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HomeMy WebLinkAbout06-22-17 City Commission Packet Materials - A1. Continued from 05-22-17 - Ordinance 1974 Provisional, STRs (Original Materials) Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Chuck Winn, Assistant City Manager Karen Stambaugh, Assistant City Attorney SUBJECT: Ordinance 1974 Regulating Short Term Rentals in the City of Bozeman MEETING DATE: May 22, 2017 AGENDA ITEM TYPE: Action RECOMMENDATION: Consider provisional adoption of ordinance 1974. This ordinance would amend chapter 38 of the Bozeman Municipal Code to add short term rental (STR) regulations and amend authorized use tables in chapter 38, establish registration requirements and fees, establish standards, provide for enforcement and penalties and provide an effective date. This ordinance would also amend chapter 12 of the Bozeman Municipal Code to except STRs from the requirement to obtain a business license. SUGGESTED FIRST MOTION: Having reviewed and considered the proposed ordinance, public comment, recommendation from the Zoning Commission, and all the information presented, I hereby adopt the findings presented in the staff report for application 17185 and move to provisionally adopt Ordinance 1974. SUGGESTED SECOND MOTION: Having provisionally adopted Ordinance 1974, I move to direct staff to bring back a fee resolution and take all other steps necessary to implement short term rental regulations consistent with the provisionally adopted ordinance. BACKGROUND: On April 24, 2017, City staff presented recommendations to the City Commission regarding potential regulations of short term rentals in the various zoning districts and took public comment. During discussion, Commissioners gave direction to staff regarding specific elements of the recommendations presented. The following table attempts to summarize the changes we incorporated into the draft ordinance in response to the Commission’s direction. Change from Staff’s April 24 Recommendations Zoning Districts Prohibit Type II and Type III in R-1 and R-S Prohibit Type III in R-2 and NEHMU No Conditional Use Permits required in any district 492 1, 06-22-17 Packet Registration Requirements Registration and inspection requirements are the same for all STRs Registration is coordinated with City-County Health Dept., and STR registration will not issue until Health Dept. has approved the STR’s public accommodation license All STR applicants, except Type I, must notify adjacent property owners of their intent to register a STR Adjacent property owner notification changed from formal 200 ft. to adjacent property owners similar to the chicken ordinance Type I STRs are limited to two (2) bedrooms per unit, or one (1) bedroom if the STR is in a two-bedroom dwelling Other Definition of STR changed to define “transient occupancy” as rental for less than 28 days to match Health Department and State requirements STRs are not allowed in designated affordable housing units Included a random selection process (lottery) for on-site fire inspections for renewals Health Department. On May 9th, we met with the City-County Health Department to discuss their particular requirements for STRs and to discuss ways we could coordinate our efforts and streamline the application process for STRs. The process recommendations are included in the flowchart (Attachment A) and within the draft of Ordinance 1974 (Attachment B). The Health Department representative confirmed they consider all three types of STRs “public accommodations” under the state health code (Title 50, Chapter 51 MCA) and thus all STRs must be licensed with the Health Department. Public Meeting. On May 12th, the City hosted a public meeting to discuss the specifics elements of the draft ordinance and to answer questions. About 25 citizens attended the meeting and were able to engage in a discussion ahead of the two opportunities for public comment; the Zoning Commission meeting on May 16, and the City Commission meeting on May 22nd. Review. We recommend a formal review of the STR program in 24 months from the effective date of the ordinance to assess the effectiveness of the program. The draft ordinance includes a reporting requirement by July 31, 2019, which will allow at least one complete cycle of STR registration and annual renewal of registration. Fees: As discussed on April 24, 2017 we recommend registration fees of $250 for all STR registrations and a fire and life-safety inspection fee of $225. These fees would be included in a fee resolution to be considered by the Commission on an upcoming agenda. UNRESOLVED ISSUES: 493 2, 06-22-17 Packet Density cap. At the April 24 meeting, some Commissioners expressed interest in a density cap requirement. Mayor Taylor also noted that other proposed restrictions – especially the prohibition of most STRs in lower-density zoning districts – might adequately address concerns and render the need for a density cap moot. Most cities studied by staff do not include a density cap. Some cities limit the number of STRs permitted per census tract or per block. Other cities have included a distance requirement – an STR cannot be licensed if it is within X feet of another licensed STR. Of the cities staff originally studied, Austin has a 3% density cap for certain types of STRs in residential districts, but not for Type-1 (room rental). Missoula caps “tourist homes” (ie, rental of the entire unit) in single-residence residential zones at one per parcel, and tourist homes in multi-residence districts at two per building. Missoula’s ordinance does not regulate or cap Type-1 STRs. Staff believes prohibiting all but Type-1 STRs in the lowest density residential districts, and capping the number of rooms that may be rented in Type-1 STRs, will address the perceived problems caused by STRs in residential neighborhoods. Issues identified include noise and other nuisance issues, parking, decreasing the supply of affordable housing, and changing the character of neighborhoods. 