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1 Dear City Council Members: As you are already aware, we began our experience home-sharing through Airbnb in August of From that time through November of 2014, we hosted over twenty different individuals and groups in our Eagan home. After our neighbors made us aware of their concerns about compliance with the city s ordinances relating to short-term rentals, and after consulting with the City Planner on the issue, we decided to apply for an interim use permit while the city debated the merits of homesharing. The result of that process has resulted in the city conducting a workshop on the underlying policies of home-sharing at a hearing later this month, and we are submitting the attached materials to facilitate discussion at that workshop. While our application is on hold, we have continued to host longer term guests (over 30 days), in accordance with Eagan s regulations. We have also registered our property as containing an accessory dwelling unit. Further, we have continued to host our friends and family for both short and long term stays. It is with that background that we strongly urge the City Council to allow short term homesharing rentals in Eagan. While we enjoy hosting long-term guests, the flexibility afforded by shortterm stays (where we can guarantee we will be at home) is important to us. In addition, we have utilized Airbnb s platform to connect with a wide variety of people from around the world, and allowing more than one stay during a thirty-day period would maximize those interactions. We know that there are people who would never join an online dating site, arrange to meet someone they found on Craigslist to purchase an item, take a taxi ride in an Uber or Lyft car, or hang out with a group of strangers they found online on a site like meetup.org, there are others that fully embrace these possibilities and experiences. We represent the latter. That said, we recognize that our neighbors, as well as some of you, may have your doubts as to why any sane person would open their home to strangers from the internet. The fear of the unknown is a powerful thing, and we, as homeowners, had similar concerns when we first started sharing our home. However, these concerns were quickly dispatched once we realized that the people seeking to stay with us were just as normal as we were. Moreover, there were countless personal benefits to engaging with all of our guests in our home that we did not anticipate when we first made our listing. It s turned us into true advocates for Airbnb and the home-sharing experience. It is our firm belief that short-term home-sharing can peacefully occur in Eagan with regulations similar to those involving accessory dwelling units. These regulations include limiting the number of individuals that can stay to two and requiring off-street parking to be available, among others. Further, by requiring the homeowner to permanently reside at the property, Eagan can ensure homeowner accountability. Allowing home-sharing in this way would be consistent with both Eagan s existing ordinances, as well as with how people ordinarily use their home, as described below. Finally, we highly recommend the City Council members (as well as other people in Eagan interested in this issue) reach out to find a friend or family member that has stayed at an Airbnb, VBRO, HomeAway, or Flipkey property, or has hosted themselves. In our own experience, people become a lot more comfortable with the idea of home-sharing when they know someone who has done it. We look forward to answering any questions you may have at the upcoming workshop. Sincerely, Tyson & Stephanie Bramer 3672 Pinecrest Court, Eagan, MN

2 Home-Sharing Frequently Asked Questions What is the sharing economy? In what is called collaborative consumption, the sharing economy or the peer economy, owners rent out something they are not using, such as a car, house or bicycle to a stranger using these peer-to-peer services. The company typically has an ebay-style rating or review system so people on both sides of the transaction can trust the other. With the popularity of these services, many people don't need to buy when they can rent from others. 1 What are some examples of the sharing economy? Airbnb, Couchsurfing, Flipkey, and VRBO (vacation r ental by owner) homesharing. Uber and Lyft cars-sharing and taxi services. DogVacay Owners leaving their dog with a person instead of a kennel. TaskRabbit and Fiverr - mobile marketplaces for people to hire people to do jobs and tasks, from delivery, to handyman services, to office help, to proofreading. Liquid - Connects individuals who want to rent bicycles from owners who aren t using them. Etsy online marketplace connecting individuals selling homemade items. What is Airbnb? Airbnb is a community marketplace where guests can book spaces from hosts, connecting people who have space to spare with those who are looking for a place to stay. Through their experiences on Airbnb, guests and hosts build real connections with real people from all over the globe. 2 How does listing a room on Airbnb differ from operating a hotel? In home-sharing arrangements, such as those facilitated by Airbnb, you re staying in someone s home. It s a more personal experience, offering the host and the guest the ability to get to know each other and connect. Guests book via Airbnb instead of a hotel for a wide variety of reasons they may want more space than a traditional hotel room can offer, desire the use of a kitchen or laundry facilities, or simply experience the city in a different way. What types of people use Airbnb? Airbnb operates in 190 countries, and there are more than a million listings on the site offering accommodations. As a result, the types of guests varies widely, but includes domestic and international travelers of all ages and ethnic groups. While some travel for work, other are simply tourists in the area. Other travelers may be evaluating a neighborhood in connection with a planned relocation. Other individuals may need temporary housing while they wait to close on a home nearby. Finally, residents in a city may seek to book a room through Airbnb in their hometown while renovations are being performed at their own home https://www.airbnb.com/help/article/1 2

