Guidelines for Short-Term Rentals/AirBnB

109 Pages·2017·14.08 MB·English

City Council Workshop Agenda Item 1

October 11, 2017 Short Term Vacation Rentals

At the request of Councilor Henderson, this item has been scheduled for Council
discussion.

Assistant City Manager Josh Reny and Planning Director Tex Haeuser have written a
detailed memo explaining both the pros and cons and the many varieties of short-term
vacation rentals. Staff is seeking further guidance from Council as to what problems
posed by short-term rentals you would like to see addressed by City ordinance.

Both Josh and Tex will be at Monday’s workshop to answer any questions the City
Council may have.

___________________________
City Manager
CITY OF SOUTH PORTLAND

P. O. Box 9422

25 Cottage Road
Joshua J. Reny
South Portland, ME 04116-9422
Assistant City Manager

EXECUTIVE
DEPARTMENT

MEMORANDUM

To: Mayor Smith, City Council, and City Manager Morelli

From: Joshua Reny, Assistant City Manager, and Tex Haeuser, Planning Director

Date: October 2, 2017

Re: Short-Term Vacation Rentals

In recent years, the sharing economy has had a tremendous impact on many industries, not least
of which is tourism. The use of vacation rental websites such as AirBnB.com, HomeAway.com,
and VRBO.com has increased in popularity. The City of South Portland is a desirable
community with excellent attractions in the middle of a growing regional tourism economy. It is
not surprising that the city is beginning to feel the impact of the sharing economy and
particularly as it relates to short-term vacation rentals. On a positive note, these types of rentals
oftentimes provide tourists a more authentic and intimate travel experience and their owners the
ability to generate supplemental income to help pay for property taxes, home renovations, etc.
However, there can also be negative impacts and residents are often concerned that short-term
rentals can take on the character of a business operating in a residential neighborhood. It is
important that the City develop rules to preserve the peaceful enjoyment of its residential
neighborhoods, while balancing the desires of residents, property owners, and the guests we
welcome to experience our great community.

There are a variety of short-term rental types but they are commonly divided into two categories:
owner-occupied and non-owner occupied. Some common scenarios include:
1. Owner is present during rental; renting out a bedroom in their home
2. Owner is not present during rental; renting out the owner’s unit for a short period of time
while owner is away
3. Owner-occupied duplex, apartment building, or home with accessory dwelling unit;
renting out one or more units in the building, not the owner’s unit
4. Single family home; non-owner-occupied; property used for short-term rentals
5. Multi-unit building; non-owner-occupied; One or more units used for short-term rentals
Tel [phone]  Fax [phone]  www.southportland.org
6. Single family home or dwelling unit leased to a long-term tenant; lease does not prohibit
sub-letting and tenant creates their own short-term rental

When considering the aforementioned scenarios, it is easy to understand why municipal
regulation of short-term rentals can be complicated. One scenario may be viewed as less of a risk
to a neighborhood than another. Which scenarios, if any, should require a City permit or business
license? Which units should be inspected for building and fire safety code? Or perhaps at a more
basic level, what constitutes a “short-term” rental; how should it be defined?

Several municipalities in Maine have already taken on the issue of short-term rentals and
developed their own local approaches and solutions. A sampling of four communities and a
summary of their regulations is provided below:

Cape Elizabeth

Short-term rentals are allowed as part of the zoning ordinance. They are defined as dwelling
rental of 30 days or less and the land use activity is listed as a permitted use in residential and
mixed-use zones. Short-term rentals require a permit and compliance with short-term rental
standards listed in the ordinance. Dwellings may be rented once or twice per calendar year, for
no more than 14 days in total, without requiring a permit. The Code Enforcement Officer is the
issuing authority for the permit and initial applications require inspection of the premises.
Subsequent inspections occur within five years of the previous inspection. Short-term rentals
must comply with fire and building codes. Permit applications require property location, owner
contact information, and approximate dates the unit will be rented. The owner is required to
provide a rental agreement addendum to all tenants and the addendum is reviewed as part of the
application process. Information in the addendum includes owner or property manager contact
information, emergency contacts, evacuation plan, maximum number of tenants and guests,
parking arrangements, etc. Limits are placed on the rental “intensity” for properties with smaller
lot size and/or located in denser residential areas. Number of tenants may be limited to two per
bedroom and not more than eight total. The ordinance includes a complaint process with
escalating penalties for permittees not in compliance. The permit fee is $50.00 and is valid for
one year.