1. Nuisance. The impact of the use of a home as a Type-1 STR on neighbors should be no different than when the STR owner has relatives or friends to stay. It should not be apparent to the neighbors that room(s) are being used by paying guests rather than invited ones. In addition, nuisance regulations already exist in the Code to address nuisance issues such as excessive noise. 2. Parking. A recent survey of Airbnb listings in Bozeman showed that less than 30% of the listings are for single rooms; most are for rental of entire dwelling units. To the extent STRs worsen the parking situation in neighborhoods, because the proposed regulations remove most STRs from the lowest density residential zones, this problem would be alleviated. 3. Housing supply. Type-1 and Type-2 STRs, because they are the owner’s primary residence, do not take homes off the market. Allowing these types of uses in lower- density residential zoning districts would not affect the supply of homes in those zoning districts. 4. Changing neighborhood character. The proposed regulations allow only Type-1 STRs in the lowest density residential districts (R-1 and R-S). Again, the use of a home as a Type-1 STR should have no greater impact on the neighboring properties than when any property owner in the district allows guests to stay in their home. A density cap also creates an inequitable situation where some property owners in a zoning district have greater rights in their property than others. Depending on how it is administered – first in the door, or a lottery system every year – there could be consequences the City did not intend. One property owner could “tie up” the only available STR registration in order to keep 494 3, 06-22-17 Packet STRs out of the neighborhood. If a lottery system, property owners who are dependent on the rental income would have no predictability. Finally, a density cap is an added layer of administration and enforcement for Community Development and Code Enforcement staff. It will take some additional time to process applications, and give Code Enforcement one more regulation to enforce. These departments are already stretched thin. Staff also questions whether a density cap would be effective – it’s possible a density cap would discourage STR owners from registering, and they would continue to operate their STR “under the radar” as they have in the past. Should the Commission wish to include a density cap in the Ordinance, staff requests direction on how to set the cap and the types of STRs and zoning districts the cap should apply to. ALTERNATIVES: As directed by the Commission. FISCAL EFFECTS: In order for the proposed ordinance to be effective, additional staff time and resources will be required for code and law enforcement officers to enforce the regulations, and for fire inspectors to conduct fire inspections. Staff strongly recommends the purchase of compliance monitoring software such as Host Compliance. Attachments: Attachment A: Registration Process Flowchart Attachment B: Ordinance 1974 Attachment C: Zoning Amendment Report Report compiled on May 15, 2017 495 4, 06-22-17 Packet PROPOSED SHORT TERM RENTAL (STR) REGISTRATION PROCESS STEP #1: APPLY TO THE CITY/COUNTY HEALTH DEPARTMENT FOR A PUBLIC ACCOMMODATION LICENSE. (If applicant contacts the City first, the applicant will be directed to the Health Department.) The Health Department will take the public accommodation license application, collect their application fees, and direct the applicant to the City’s Community Development Department to register their STR with the City and to schedule the fire inspection required by the Health Department. The Health Department will begin their review process. The State of Montana requires every type of STR to obtain a Public Accommodation License pursuant to 50-51-201, MCA. The Gallatin City/County Health Department is charged with implementing this State requirement in Gallatin County. See http://healthygallatin.org/permits-licensing/lodging/ The Health Department and the City will work together on the approval process. The Health Department cannot approve a public accommodation license without a successful fire inspection by the City, and the City cannot approve a STR registration without proof the public accommodation license has been approved. STEP #2: APPLY TO THE CITY COMMUNITY DEVELOPMENT DEPARTMENT FOR STR REGISTRATION The Community Development Department will take the STR registration application, collect the