3 Home-Sharing Frequently Asked Questions (Continued) Why would people rent a room via Airbnb in Eagan? Individuals that seek out Eagan as a place to stay regularly point out the following as the reasons they want to stay here as opposed to other cities in the metro o o o o o o o Quiet and safe residential neighborhood with available parking. Family/friends in Eagan that do not have the capacity to host them. Proximity to attractions such as the Eagan Outlet Mall and Mall of America. Accessibility of public transit and walkability of the neighborhoods. Planned relocation to the area in town to explore housing options. Desire to have a larger space with cooking facilities that a hotel doesn t offer. In town for work nearby (Thompson Reuters, CHS, etc.) What is a sample inquiry a host gets when they want to book in Eagan? We need a place to stay occasionally over the next couple of months while some construction is going on at our home. We live near Eagan high school in the North Ridge neighborhood. We have lived there for 15 years and I was raised in Eagan. It is my wife, my 12 year old son and me. We have a dog (golden retriever). He is quiet and super nice but hairy as heck so I would not expect you to allow him. Your place looks perfect for us. What is the next step? May I come by and meet you and see the place? 3 What are typical concerns by neighbors of Airbnb rentals? The principle concerns raised by neighbors of Airbnb rentals relate to parking congestion, noise, and safety in communal areas. Eagan can address these concerns through specific regulations, similar to what Eagan currently has in place for accessory dwelling units. By allowing home-sharing in R-1 or Estate zoned areas only, no communal areas (such as secure building access) will be implicated. Moreover, Eagan can incorporate similar restrictions on parking (two off-street parking spaces required), and can limit the number of guests staying in the home. Finally, by incorporating a requirement that the homeowner reside in the home while the home is being shared, there will always be someone at the property to address immediate issues such as noise problems. How does Airbnb ensure the safety of guests and hosts? Verifications. Guests and hosts verify their IDs by connecting to their social networks and scanning their official ID or confirming personal details. Profile & Reviews. Guests and hosts have detailed profiles and confirmed reviews. Messaging. Guests and hosts use the Airbnb messaging system to learn more about a host or ask a guest about their trip. Unlike a hotel, if a host does not feel comfortable with a guest, they do not need to approve the booking. In addition, if the host experiences any issues during a guest s stay, they can cancel the remaining days of the person s stay and work with Airbnb to resolve any outstanding concerns. 3 This is an actual communication from potential guest, which was declined pending resolution of our permit request. Upon hearing that we could not rent to him and his family, he replied with Shoot. Does it matter to them if we are practically neighbors and we will be living in our home but just using this one sometimes? 3

4 Anatomy of an Airbnb Stay Profiles In their profile, the user describes their background, provides a photo or video of themselves, and describes why they are hosting or traveling. Listing The listing includes a description of the property, photos of the space, information about the neighborhood, a list of amenities, and the house rules. Host Creates Profile Host Verifications Host Creates Listing Listing Inquiry By Guest to Host Guest Creates Profile Guest Verifications Guest Searches for Listings Verifications To be verified, a user links their social media accounts (e.g. Facebook. & Linkedin). Newlyformed or dummy accounts are rejected. Offline identification (driver s license and/or passport) can be added. Guest Searches Guests can search available listings based on geographical area, type (whole home, private room, shared space), number of occupants, etc. Booking A guest cannot stay at a property without being first accepted by the host. Reviews Following the conclusion of the stay, both the host and the guest leave blind reviews of each other, and rate their experiences. This information is then made available to other guests/hosts on the user s profile page. Messaging Between Host and Guest Booking Messaging Between Host and Guest Stay Blind Reviews Communications The potential guest and the host communicate via message in advance of the booking, as well as after. Personal details (including the property address are only released after booking). Stay The day of check-in, a homeowner greets the guest, provides a tour of the space, and answers any questions the guest may have. During the stay, hosts and guests have the opportunity to interact and get to know each other. 4

5 Permissible and Impermissible Home-Sharing Activities in Eagan Rental of Accessory Dwelling Units Relatives House-sitter Roommates Friends No-Fee Home-Sharing (Couchsurfing.com *) Rental of 30 days or more through any platform Nanny or Live-In Housekeeper Permissinble Home-Sharing Activities in Eagan Entire Home Rental Up to 5 Unrelated Individuals in a SFR AIRBNB B * Couchsurfing.com is similar to Airbnb, however, no compensation is provided to the host. It is a way for individuals to stay with people who open up their homes for free, and fosters cultural and social exchanges between its participants. From Couchsurfing s website Couchsurfing is a global community of 10 million people in more than 200,000 cities who share their life, their world, their journey. Couchsurfing connects travelers with a global network of people willing to share in profound and meaningful ways, making travel a truly social experience. 5 Impermissible Home-Sharing Activities in Eagan Hotel/Motel (stays of 30 days or less for commercial purposes not permitted in SFRs)