Rockland

Short-term rentals are allowed in all residential and mixed use zones but require a permit. Three
categories of short-term rentals are defined in ordinance, each with its own level of review and
permitting authority. Short-term rentals are dwelling units rented for 30 days or less. Permits are
only issued to owners and therefore tenants may not sublet their dwelling on a short-term basis.
Permit applications are submitted to the City Clerk’s office and then reviewed by the Code
Enforcement Officer and scheduled for inspection. All non-owner-occupied and 3+ unit
buildings (whether or not owner-occupied) must receive Planning Board approval. If the owner
does not live in Rockland or a neighboring town, a property manager must be designated on the
written application. The permit requires notice to immediate abutters who are also provided
contact information for the owner or property manager. Proof of liability insurance is required.
Buildings with 3+ units and/or mixed use must comply with fire and building standards for
lodging establishments, including sprinkler systems. This has effectively limited short-term
rentals to 1- and 2-unit properties. The short-term rental permit is valid for two years.

(Example) Table from Rockland Code of Ordinances
Type of Type of Structure Minimum Stay Permitting Permitting Review
Rental Period Authority in Authority in Level
Residential AA, Other Zones
A, and B Zones

STR-1 Single-Family (rental of one 1 night up to less Code Office Code Office I
room in owner-occupied than 1 month
structure or one unit in an
owner-occupied two-family
structure)
STR-2 Single-Family (whole house) 1 night up to less Planning Board Code Office I
than 1 month
Two-Family (one unit rented 1 night up to less Planning Board Code Office I
monthly and one unit rented than 1 month
less than one month)
STR-3 Multi-Family or Mixed Use 1 night up to less Planning Board Planning Board II
than 1 month

Portland

Short-term rentals are allowed but units are required to be registered with the City effective
January 1, 2018. Short-term is defined as less than 30 days. There are four categories of short-
term rental, including Owner Occupied, Non-Owner Occupied (Mainland), Island Rentals, and
Tenant Occupied. The City has set a cap on the number of Non-Owner Occupied (Mainland)
units at 300, which will be selected by lottery. All applicants are required to complete a pre-
application checklist to verify compliance with fire and building codes. The City intends to
inspect all rental units but currently not all units are inspected before they are rented due to
resource constraints. Additional restrictions include caps on the number of short-term units per
registrant, the number of short-term units in a single building, and the number of tenants allowed
per unit. Rental unit registration is managed by the City’s Housing Safety Office and can be
completed by the applicant using an online tool or by completing a written form and submitting
via email, fax, mail, or in person.

(Example) City of Portland Short-term Rental Registration Fees
Discounts on the Registration Fee are available as follows:
 $10 for a fully-sprinkled building
 $7.50 for an off-site monitored fire alarm system
 $5 for a HUD Housing Quality Standard (HQS) Inspection
 $10 for a HUD Uniform Physical Condition Standard (UPCS) Inspection
 $2.50 for a smoke-free policy for the dwelling unit

* The maximum discount is $20.00 per unit.

Old Orchard Beach
Short-term rentals are allowed under the same rules that apply to all rental properties. All rental
properties in the town, regardless of duration of rental, require a business license. Business
licensing and inspections are processed by the Office of Code Enforcement. There are two
business license categories for rental property, which are year-round and seasonal. Short-term
rentals are allowed under both categories but must be disclosed on the license application. All
units are inspected for fire and building codes before a license is issued. All license applications
deemed complete are scheduled to be on the next Town Council agenda. The Town Council is
the licensing authority and each license involves a public hearing and Council vote, for both the
initial license and upon renewal. To streamline the licensing approval process, the town is
geographically split into two districts with all business licenses in one-half of town expiring in
even years and licenses in the other half expiring in odd years. Therefore, all business licenses
are valid for two years. Year-round rental licenses are $25 per unit and Seasonal are $25 per unit
for the first 10 and then $7.50 per unit thereafter. Licenses also incur a processing fee of $100 for
initial and $25 for renewals.

Conclusion

There is no easy solution to address the issue of short-term rentals. Most practical solutions
require time and resources. The greatest challenge to implementing regulation will be
enforcement. Feedback we have received to-date indicates that permitting and inspections
require considerable staff assistance, even when assisting owners who actively want to comply.
Many owners of short-term rentals are neither savvy business owners nor well-versed in building
code. It is likely that staff will have to walk people through the approval process and perform
multiple inspections to ensure compliance. Perhaps an equally challenging issue is identifying
short-term rentals that have not been permitted. Staff have spoken to a service provider called
Host Compliance, which provides an outsourced solution for implementation and enforcement of
a short-term rental ordinance. There are several tiers of service, which is explained in a
presentation that has been added to your meeting packet.