registration fee and fire inspection fee, and forward applicant’s information to the Bozeman Fire Department for inspection scheduling. STEP #3: BOZEMAN FIRE INSPECTION Once the Fire Department receives the request from Community Development, a fire inspector will contact the applicant to schedule the inspection. When the fire inspection is completed and signed off by the fire inspector, the inspector will forward the signed fire inspection form to Community Development. The Community Development Department will provide the signed fire inspection form to the applicant. Every type of STR must register with the City under the proposed STR ordinance. Information, application forms, and the fire inspection checklist will be available on the City website or by contacting the Community Development Department at 20 E. Olive St. 406-582-2260 www.bozeman.net A fire inspection checklist will be provided to the applicant when they first apply so that the applicant may prepare for the fire inspection and hopefully pass on the first try. However, if a repeat inspection is required, additional fees will apply for the re- inspection(s) and must be paid before the re- inspection will be scheduled. STEP 3(a): Applicant provides the signed fire inspection form to the Health Department so they can complete their review. → ↓ ↓ 496 5, 06-22-17 Packet STEP #4: CITY ZONING REVIEW With the fire inspection completed, the Community Development Department will review the registration application materials to confirm the STR complies with city requirements. ↓ ↓ The Health Department completes their review, performs a pre-operational inspection, and approves the public accommodation license. Health Department provides applicant a signed inspection report. STEP #5: ISSUANCE OF STR REGISTRATION Once the Community Development Department determines the STR complies with city requirements and confirms the STR has been licensed by the Health Department as a public accommodation, the City will issue the STR registration. The STR will have a unique registration number. The City will list the STR registration on its website, and the registrant must include the STR registration number on all advertising of the STR. The registration will be valid for one year from the end of the registration month, unless the registration is revoked as provided in the proposed STR Ordinance. STEP #4(a): Once the Health Department public accommodation license is approved, applicant provides a copy of the signed Health Department inspection report to the Community Development Department. 497 6, 06-22-17 Packet ORDINANCE NO. 1974 AN ORDINANCE OF THE CITY COMMISSION OF THE CITY OF BOZEMAN, MONTANA AMENDING CHAPTER 38 OF THE BOZEMAN MUNICIPAL CODE, UNIFIED DEVELOPMENT CODE, TO ADD SHORT TERM RENTAL REGULATIONS; AMENDING AUTHORIZED USE TABLES IN CHAPTER 38; ESTABLISHING REGISTRATION REQUIREMENTS AND FEES; ESTABLISHING STANDARDS; PROVIDING FOR ENFORCEMENT AND PENALTIES; AND PROVIDING AN EFFECTIVE DATE WHEREAS, the City is authorized by its Charter and Montana law to adopt zoning regulations and provide for the enforcement and administration of zoning regulations pursuant to 76-2-304, MCA; and WHEREAS, the Director of Community Development is authorized to determine the appropriate classification of a particular use within zoning districts pursuant to 38.07.050, BMC; and WHEREAS, “extended stay lodging” has been authorized as a conditional use in R-1, R- 2, R-S, and NEHMU zoning districts and as a principal use in R-3, R-4, R-5, R-O, B-2, B-2M, B-3, REMU and UMU zoning districts; and WHEREAS, Interim Zoning Ordinance 1958 (as extended by Ordinance 1970) repealed and suspended extended stay lodging as a conditional use in R-1, R-2, R-S and NEHMU until August 8, 2017 and directed the City Manager to research, seek public input on, and develop recommendations for the regulation of short term rentals; and WHEREAS, it is in the interests of the city to establish regulations and standards for short term rental operations to ensure the public health, safety and welfare of city residents and visitors. NOW THEREFORE, BE IT ORDAINED BY THE CITY COMMISSION OF THE CITY OF BOZEMAN, MONTANA: 498 7, 06-22-17 Packet Section 1 Legislative findings: 1. Short term rentals provide economic opportunities to short term rental owners and other city businesses by attracting visitors to engage in economic and social activities within the city. 2. Short term rentals add to a vibrant, diverse and welcoming community by providing accommodations for a wide variety of visitors, including tourists and travelers, friends and family of residents, and temporary workers. 3. The primary purpose of R-S, R-1, and R-2 residential zoning districts is to provide for primarily single-household and two-household residential and related uses within the city. 4. The rental of sleeping rooms in an owner-occupied dwelling unit while the owner is present on the property, and rental of an owner-occupied dwelling unit for part of the year are primarily residential uses. 5. The rental of a dwelling unit by an owner who does not occupy the home as their primary residence is not a primarily residential use. 6. Restrictions on noise and maximum occupancy, and requirements providing for life safety inspections and easy reporting of concerns and complaints are necessary to help protect city residents’ peaceful enjoyment of their residences and neighborhoods. 