6 Home-Sharing is CONSISTENT with Other Home-Sharing Activities Permitted by the City of Eagan Permitted Guests No Restrictions There are a number of ways a home is shared with other individuals. These types of home-sharing arrangements are not subject to any particular permissive ordinance, but are generally accepted by the community as a normal or typical use of the home which is within the homeowner s direction. These individuals may reside for more or less than 30 days. The Friend A homeowner may allow friends to stay at his or her home, for any length of time, for any purpose, regardless of whether the homeowner resides at the property. They may or may not pay rent (or provide some other form of compensation to the homeowner for their hospitality.) The In-Laws In-laws or other relatives are permitted to reside in a home with the permission of the homeowner, again, for any purpose or any length of time, regardless of whether the homeowner is present. Here, too, they may or may not pay rent (or provide some other form of compensation to the homeowner for their hospitality.) The House-Sitter The homeowner may pay a third party to house-sit while the homeowner is not at the property. In some cases, a person could agree to house-sit and pay the homeowner for the privilege if they are in need of housing for the same period of time (i.e. a college student in need of temporary housing). The Friend of a Friend A homeowner may offer accommodations to friends of friends, or any other person they don t know personally (another employee in the same organization, for example). The Exchange Student Homeowners open up their homes to students both foreign and domestic for certain periods of time (one night to one year or more), without having a prior relationship with that individual. The Nanny A live-in housekeeper or nanny may provide services to a homeowner in exchange for renting a room. The Couch-Surfer Homeowners can allow Airbnb-style rentals of a room (or a couch) to anyone, for any period of time, if no compensation is provided. Couchsurfing.com is a popular website that connects homeowners and travelers for this purpose. 6

7 Home-Sharing is CONSISTENT with Other Home-Sharing Activities Permitted by the City of Eagan Permitted Guests/Renters With Restrictions In addition, to the typical guests summarized above, a single-family home may allow home-sharing in other ways that are subject to specific city or state regulations, such as rental restrictions and ordinances. These uses are permissible, despite being inconsistent to what some may see as allowable in a single-family neighborhood. The Single-Family Rental An entire home may be purchased by the homeowner and rented out to individuals or families, with the homeowner residing at another location. The homeowner needs to register the property as a residential rental under the Eagan city code. The Traditional Roommate A homeowner may opt to have a roommate for stays of 30 days or longer. The College House Up to five unrelated individuals can reside in a single-family residence. The Accessory Dwelling Unit Rental As described below, a homeowner my rent an ADU to a third party. The Snow-Bird Rental Homes may be rented out while the homeowner escapes to warmer climates during the winter. Regardless of the type of home-sharing (whether it is commonly accepted, or atypical but allowed under city and state laws), the decision of the homeowner on whether they want to allow their home to be shared is guided by a number of fundamental principles: 1) The individual rights of the homeowner to decide who, if anyone, to allow into his or her home and for what purpose. 2) The necessity of the homeowner to conduct due diligence on who will be in their home, which ensures the homeowner is comfortable allowing third parties into their home. This may take the form of existing relationships with guests, references or referrals, background checks, the requirement of a security deposit. 3) An understanding by both the guest/renter and the homeowner of the need to comply with local and state laws and regulations. 4) Mutual respect by neighbors of their rights to use their own property in a reasonable manner (even if they disagree with the usage), coupled with the understanding that the actions of a guest/renter will reflect on the homeowner 7

8 Home-Sharing is CONSISTENT with Eagan s Existing Accessory Dwelling Unit Ordinance After years of debate and discussion, Eagan enacted its Accessory Dwelling Unit ordinance in Many of the issues relating to the preservation of single-family residential areas were discussed as part of these deliberations, including parking, property values, and safety concerns. Accordingly, the resulting ADU ordinance is reflective of these concerns, balanced with a recognition of the changing needs of the city and the rights of individual homeowners to utilize their single-family residences in non-traditional ways. Indeed, the defined purpose of the ADU subdivision is: to permit and regulate an accessory dwelling unit (ADU) within a single -family detached dwelling in R-1 and Estate districts only as a permitted accessory use subject to the regulations set forth herein. The minimum lot size in R-1 and Estate zoning districts ensures that additional housing will have less impact on neighboring properties. Because this use will be located in established one-family residential districts (single family home neighborhoods), the installation and use of an accessory dwelling unit must be strictly controlled to avoid adverse physical, social, economic, environmental and aesthetic impacts. By allowing only those accessory dwellings unit that are in compliance with all of the performance standards of this subdivision, the character and quality of existing neighborhoods will be protected. Eagan City Code, 11.70, subd.32(a). During the deliberations on the ADU ordinance by members of the Advisory Planning Committee, and later, the City Council, certain subjects were discussed that directly relate to policy concerns on home-sharing. A sample of these topics is below A limitation that would have required ADUs to only be rented by family members was discussed, but was not incorporated into the ordinance. A concern about rental of both the primary residence and the ADU was raised, and resulted in a residency requirement found in 11.70, subd.32(c). To prohibit traffic congestion and parking issues, a maximum of two individuals was imposed per ADU. Thought was given to allowing minors in addition to the two individuals listed, but this proposal was rejected. To preserve the character of the neighborhood as a SFR area, it was determined that the door to the ADU could not be on the same façade as the main entry door. As a result, a passerby could not distinguish between a home with an ADU and a home without one. 8