The Council may also want to consider convening a facilitated meeting of stakeholders to
identify the problems that currently exist and tailoring solutions to meet those specific concerns.
This could produce a fair and reasonable set of rules to safeguard our neighborhoods, while not
“overshooting” from a regulatory standpoint.

We look forward to discussing this issue with you and will be happy to answer any questions.
Short-term rentals becoming
more common in Vacationland
As ‘new’ websites enabling property owners to rent their homes for days a time
flourish, some municipalities consider new regulations. Safety is priority one.
By Janine Pineo
Vacationland is all about location,
location, location.
So it should come as no sur-
prise that municipalities with a long
history of being tourist destinations
are also big hits for the slew of online
vacation rental companies and web-
sites that have cropped up in recent
years. They have built their businesses
not through the traditional hotels,
motels and bed and breakfasts, but
by giving residents a chance to rent
rooms or their homes to tourists.
The uptick in what are called
“short-term rentals” has prompted
a number of cities and towns to in-
vestigate the extent of these accom-
modations communities and then
decide what, if anything, needs to be A typical online ad for short-term rental. (Submitted photo)
addressed in ordinances and permit-
ting.
An issue that rises to the forefront sites on the internet. Safety first
is safety. While traditional lodgings “Online postings don’t actually Other requirements, Heyland
have to meet strict safety regulations, give you an address. I went one by said, include 200 square feet per per-
people renting out a house to tour- one to identify,” Heyland said. “It’s son, meaning a 1,000-square-foot cot-
ists don’t have the same restrictions, hard to put a number on how many tage would be limited to five people.
although some might find that their are renting.” Part of the problem is Smoke and carbon dioxide detectors
homeowners’ insurance policy would that the listings for Ogunquit might must be operational.
not be adequate if something oc- actually be in a neighboring town. His “It’s more (the town) trying to
curred during a rental situation. guess, however, is that there are about get a message out that we want these
“Obviously, we want everyone 300 short-term rentals. properties safe,” he said.
safe,” said Scott Heyland, Ogunquit’s Heyland said the town held a work- A bit farther up the coast is Rock-
code enforcement officer. shop and the decision for this year land, which put an ordinance on
Ogunquit has about 3,000 single- was that there would be “no broad, short-term rentals into effect in May
family dwellings, he said, 2,000 of sweeping controls.” Instead, there is 2016. City Manager Audra Caler-Bell
which are seasonal. The town’s year- expanded guidance for rentals, and said that a repercussion of taking on
round population is about 1,000, the town is relying on existing lan- this oversight is financial.
swelling 30 times over in the summer. guage in a zoning ordinance to set the “This is a cost to municipalities in
Last year, Ogunquit began the task foundation. Among the rules is for a staff time,” she said. The city’s process
of looking online to identify residenc- minimum stay of seven days and that in its first year was “very time-consum-
es that were advertised on such sites all who rent any type of single-family ing,” stemming from the requirement
as Airbnb, HomeAway and VRBO, the dwelling apply for a business license. that whole-house rentals needed ap-
best known of the many home rental Between 100 and 150 have reg- proval from the planning board.
istered this year, Heyland said, and Heyland also cited staffing as an
Janine Pineo is a freelance writer from Hudson each pays $150 annually for the reg- issue for Ogunquit. “The town staff
and regular contributor to the Maine Townsman, istration. here is so minimal,” he said. The
[email protected].
MAINE TOWNSMAN JUNE 2017 11
possibility of needing to inspect 300 Official action ing to Caler-Bell, has been the city’s
homes to make sure that they were After meeting with Root, a plan- seven-day requirement, which re-
up to code would be overwhelming. ning board review would be sched- mains as is. Rockland requires one
There also was a matter of liability for uled if the house fit a certain category set of renters only during a seven-day
the town, he said. Instead, Ogunquit of rental. Each has taken 15 to 20 period.
has put the onus on homeowners and minutes to consider, he said, with Root said the city tried to keep
their insurance carriers, which must 48 permitted and nine applications things simple. “It all boils down to
inspect the dwellings. pending thus far. how you’re renting and how you’re
“Let’s let some of the responsibil- Since it went into effect a year ago, occupying the property.”
ity go back to the homeowner,” Hey- a couple of areas in the ordinance If a resident rents a room or rents
