHANCEMENTS We recommend establishing rules, standards and guidelines for property management companies (the “Company”): • Have property management that manage units in Palm Springs register with the City and agree to follow the City’s Short Term Vacation Rental Ordinance (the “ordinance”). This would exclude internet companies who are only involved in advertising and booking clients based upon the direction of the Owner/Company. • When an Owner registers or renews the Unit’s license, any Company involved in the rental must be identified and the type of management offered. The following terms will define how rentals are being managed: o Owner Management – Owner takes full responsibility for registering the Unit with the City and for the managing and renting of the property. o Split Management – Owner splits the responsibility for managing the Unit with a Company but controls the booking calendar and the selection of the tenants. The Company may/may not greet the tenants upon arrival but acts as the local contact in the event there is an issue with the Unit. o Agent Management – Owner assigns responsibility to the Company. The Company may/may not assuming responsibility for licensing, but it controls the calendar and tenant selection, plus other issues that may arise with the Unit. The Owner expects the Company to manage the property at an acceptable standard and adhere to the Ordinance. For those Units designated as Agent Management category, the following processes would apply: • Require any Company before placing advertisements for a short-term rental ensure the Unit has its license in place and is in full compliance with the Ordinance. • If a Company advertises a Unit that is not licensed, or in full compliance, the penalty goes to the Company, not the Owner. The first violation by the Company on any Unit’s managed (as an example), will be $5,000. The second will be $10,000, and the third, will be $20,000 plus a lifetime suspension of the Company and its principals from managing Units in Palm Springs for other people. The Company cannot pass the fines on to the Owner. o Any infractions of the tenants that results in violations of the Ordinance should be the responsibility of the Company (i.e., noise complaints, etc.). If the Company receives six violations within a one-year period, the City Manager has the option to suspend the Company’s ability to manage Units in Palm Springs for a period of one year. Fines and the suspension cannot be passed on to the Owner.