9 Home-Sharing is CONSISTENT with Other Commercial Activities in Residential Neighborhoods The idea that there cannot be any commercial activities in a residential neighborhood is a common misconception. In both Estate and R-1 Residential Zones, for example, home occupations and in-home daycares are permitted. See In the case of home occupations, a number of restrictions are in place to ensure that the home occupation does not change the character of the residential area. Set forth in 11.70, these restrictions include the following: The occupation shall be clearly incidental and secondary to the use of the dwelling unit for residential purposes and shall not change the character thereof. No more than three persons shall be engaged in the home occupation, one of whom resides outside of the dwelling. No home occupation activity shall be allowed within a detached or attached accessory building or garage. Evidence of the home occupation shall not be visible from the street. No signs shall be present other than those permitted in R zoning districts. Entrance to the home occupation shall be gained from within the principal structure. The home occupation shall not utilize more than three off-street parking spaces for the occupant and visitors. Like the home occupations that are already permissible under the Eagan city code, homesharing does not change the character of the home and does not involve signage of any kind. Indeed, a person traveling down the street could not differentiate between a home that is used for home-sharing via Airbnb and one that is not. Moreover, neighbors of an Airbnb host cannot tell the difference between a typical guest that they would approve of (friend or family member), a new long-term roommate or renter (which is permissible), or a short -term Airbnb guest. 4 This inability to distinguish a short-term home-sharing rental and a family friend or longterm renter raises issues with enforcement of a prohibition on short-term home-sharing. It also would implicitly allow short-term home-sharing if the neighbors were indifferent or were supportive, which is already occurring in Eagan and countless other areas where the issue of Airbnb-style rentals has not yet been addressed. 4 In fact, shortly after the first City Council meeting where our permit was discussed, we had our cousin stay with us for a week as well as a long-term renter move in. This prompted complaints to the City by our neighbors. Specifically, [t]he complainants reported that they observed a number of travelers/lodging guests coming and going from the Bramer s residence over the weekend. It was apparent to the complainants that these persons were traveling Airbnb guests staying at the Bramer s home as they were observed carrying suitcases from their vehicle to around and to the back of the house. As a result of these complaints, we communicated to the City Planner who was staying with us and for how long, as well as their relationship to us, although we were not required to do so. Based on this interaction, it s clear that looks alone cannot establish a person as a short or long term renter. 9

10 Home-Sharing is CONSISTENT with Eagan s 2015 Priorities and Views of the Future Home-Sharing is Consistent with Eagan s 2015 Priorities Enhance the City's vibrancy and attractiveness to a broad range of cultures, lifestyles, and generations. Home-Sharing is Consistent with Eagan s View of the Future: The City of Eagan recognizes that its future is shaped by the decisions made today. It is also bounded by current circumstances and their dynamics over time. While growth and economic vitality continue, services must continually adapt over time to meet the changing needs of a diverse population, technological change and a global, service-based economy. To meet these needs, the City must plan with vision, encourage balanced services and welcome orderly change. Home-Sharing is Consistent with Eagan s View of Development; The City of Eagan is committed to encouraging and fostering orderly, high-quality development and redevelopment. The City will maintain a balanced variety of housing types, diversity of commercial and industrial development and effective integration of land use types. Eagan is panned to be a fully developed city in the future and efforts will be made to affect that growth in a rational, deliberate manner in the best interests of all residents, both present and future. The City will maintain its standards while recognizing the need to be sufficiently flexible and creative to permit quality development to occur. Home-Sharing is Consistent with Eagan s View of Economic Vitality: The City of Eagan recognizes the need to foster an attractive and desirable business environment in order to ensure employment opportunities for its citizens, a strong tax base, retail services for its citizens and economic opportunities for entrepreneurs. The City of Eagan will encourage the formation of head of household jobs, clean industries, economic diversity, commercial stability and effective relationships with the regional, state, national and international economies. Home-Sharing is Consistent with Eagan s Commitment to Entrepreneurial Residents Eagan offers one-on-one business counseling to support entrepreneurial residents. See See also 10