7. Reasonable, narrowly tailored regulation of short term rentals is necessary to protect the health, safety and welfare of city residents and visitors. Section 2 That Chapter 12, Article 1 of the Bozeman Municipal Code, Business Licensing, be amended as follows: Sec. 12.01.010. - Definitions. . . . 4. "Home occupationHome-based business" means the use of a portion of a dwelling as an office, studio or workroom for occupations at home by one or more persons residing in the dwelling unit. No home occupation shall occupy more than 20 percent of the gross floor area nor more than 400 square feet of gross floor area. The activity must be clearly incidental to the use of the dwelling for dwelling purposes, and shall not change the character or appearance thereof has the meaning ascribed to it in 38.42.1380. 499 8, 06-22-17 Packet Section 3 That Chapter 12, Article 2 of the Bozeman Municipal Code, Business Licensing, be amended as follows: Sec. 12.02.040. - Exemptions. A. No license shall be required of any person or entity for any mere delivery in the city of any property purchased or acquired in good faith from such person or entity as the person or entity's regular place of business outside the city where no intent by such person is shown to exist to evade the provisions this chapter. B. No license shall be required of any nonprofit organization as defined by this chapter. C. No license shall be required of any person under 18 years of age. D. No license shall be required for any property manager managing or renting less than three rental dwelling units as defined in 38.42.940. E. No license shall be required for short term rentals as defined in 38.22.250.C. EF. The exemptions listed in subsections A, B, C, and D and E of this section do not apply to a transaction, use, or business involving marijuana. Section 4 That Chapter 38, Articles 8-13 of the Bozeman Municipal Code be amended to remove the term “extended stay lodging” as a type of authorized use, and to add “short term rental” as an authorized use in certain zoning districts, as follows: Table 38.08.020 Table of Residential Uses Authorized Uses R-S R-1 R-2 R-3 R-4 R-5 R-O RMH Extended stay lodgings C C C P P P P — Short term rentals (Type 1) P P P P P P P P Short term rentals (Type 2) — — P P P P P P Short term rentals (Type 3) — — — P P P P P 500 9, 06-22-17 Packet Table 38.09.020 Table of Uses Table of Uses Maximum Gross Building Area Authorized Uses Extended-stay lodgingsShort term rentals (all types) 40,000 square feet P Table 38.10.020 Table of Commercial Uses Authorized Uses B-1 B-2 B-2M B-3 Extended-stay lodgingsShort term rentals (all types) -- P P P Table 38.11.020 Table of Uses Authorized Uses Extended-stay lodgingsShort term rentals (all types) P Section 5 That Chapter 38, Article 42 of the Bozeman Municipal Code be amended as follows: Sec. 38.42.390. - Bed and breakfast home. A single-household dwelling which remains owner-occupied at all times providing one or more guest rooms for compensation, and where food service is limited to breakfast which may be served to overnight guests only. Sec. 38.42.940. - Dwelling. A building, or portion thereof, meeting the requirements of the city's adopted International Building Code and used by one household, as defined by this article, for residential purposes. Dwelling occupancy duration is typically longer than 30 continuous days. Dwellings may exist 501 10, 06-22-17 Packet in many configurations, including single-household, two-household, multiple-household dwellings and group homes. Dwellings do not include hotels, motels, extended stay lodgings or tourist homesType-3 short term rentals as defined in article 22. Sec. 38.42.1040. - Extended stay lodgingsReserved. Guest rooms intended or designed to be used, or which are used, rented or hired out to be occupied, or which are occupied for sleeping purposes for guests and contain kitchen facilities for food preparation, including, but not limited to, such facilities as refrigerators, stoves and ovens. Generally an individual guest will not exceed 30 days stay. This definition includes dwelling units used, rented or hired out for vacation homes. Sec. 38.42.1410. - Hotel or motel. A building or a group of buildings in which lodging is provided and offered to transient guests for compensation; the term "hotel or motel" shall not include a boardinghouse, extended stay lodgings short term rental, lodginghouse or roominghouse. Sec. 38.42.2835. – Short term rental. A vacation home, tourist home as defined in MCA 50-51-102, a dwelling as defined in 38.42.940, accessory dwelling unit, or room within a vacation home or dwelling, which is rented by or on behalf of the owner to the general public for compensation for transient occupancy as provided for in article 22. Section 6 That the Bozeman Municipal Code be amended by adding a new section 250, Short term rentals, to Chapter 38, Article 22, Unified Development Code – Standards for Specific Uses, as follows: Sec. 38.22.250. – Short term rentals. A. Purpose and intent. The purpose of this article is to provide for the regulation of short term rentals in certain zoning districts within the city in order to preserve neighborhood character while encouraging economic activity and diversity, and to promote public health, safety, and welfare. B. Applicability. 