Title
Discuss and Provide Direction Regarding Short Term Rentals
Summary
COUNCIL GOAL: Safe and Secure Community
MEETING DATE: January 25, 2016
DEPARTMENT: Planning
CONTACT: Brian Lockley, AICP, Director of Planning
Michael Quint, Executive Director of Development Services
RECOMMENDED CITY COUNCIL ACTION:
• Discuss and provide direction regarding short term rentals.
ITEM SUMMARY:
• Short Term Rentals (STR) or Vacation Rentals by Owner are generally residential properties within residential zone districts (single family and/or townhomes) that are not owner occupied and are rented for a specific timeframe, usually 30-days or less. These types of rental are advertised on various travel websites but the more popular websites are Airbnb.com and HomeAway.com.
• Staff has researched this issue and contacted several Texas cities (Plano, Frisco, Allen, Grapevine, Austin) to ascertain if and how they regulate this use.
BACKGROUND INFORMATION:
• The City of McKinney does not currently regulate STRs. The Zoning Ordinance regulates: Bed and Breakfast facility; Boarding House and Rooming House; and Hotel or Motel. These uses are defined as follows:
o Bed and Breakfast facility - means an owner-occupied private home which offers lodging for paying guests, and which serves breakfast to these guests and which contains one or more guest bedrooms.
o Boarding House or Rooming House - means a building, other than a hotel, where lodging and/or meals for three or more persons are provided for compensation.
o Hotel or Motel - means a building or group of buildings designed and occupied as a temporary abiding place of individuals. To be classified as a hotel or motel, an establishment shall contain a minimum of 12 individual guest rooms or units and shall furnish customary hotel services such as linen, maid service, telephone, use and upkeep of furniture.
• The city does regulate the external effects of this use on the surrounding neighborhood (i.e., noise, trash, or improper use of the property) via non-emergency police number or code enforcement.
• In general, short term rental housing differs from bed & breakfasts, hotels, motels, and other lodging uses by providing complete, living facilities, including provisions for living, sleeping, eating, cooking and sanitation. Although bed & breakfasts often are similar in appearance and location to many short-term rentals, they differ by the presence of the owner/operator onsite. Boarding houses differ from short-term rentals by having multiple rooms or units for rent and common kitchen and dining facilities that are shared by the occupants. Boarding houses also tend to be less transient than short-term rentals. Similarly, hotels and motels are distinguishable from short-term rentals by having separate entrances and an on-site management office.
• Staff research has revealed how the following cities govern STRs:
o City of Plano - They do not regulate the use but deal with any enforcement issues by complaint on a case by case basis.
o City of Frisco - They do not have an ordinance that prevents STRs. short-term leases, but they have a policy defining single-family which doesn’t allow for short term leases in a single family neighborhood.
o City of Allen - They do not restrict the use
o City of Grapevine - They do not regulate STRs but do collect hotel-motel tax on them.
o City of Austin - Have the most extensive regulations of all the contacted cities. Austin distinguishes STRs by type;
• Type I - Owner occupied or in association with an owner occupied principle residence.
• Type II - Not owner occupied and not part of multi-family use
• Type III - Part of a multi-family use
All rentals are for less than 30 consecutive days (See attachment for complete regulations). In November, Austin’s City Council adopted a moratorium on Type II STRs to enact a package of new short-term rental regulations designed to enhance enforcement and curb the late-night parties held at short-term rentals.
Potential Challenges with Regulation:
• A concern expressed by many cities in researching this topic is the difficulty in enforcing the transient nature of the use. The continual turnover of occupants and the use of the residence for special events (i.e., birthday parties, weddings) is complicated. Although it may be more reasonable to rent a STR for a special event than rent a venue designed for a special event, regulating this is difficult.
• Although STRs are primarily located within residential zone districts the use is more akin to a hotel or motel. Consequently, hotel occupancy taxes should be paid on the property. However, determining who is operating the STR and where it is located may become an enforcement challenge that may require additional city resources.
• There may also be unforeseen consequences that have not been fully considered. What are the long term consequences of having a STR in a residential neighborhood? Similar to what Austin, Texas has adopted, should there be a limitation on the number of STRs in a neighborhood to protect and preserve neighborhood vitality.
FINANCIAL SUMMARY:
• N/A