11 Potential Regulations on Home-Sharing In order to allow short-term home-sharing in Eagan, a number of regulations could be put in place to ensure that the use is consistent with other rental activity in residential areas. We offer these suggestions for discussion, but do not believe all are necessary to ensure peaceful home-sharing activity in Eagan. Recommendation Purpose Sample Cities With Similar Regulation Rental Registration/Permit Registration helps Duluth, MN ensure, through relationship and education, that rental housing in Eagan is decent, San Francisco, CA Palm Desert, CA Fort Lauderdale, FL safe and sanitary, and is maintained as to not become a nuisance. Advises the city that the subject property will be used for short term rentals. Registration fees could be collected. Registration could be terminated if other Collection of local lodging taxes. 2 guest maximum for short term rentals. regulations are not followed. Generates additional income for the city. Same as ADU requirement. New York, NY San Diego, CA San Francisco, CA Philadelphia, PA San Francisco, CA Santa Monica, CA San Jose, CA Washington D.C. Chicago,,IL Malibu, CA New York City, NY Palm Desert, CA Austin, TX Phoenix, AZ New Orleans, LA Eagan, MN (for ADUs) Palm Desert, CA 11

12 Allow short term rentals in Estate and R-1 residential zones only. Larger lot sizes. Similar to rationale for allowing ADUs in these areas. Allow short term rentals in Ensures that there is registered ADUs only. sufficient space to accommodate guests. Residency requirement. Prevents both the main home and the rental space from being rented out that the same time to different groups. Ensures operation is home-sharing and not strictly for commercial purposes. Increases owner accountability. Significantly reduces the risk of noise, property damage, or safety issues. Prohibition against street parking for guests. Similar to ADU requirement that there are two off-street parking spaces available. Prevents parking congestion to alleviate neighbor complaints. Absent this explicit prohibition, existing street parking laws will be followed, which may make this provision unnecessary. Fire and safety inspections Makes sure homes are to code. (Note - Home sharing is generally limited in multifamily dwellings due to prohibitions on sub-leasing lease agreements and guest restrictions in condominium bylaws.) N/A San Francisco Eagan (for ADUs) Eagan, MN (requires 2 off street parking spaces for ADUs) Lakeville, MN Philadelphia, PA Fort Lauderdale, FL In addition to the potential regulations listed above, it is assumed that both the property owner and the tenants will be subject to city, state, and federal laws and regulations (i.e. parking restrictions, noise levels, and general good citizen behavior). 12

13 Selected Cities and States that Have Authorized and Regulated Home-Sharing Regulations relating to short-term rentals and home-sharing vary widely between cities, states and towns. Many smaller town have opted to not take any proactive measures to regulate home-sharing, while larger cities have taken steps to enhance registration requirements and collect required taxes. The sample list below is not exhaustive. Cities Duluth, MN Lakeville, MN Atlantic City, NJ Blue Ridge, GA Ocean Springs, MS Philadelphia, PA San Francisco, CA Santa Monica, CA San Jose, CA Washington D.C. Chicago,,IL Malibu, CA New York City, NY Encinitas, CA Fort Lauderdale, FL Austin, TX Phoenix, AZ New Orleans, LA Westbrook, CT States Rhode Island North Carolina South Carolina (bill pending) And thousands of other cities worldwide. 13

14 Statement on Short-Term Rentals From Tony Bagato, Principal Planner for the City of Palm Desert, CA In 2009, we were directed by the Palm Desert Planning Commission to look at an ordinance prohibiting all short-term rentals in single-family areas. The response from property owners using their home as a short-term rental were not welcoming to that, so we decided to require a conditional use permit for non-gated communities. The permitting process involved paying a $500 fee, notifying neighbors within 300 feet of short-term rental and a public hearing. When the conditional use permitting process was approved, we were asked to report back in six months. After six months, we had the first application denied for no wrongdoing (a neighbor erroneously complained about trash), and we had only approved five conditional use permits when we knew there were roughly 600 unlicensed rental properties in our city. Basically, we learned that we needed to focus on the dealing with the loss of transit occupancy tax, and to look at a nuisance as a nuisance no matter how the property is being managed or lived in. Any property can be a nuisance by creating noise, parking and trash violations. Those issues are not isolated to short-term rental properties and many of our shortterm rental properties do not create those problems less than 1% have had issues that we are aware of. The ordinance has laws to restrict short-term rentals to limit the potential of a nuisance property (capping the number of renters to two per bedroom and a maximum of 20 daytime guests for a house with 5 or more bedroom and not allowing outdoor music after 10 pm). If the rules are violated, the ordinance has a violations and fines process that can be heavy handed to deal with a nuisance or non-licensed short-term rental. So we decided to create an ordinance that would promote the business side of our rental community establishing a low fee license to encourage registration. Source: 14