1. The provisions of this article apply only to short term rentals as defined herein. 2. This article does not apply to any rental of a dwelling unit which is governed and defined by The Montana Residential Landlord and Tenant Act of 1977 (Landlord 502 11, 06-22-17 Packet Tenant Act). This article applies only to transient occupancy of a short term rental as defined herein. 3. A lower-priced or moderate-priced home subject to and defined by chapter 38, article 43, or a dwelling that received financial support from the city, including but not limited to down payment assistance, impact fee payment, or other financial subsidy, may not be used as a short term rental until such time as the lien instrument against the property in favor of the city securing the amount of such subsidy has been released and the release recorded with the Gallatin County Clerk and Recorder’s Office. C. Definitions. For purposes of this article, the following definitions apply: 1. Hosting platform means a person or entity that provides a means through which an owner may advertise and offer for rent a short term rental to the general public. 2. Owner includes any part owner, joint owner, tenant in common, joint tenant, tenant by the entirety, or lessee with exclusive possession under a valid lease or rental agreement, and any agent of the owner such as a property manager. 3. Owner-occupied means the owner occupies the dwelling as his or her principal residence for more than 50% of the calendar year. 4. Responsible person means the person responsible for addressing all maintenance, nuisance, and safety concerns related to a short term rental. 5. Short term rental is defined in article 42 of this chapter. 6. Transient occupancy of a short term rental means occupancy which has the following characteristics: a. The period of occupancy is less than 28 consecutive days, and b. The renter has a principal residence other than the short term rental, and c. The short term rental is furnished with personal property necessary to make the unit ready for immediate occupancy by the renter. D. Short term rental classifications. Short terms rentals are classified as: 503 12, 06-22-17 Packet a. Type-1: Rental of one or more bedrooms in an owner-occupied dwelling while the owner is occupying the same dwelling unit for the entire rental period. b. Type-2: (1) The rental of an owner-occupied dwelling if the owner is not occupying the dwelling during the entire rental period. (2) The rental of a permitted accessory dwelling unit (ADU) whether or not the ADU’s owner is present in the primary dwelling unit during the rental period. (3) The rental of one dwelling unit within a duplex whether or not the duplex’s owner is present in the duplex’s other dwelling unit during the rental period. c. Type-3: A short term rental that is not owner-occupied. E. Where allowed. An owner may establish and maintain a short term rental in all zoning districts where such use is authorized in Chapter 38, articles 8-11 and 14 subject to the requirements of this article. F. Compliance with laws. 1. In addition to the provisions of this article, the short term rental owner must comply with all other applicable local, state and federal laws, including but not limited to city parking regulations, including time limitations and ADA parking restrictions; lodging facility use tax and accommodations sales tax regulations; health department permitting requirements; the Americans with Disabilities Act; fair housing laws; building codes and fire codes, and the nondiscrimination provisions in chapter 24, article 10. Loss of any required permit or license will result in revocation of the short term rental registration in accordance with subsection J of this section. 2. Compliance with all applicable laws and regulations is the sole responsibility of the owner and city approval of an application for short term rental registration in no way waives or transfers to the city such responsibility. In addition, the owner is solely responsible for verifying the use of a property as a short term rental is compatible with insurance and mortgage contracts, home owners’ association covenants, rental agreements and any other contracts which govern the use of the property. G. Administration. The director will collect all registration fees and will issue registrations and renewals thereof in the name of the city to all persons qualified under the provisions of this article and has the power to: 1. Make rules. The director will promulgate and enforce all reasonable rules and regulations necessary to the operation and enforcement of this article. All rules are subject to city commission review and modification. 504 13, 06-22-17 Packet 2. Adopt forms. The director will adopt all forms and prescribe the information to be given therein. 3. Obtain approvals. The director will submit all applications to interested city officials for their approval as to compliance by the applicant with all city regulations which they have the duty of enforcing. 