land said, of the town’s decision. came under scrutiny. “There have a unit in a duplex in which they live,
John Root Jr., Rockland’s code en- been some adjustments already,” Root then “you just gotta come to me,”
forcement officer, said anyone in the said. Root said. “There’s no inspection
city offering a short-term rental has First, was the requirement for a involved. If you live on the property,
to provide evidence or a certificate property manager in the whole-house we’re going to make it simple.”
to prove that adequate insurance is rental portion. “The whole purpose of The planning board comes into
in place. this was to have someone readily avail- play if it is a whole-house rental, a
Once Rockland figured out who able 24/7,” he said. unit in a duplex in which the second
was renting, much as Ogunquit did, That section was redefined, City unit is rented monthly and not short-
Root sent a letter to the property Manager Caler-Bell said, so that it term, or a multi-family dwelling.
owners to let them know what the city doesn’t have to be a professional Rockland also requires permit
required. (See p. 13) property manager, but it may be some- holders to put the permit number in
“I met with everyone who is doing one local who can be reached during their online advertisements, which
short-term rentals,” he said. In many an emergency. will help the city track new renters.
cases, owners found out their insur- The other was the language on
ance policies did not cover them, the insurance requirement. Root said Mapping hotspots
and Root said people were grateful to he reviewed policy with an agent and During this process, Rockland
know so they could act. discovered that the terms needed to developed a map to pinpoint the lo-
“It was one of the better things be adjusted. cation of its rentals, breaking it down
that came out of this,” he said. Another sticking point, accord- into each aforementioned category.
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MAINE TOWNSMAN JUNE 2017 13
“That’s actually very important to the Portland Press Herald, hosts using 2,100 hosts in 2015. Portland was the
the councilors,” Caler-Bell said. “We Airbnb’s site earned $26 million from busiest, with 51,214 guests and $7.1
are finding concentrations in certain about 174,000 visitors, figures that million in revenue, followed by Bar
areas.” the company said doubled from the Harbor with 7,101 visitors and a rev-
The concern is about the livability previous year. enue of $1.4 million.
of the city’s neighborhoods. “What It isn’t only short-term rentals for Bar Harbor has long been the
prompted it for Rockland,” she said, Airbnb. The company also does sub- jewel in Maine’s tourism crown. It
“was neighbors who were abutters.” lets (https://www.airbnb.com/sub- also has had a short-term rental policy
Noise and parking were among the lets) if you have the link (the feature in place for a decade.
issues, she said. is not available on the home page). Code Enforcement Officer Angela
“You can also change the charac- Rockland’s ordinance, for instance, Chamberlain said that the rules im-
ter of a neighborhood,” Root said. specifically forbids subletting. On plemented in 2006 still stand. Entire
“These short-term rentals are all in the other hand, some places such as homes that are rented for less than
neighborhoods.” New York City don’t allow short-term 30 days need to be inspected once
Rockland plans to monitor the rentals at all, only sublets for longer and registered once with a $50 fee.
situation and revisit the ordinance if terms. The town has about 400 registered,
necessary. Earlier this year, a report about although she was not sure how many
Ogunquit’s Heyland pointed out Bloomberg stated that the company were still active as short-term rentals.
that for some rental owners, it is their was investigating an expansion into The ordinance does occasionally
business to purchase properties and long-term rentals, taking on Craig- come up in conversation. “No one is
use them for seasonal rentals. “There slist, which is the dominant online actively making changes,” she said.
is this creep of companies,” he said. force in many rental markets. But the Chamberlain said it’s been “pretty
They are buying homes that are only company is mum on whether it will steady for them” and that they have
rented during the 16 weeks of tourist pursue this as a source of revenue. not seen a surge in permit requests.
season. In Maine, for now, the focus is Bar Harbor’s policy was in place be-
To get an idea about the extent on short-term rentals, something fore online home-rental sites charged
of rentals through companies such as that is defined by each municipality. into serious play in Maine’s rental
Airbnb, HomeAway and VRBO, one According to data Airbnb provided market.
has only to look at some of the data to the Portland Press Herald, 3,700 As Root of Rockland said, “The in-
from Airbnb in 2016. According to hosts were active in 2016, up from ternet is the only reason this works.” n
14 JUNE 2017 MAINE TOWNSMAN