15 The U.S. Conference of Mayors Short Term Rental Resolution 2014 PROMOTION OF ECONOMIC DEVELOPMENT THROUGH A VIBRANT VISITORS INDUSTRY WHEREAS, communities throughout the United States benefit significantly from travel and tourism and support the local visitors industry; and WHEREAS, the economic impact and transient hotel taxes of local visitors often fund convention and visitors bureaus, convention centers, sports arenas and sports teams; and WHEREAS, as growth in travel evolves, changes in housing options by local visitors creates options that help support local cultural programs including music, film, gaming, visual arts, dance and more; and WHEREAS, the travel and tourism industry continues to see steady, healthy, growth; and WHEREAS, the traditional short-term rental of homes can provide a flexible housing option that allows family travelers and business travelers spending longer periods of time in a community a safe accommodation while contributing to the local economy; and WHEREAS, economic impact studies conducted in 2014 show and overall economic impact by the traditional short-term rental activity in Myrtle Beach, SC at $200.7 million and 2,587 jobs, and overall economic impact to St. Joseph, Michigan of $24 million and 300 jobs, and the Coachella Valley, California communities of $272 million and 2,539 jobs; and WHEREAS, a 2012 United States Conference of Mayors resolution states, fair regulation of short-term rentals ensures greater compliance and greater receipt of local hotel taxes ; and WHEREAS, a 2012 United States Conference of Mayors resolution states, onerous regulations of short-term rentals can drive the industry underground, thus evading local regulations and local hotel taxes ; NOW, THEREFORE, BE IT RESOLVED, that the U.S. Conference of Mayors urges support for the overall economic impact created by a vibrant visitors industry that includes traditional short-term rentals as a housing option for family travelers and business travelers. ### 15

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27 WHAT IS A SHORT-TERM RENTAL? STRAC defines a short-term rental as a residential property that is rented to a visitor for less than 30 days. YOU PROBABLY KNOW A SHORT-TERM RENTER. But the fastest growing markets are not in big cities. [HomeAway, 2014] Mexico Beach, FL Cap San Blas, FL Lavallette, NJ Cape Canaveral, FL Moonridge, CA Balboa Peninsula, CA Manteo, NC Cocoa Beach, FL Point Pleasant Beach, NJ Crested Butte, CO SHORT-TERM RENTING IS BIG BUSINESS FOR SMALL COMMUNITIES In 2012, PhoCusWright found that 12% of American adults stayed in vacation rentals, spending $23 billion. [PhoCusWright, 2013] Short-term rentals created a $24 million economic impact and supported 300 jobs in the small town of St. Joseph, MI in [STRAC, March 2014] In the vacation hub of Myrtle Beach, SC, short-term rentals created over $200 million in economic output while supporting over 2,500 jobs. [STRAC, April 2014] Coachella Valley, CA benefits from over $272 million in economic activity as well as over 2,500 jobs as a result of short-term rentals in the area. [STRAC, March 2014] AND GROWING Over 52% of surveyed individuals plan to stay in a vacation rental in 2014, up from 44% in [TripAdvisor, 2014] Online bookings jumped from 12% of the vacation rental market in 2007 to 24% in [PhoCusWright, 2013] Nearly three quarters of peak-summer vacation rental owners (72 percent) reported occupancy rates of 76 percent or higher, an increase of 8 percent over last year. Meanwhile, hotel occupancy rates increased just 5% over last year s rates. [HomeAway, September 2012] Short-term renters are attracted to the extra living space, lower rates than hotels, and better amenities. [TripAdvisor, 2014] ECONOMIC BENEFITS FOR LOCAL COMMUNITIES, TRAVELERS AND OWNERS Nine out of ten people (90%) believe that short-term rentals bring meaningful tourism and tax dollars to local communities. [STRAC, 2013] Travelers surveyed said overwhelmingly (82%) that savings and last-minute deals sway them towards staying in vacation rentals instead of hotels. [TripAdvisor, 2013] Owners generate an average of $27,360 per year in rental income. [HomeAway, 2014] A survey of Airbnb users showed that the money generated by short-term rentals was viewed by hosts as extra spending money (52%) or supplementary income that the host relies upon (41%). [Airbnb, Short-Term Rentals and Apartment Market ] The Airbnb market represents $14 million of annual accommodation spending in San Francisco. [Airbnb Economic Impacts: Preliminary Findings, June 2012] On average, vacation rentals are at least 50 percent less expensive per square foot than hotels. Travelers pay 80 percent more per square foot in some popular destinations including Orlando and Destin, Florida. [HomeAway, September 2012] About 59 percent of STR owners say they use income from renting their property short-term to make improvements and upgrades to their home. [HomeAway, September 2012] LEARN MORE AT STRADVOCACY.ORG

28 The Basics: Best Practices in Short-Term Rental Regulation

29 We support local residents and short-term rental providers as they work with local authorities to advance reasonable shortterm rental regulations that safeguard travelers, alleviate neighborhood concerns and allow the short-term rental (STR) marketplace to continue to thrive to the benefit of all stakeholders. Importantly, we believe local regulations should be easy for residents to locate, understand and comply with. STRAC Mission 2