4. Investigate. The director will investigate and determine the eligibility of any applicant for a short term rental registration as prescribed herein. 5. Examine records. The director may examine the books and records of any applicant when reasonably necessary to the administration and enforcement of this article. 6. Give notice. The director shall notify any applicant of the acceptance or rejection of the application and will, upon the director’s refusal of any registration, at the applicant's request, state in writing the reasons therefor and deliver them to the applicant. 7. Record keeping. The director will maintain at all times a record of registered short term rentals, including the full name of each registrant, the address at which such short term rental is operated, the date of issuance, the fee paid therefor, the telephone and address of the applicant, and the time such registration will continue in force. H. Registration. The following requirements apply to all short term rentals unless otherwise noted. 1. General. It is unlawful for any person to operate within the city a short term rental without having first registered the short term rental with the Department of Community Development. A separate registration shall be required for each short term rental. 2. Application; submittal materials. The applicant must complete and submit an application for a short term rental registration to the Department of Community Development using a form provided by the city. The form will include an acknowledgement and agreement the short term rental meets and will continue to meet the definition of short term rental classification (Type-1, Type-2, or Type-3) during the registration term. Before the application will be accepted by the director, the applicant must provide: a. The name, telephone number, address, and email address of all property owners and of the responsible person, if different. If the property owner is a business, the name(s) and contact information of all business owners must be provided. 505 14, 06-22-17 Packet b. A sketch plan with a description of the short term rental, including street address, number of bedrooms, and number of off-street parking spaces available for guests’ use. c. Certification the short term rental meets and will continue to meet the definition of short term rental classification (Type-1, Type-2, or Type-3) during the registration term. d. For Type-2 and Type-3 short term rentals, certification the applicant has read and understood the standards in subsection I of this section and the property applied for meets the standards. e. For Type-2 and Type-3 short term rentals, certification that residents adjacent to the proposed short term rental have been provided written notice in accordance with subsection 8 of this section. f. The registration fee and fire inspection fee. 3. Safety inspections. a. Initial inspection. Prior to issuance of a short term rental registration, an inspection by the city fire department must be completed and signed off by a city fire inspector, or by an NFPA-certified fire inspector using an inspection form approved by the city fire marshal. A fire inspection checklist form will be provided to the applicant with the application materials. If a short term rental registration lapses for any period of time, upon reapplication for registration an inspection must be completed and signed off as described in this subsection before the short term rental registration will issue. b. Re-inspection. If re-inspection or multiple visits by a fire inspector are required before the inspection form may be signed, additional inspection fees will apply. c. Subsequent inspections; self-certification. The city fire marshal may require a repeat inspection on a periodic basis, and at any time upon complaint or evidence of non-compliance. Applications for annual renewal of registration will include a self-certification by the applicant that they continue to comply with the fire inspection checklist. By applying for renewal of registration, the applicant will acknowledge and agree that the city may randomly select a certain percentage, not to exceed 10%, of the renewal applications for a full inspection as described in subsection (a). If selected, the registration renewal will be conditioned on completion of the fire inspection and payment of the fire inspection fee. The owner of a short term rental selected for a full inspection will be allowed to continue to operate the short term rental pending completion of the inspection, provided all other renewal requirements have been met. 4. Safety hazards. The short term rental owner acknowledges that the city, or any authorized representative thereof, have the right to suspend operation of any short 506 15, 06-22-17 Packet term rental when the city determines the rental is causing or contributing to an imminent public health or safety hazard. 5. Fees. Short term rental registration and inspection fees shall be established by resolution of the city commission. 