Administrative Report DISCUSSION ITEM TO:

CITY COUNCIL

FROM:

Steve McClary, Interim City Manager

DATE REPORT PREPARED:

May 16, 2016

MEETING DATE:

May 24, 2016

SUBJECT:

Enforcement of Short-term Rentals

Recommendations Discuss options for enforcement of short-term rentals (also known as "vacation" or "transient rentals") and provide direction to staff. Identified options include, but are not limited to: •

•

•

Maintain the direction to staff to begin enforcement on June 1 of the existing ban on short-term rentals, to include imposing administrative citations, fines, and other remedies as permitted by applicable law; Extend the period of warning-only enforcement (the City is currently in this period) pending the outcome of citizen initiative efforts to place a measure or measures on the ballot that would impact the City's short-term rentals laws. Council could choose to then revisit the matter when a) we know whether any such measures will appear on the November 2016 ballot; or b) upon certification of the vote of any such measures that appear on the November 2016 ballot; Suspend all enforcement pending the outcome of citizen initiative efforts to place a measure or measures on the ballot that would impact the City's short-term rentals laws. The Council could choose to then revisit the matter when a) we know whether any such measures will appear on the November 2016 ballot; or b) upon certification of the vote of any such measures that appear on the November 2016 ballot.

Discussion On January 12, 2016 the City Council voted to continue the ban on short-term rentals (also known as vacation rentals, transient rentals) and directed staff to prepare a resolution confirming the ban, which the City Council approved at its regular meeting on January 26, 2016. The Council also directed staff at that time to develop a plan on the broader enforcement of short-term rentals. In response to that direction, staff and the City Attorney developed an initial

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warning letter template and review process to identify unlawful vacation rentals. To date, this warning letter has been sent to about a dozen property owners for whom the City has evidence indicating that the owners are illegally operating and/or advertising a short-term rental in the City. Additionally, the City sent out legislative subpoenas for vacation rental data from the major vacation and short-term rental advertising websites. To date, only Homeaway, and its affiliated companies, have responded to the subpoena, submitting several objections and not providing any data. The mayor has asked for Council discussion on the matter of continuing implementation of the warning-only enforcement and the previously-directed shift to comprehensive enforcement, including fines and other remedies allowed by applicable law, due to the fact there are two citizen-initiative efforts underway in the City that would legalize short-term rentals in Ojai. Should either or both qualify for a future ballot, the City Council will then have to determine whether to adopt such a measure without change, or place it on the ballot (those are two main options) to let voters decide. Therefore, it is possible that the City could undertake a significant effort towards enforcement for a relatively short period of time, only to see the voters change the City's rules on short-term rentals in November. However, there is no legal reason the City could not begin enforcement on June 1 (or some other directed date) in earnest, regardless of any pending initiatives. The concern would be the amount of City resources required to undertake enforcement knowing there is a chance that effort will be largely wiped out at the polls. On the other hand, it is relatively easy to begin the process to circulate a citizen initiative, so the City runs the risk of inviting other such challenges in hopes it will force the City to delay enforcement or enactment of policy. The Council could direct that the current warning-only enforcement efforts continue, that all enforcement efforts cease, or that full enforcement efforts begin, pending confirmation that one or the other initiative will reach the ballot and/or the result of the election. If the Council directs that full enforcement efforts begin, including imposition of fines and penalties, then staff will return to the Council with a comprehensive enforcement plan for discussion. This plan will include: administrative citations and fines; compliance agreements to confirm compliance and fine payment; subpoenas for data from property owners; advertisement take-down demand letters to hosting sites; and other available tools. If the Council directs that full enforcement efforts begin, fines are then imposed, and either initiative passes, then the fines will not be automatically refunded as vacation or short-term rentals of property for less than 30 days are presently unlawful, other than lawfully permitted hotels, motels, and bed and breakfasts operating in compliance with all applicable regulations. A further question for the Council, if it so directs, will be whether to initiate revocation proceedings for any existing business licenses issued for vacation or short-term rental businesses. It should be noted that suspension of enforcement does not equal permission. The City will continue to deny any applications for permits for a short-term rental.

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Below is an excerpt from the January 26, 2016 city council meeting, showing the actions taken by the City Council on short-term rentals, as follows: MOTION: It was moved by Council Member Lara, seconded by Council Member Clapp to adopt Resolution No. 16-07 confirming the city's existing ban on short term, transient, or vacation rentals and amending the Master Fee and Fine Schedule for Municipal Code Violations. On roll call the vote was: AYES: Clapp, Lara, Weirick NOES: Blatz, Haney ABSENT: None ABSTAIN: None

MOTION: It was moved by Mayor pro tern Weirick, seconded by Council Member Lara to start enforcement with warning letters for the next four months. On roll call the vote was: AYES: Blatz, Haney, Lara, Weirick NOES: Clapp ABSENT: None ABSTAIN: None By consensus, the City Council directed staff to bring back a report in two months on broader enforcement for short term rentals. --End of Excerpt-Fiscal Impact The recommended action has no fiscal impact.

Approved for forwarding City Manager's Office

Submitted by Steve McClary, Interim City Manager Attachments: None

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