30 This presentation is meant to serve as a guide for anyone interested in crafting clear, reasonable and enforceable regulation of the short-term rental marketplace. The basics of good regulation 3

31 We define a short-term rental (STR) as a residential property that is rented to a visitor for less than 30 days. Definition of STR 4

32 WHY DOES IT MATTER? Short-term rentals are not hotels. They are primarily offered by individuals. While some STRs are available for rent year round, others are rented only during a season or on specific occasions by short-term visitors. STRs are used for more than just vacations. They serve a broad variety of purposes including families remodeling their homes, business people staying for more than a few days, patients and their families in town for extended medical visits, and groups attending out-of-town functions, among others. Definition of STR 5

33 Using a property as a STR does not change its status from residential to commercial. Regulations should clarify the definition of residential use to include short-term rentals. Zoning/Use classification 6

34 WHY DOES IT MATTER? Renting a home long term does not change that home from residential to commercial. The type of tenant doesn t change the structure, and should not change the zoning. There is no real difference between a visitor sleeping in a bedroom and a resident sleeping in a bedroom the use of the property doesn t change. Moreover, a property offered for STR today might be offered as a long term rental tomorrow, depending on tenant needs. Zoning/Use classification 7

35 If a community requires registration of STRs, those requirements should be easy to locate and follow. Registration requirements should be aimed at establishing a reliable way for local authorities and neighbors to identify and contact the short-term rental owner or local property manager, not used as a tool for limiting the number of STRs in a community. Registration should be quick and easy 8

36 WHY DOES IT MATTER? An overly burdensome registration or permitting process most often leads to greater non-compliance. Importantly, registration requirements should NOT: Apply to individuals who rent their home for less than two weeks per year. Require an in-person visit to a government office, but rather be online. Require payment of a fee, but if they do it should be less than $100. Require submission of official documents rather individuals should only be required to provide these during an investigation. Require reviews from other local, city or state agencies or any additional inspections or permits (e.g., fire department). Change the classification of the property from residential to commercial. Require approval from third parties. Registration should be quick and easy 9

37 If short-term rentals are taxed, regulations should make any tax collection and remittance obligations clear to the shortterm rental owner. Taxes 10

38 WHY DOES IT MATTER? Individuals listing their properties for short-term rental probably won t collect and remit taxes they don t know about. Clearly defining all applicable local taxes that must be collected and remitted on short-term rental income will be more easily enforceable and ensure compliance. Taxes 11

39 Existing good neighbor laws including noise ordinances, parking regulations and trash guidelines apply to residents and their guests alike. If these regulations are properly enforced, they provide sufficient protection against disruptive behavior of any kind. If a community decides to build penalties for non-compliance into STR regulations, they need to be clear, reasonable and enforceable. Compliance with the law 12

40 WHY DOES IT MATTER? We believe property owners are, and should continue to remain, responsible for ensuring that their guests are good citizens and good neighbors whether their guests are family members visiting for an extended stay, annual tenants or visitors staying for a shorter period of time. Passing additional laws, aimed solely at regulating behavior of short-term visitors, would be redundant and create extra costs to the community, as they would require a separate layer of enforcement. One mistake should not result in penalties that effectively prevent an individual from renting their home on a short-term basis. Rather, those penalties should be reserved for those who repeatedly violate existing laws. Compliance with the law 13

41 Lessons Learned: The Best Laws & Approaches to Short-Term Rentals

42 Short-term rentals for 30 days or less is a vibrant, growing market 49% of travelers stayed in or are planning to stay in a short term rental this year, up from 40% in 2011 Travelers like the affordability, space and ability to stay with large groups in shot-term rentals Short-term rentals represent a $24 billion annual market in the U.S. 8% of the total U.S. travel market According to PhoCusWright, there are 1.2 million vacation rentals in the U.S. *sources at Short-Term Rental Facts 2

43 Like all fast-growing, market-based innovations, many are left wondering what this means for their communities. With little information, states and municipalities have passed a patchwork of regulations. We believe local regulations should be easy for residents to locate, understand and comply with. What s good regulation? 3

44 The issue: The community in the Coachella Valley first passed short-term rental regulations that required: Conditional use permits ($500 or more) and a three-day minimum for short-term rentals. Restrictions on parking, noise, the number of renters, and the days a property could be rented annually. Public hearings for all applications. In one case, the Palm Desert Planning Commission denied an application without evidence of wrongdoing. The California Desert Association of Realtors predicted the permit process would lead to few following the law and paying the occupancy tax. Ultimately, the city agreed. Palm Desert, CALIFORNIA 4

45 The solution: In April 2012, a Palm Desert ordinance went into effect for the licensing of all residential short-term rentals. Those rules call for: Lesson Learned Exorbitant fees and an onerous process to register properties did not work for the city or short-term renters. A reasonable registration process and fee is a sensible approach, allowing for this market to grow while creating safeguards for Palm Desert residents. A short-term rental permit, if the property is rented for 27 days or less. Permits must be renewed annually. An application fee of $25 per property. A fine of up to $5,000 for anyone without a permit or not collecting a 9% Transient Occupancy Tax. The Result: More residents registered, compliance rose and the city collected more transient occupancy taxes. We learned that we needed to focus on the dealing with the loss of transit occupancy tax, and to look at a nuisance as a nuisance no matter how the property is being managed or lived in... we decided to create an ordinance that would promote the business side of our rental community establishing a low fee license to encourage registration. Tony Bagato, Principal Planner, City of Palm Desert Palm Desert, CALIFORNIA 5

46 The issue: In the summer of 2011, the City Council of Atlantic City quietly voted to prohibit residential property owners from renting their properties for less than 90 days at a time to address allegations of late night noise and parties. There was very little evidence of those parties and such a change was a de facto ban on vacation rentals. The solution: Short-term rental providers formed a coalition, the Atlantic City Coalition of Landlords, hired an attorney and began holding meetings and conference calls. Lawyers found the city wrongly targeted absentee owners and sought to define short-term rentals as hotels. In fact, by targeting absentee owners the city was violating New Jersey law. The Supreme Court judge ruled in the coalition s favor. Atlantic City, NEW JERSEY 6

47 The result: Instead of forcing the city to summary judgment, the group reached an agreement with the city in December 2012 that repealed the ban and stipulated that the city wouldn t prohibit short-term rentals or impose fees on those rentals in the future. Lesson Learned Building a large, well-coordinated group with strong legal representation is incredibly powerful. In the case of Atlantic City, it led to a historic legal ruling. It s critical to have and build relationships with other local property owners as this provides strength and resources in fighting those that attempt to wrongly restrict vacation rentals We ended up paying $35,000 to our lawyers, but that was well worth it given the results we achieved. The more members you have the better as it helps defray the cost, our costs though not fun became affordable with more people involved. It was a very worthwhile investment. Steve Laskarides, Atlantic City, New Jersey Atlantic City, NEW JERSEY 7

48 The issue: Three cabin rental property managers in Blue Ridge, GA formed a group shortly after a local vacation cabin rental company went out of business and allegedly had collected and not remitted taxes. The solution: The Blue Ridge Lodging Association was formed as an alliance of lodging providers working and solving common problems, such as issues with renters, working with subcontractors and how to comply with regulations and pay taxes. The association designed qualifications for others to join, such as proof of paying local lodging taxes, and set best practices for short-term rentals. They created a board, solicited all lodging providers in the area, and planned an event, the Blue Ridge Blues and BBQ Festival, during a slow time between seasons to give people a reason to visit. Blue Ridge, GEORGIA 8

49 The result: The association has united short-term rental providers in the mountains of North Georgia. The Blues and BBQ Festival brought 8,000 to Blue Ridge over two days last year. Lesson Learned Forming a tight-knit group locally that is focused on advancing the interests of short-term rentals is formidable. And creative contributions like the Blues and BBQ festival only makes your group more important to your community. The festival has allowed our board to form great relationships with local officials between the city, county and chamber of commerce. They as well as local businesses and residents appreciate our festival and the meaningful benefits short-term rentals bring to Blue Ridge. CJ Stam, President, The Blue Ridge Lodging Association Blue Ridge, GEORGIA 9

50 When communities decide to regulate short-term rentals in a clear and simple way, such as requiring visitors to pay taxes, rental providers, local businesses and government budgets benefit. Check out these examples of local areas that have enacted clear, easy-tounderstand taxes and how communities have benefited from the revenue: In Orange County, Florida, the tourist development tax on visitors who stay in short-term rentals generated $15.2 million in July 2013 alone. That figure is up 5.4% over the same time period a year ago. County Comptroller Martha Haynie said the income will help the county in meeting its current financial obligations. Okaloosa County, Florida, 12,200 properties pay a local occupancy tax and state sales tax that brought in around $13.2 million in The income funds the Tourist Development Council s operations and advertising to attract more visitors, creating a positive and mutually beneficial cycle. Mutually Beneficial Regulations 10

51 When communities decide to regulate short-term rentals in a clear and simple way, such as requiring visitors to pay taxes, rental providers, local businesses and government budgets benefit. Check out these examples of local areas that have enacted clear, easy-tounderstand taxes and how communities have benefited from the revenue: The city of Encinitas, California used roughly $500,000 it pulled in from an occupancy tax on short-term rentals to help fund research for a project to replenish eight miles of its beaches. The Bradenton Area Convention Center & Visitors Bureau in Florida is partnering with Southern Living magazine to host a restaurant week and country music concert next year. The festival is designed to attract visitors and is funded through revenues from the bed tax that all Manatee County visitors pay when they stay in a local hotel or short-term rental property. Mutually Beneficial Regulations 11

52 Professional Association of Innkeepers International 12

53

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