6. Additional notice requirements for registrations and registration renewals of Type-2 and Type-3 short term rentals in residential zoning districts. The applicant for a Type-2 and Type-3 short term rental registration in a residential zoning district must provide notice on a form provided by the city to each residence adjacent, including those residences adjacent across a public right-of-way and properties connected to the applicant’s property by property corners. The notice must include a description of the proposed use and the name, address, telephone number and email address (if any) of the responsible person. 7. Issuance of registration. Once the applicant submits the completed application form, all required submittal materials, and registration and inspection fees, the director will review the application form and submittal materials and determine whether the short term rental meets all city requirements for registration. The city will issue the short term rental registration when: a. The director determines the short term rental meets all city requirements for registration; and b. The applicant has provided either a signed pre-operational inspection report from the health department indicating the short term rental may operate as a public accommodation or a valid and current public accommodation license issued by the state of Montana department of health and human services pursuant to Title 50, Chapter 51, MCA. 8. Listing of registration. The short term rental registration form will require the applicant to agree to inclusion in an online listing of short term rentals registered with the city, to include the registrant’s name, address and contact information. 9. Display of short term registration number. The owner must include the short term rental registration number in all listings of the short term rental on any hosting platform and print advertising. 10. Change in ownership. A short term rental registration does not run with the land, and a change in ownership of the short term rental terminates the registration. The new owner wishing to continue operation of the property as a short term rental must apply for registration following the process described in this section. 507 16, 06-22-17 Packet 11. Expiration. Registrations issued pursuant to this article are valid for one year from the month in which such registration is issued and will expire automatically unless renewed in accordance with this section. 12. Renewal. The registrant may apply to renew the registration annually using a form provided by the city. It is the registrant’s responsibility to renew the registration on time even if a courtesy reminder is not received by the registrant. I. Short term rental standards. The following requirements apply only to Type-2 and Type- 3 short term rentals unless otherwise noted. 1. Short term rental agreement; written rules for guests. The short term rental owner must enter into a written rental agreement with the guest for each stay in the short term rental. a. The guest must be provided with a written list of rules applicable to the short term rental with the rental agreement, and the rental agreement must include a written acknowledgement by the renters of their agreement to comply with such rules. b. The list of rules must include those rules required by this article to be included. c. The list of rules must be prominently displayed within the short term rental. 2. Responsible person. The applicant must designate a person responsible for addressing all maintenance, nuisance, and safety concerns related to a short term rental. The responsible person must be available to take and respond to reports of concerns and complaints 24 hours per day, 7 days per week during the registration term. The name and contact information for the responsible person must be included in the list of rules. 3. Maximum occupancy for Type-2 and Type-3 short term rentals. The maximum occupancy of a Type-2 or Type-3 short term rental is two persons per bedroom plus two additional persons, except that this number may be reduced by the city based on available parking spaces. The maximum occupancy will be noted on the short term rental registration and must be included in the list of short term rental rules. 4. Maximum number of bedrooms that may be rented in a Type-1 short term rental; maximum occupancy. The owner of a Type-1 short term rental may rent or offer for rent up to two bedrooms in the dwelling, except that in a two-bedroom dwelling, only one bedroom may be rented or offered for rent. No other area of the dwelling may be rented or offered for rent. The maximum occupancy of a Type-1 short term rental is two persons per bedroom. 508 17, 06-22-17 Packet 5. Trash removal. The responsible person must ensure proper disposal of solid waste pursuant to local and state rules, regulations and laws. The schedule for trash and recycling collection and instructions for proper disposal must be included within the short term rental rules. 6. Signage. Exterior signs identifying the unit as a short term rental are prohibited on short term rentals. During a rental period, there must be a sign posted inside the front door of the short term rental showing the locations of all fire extinguishers in the unit, the gas shut-off valve, and fire exits. 7. Noise and nuisance a. The owner of the short term rental must ensure that use of the short term rental by guests is in compliance with the noise provisions of chapter 16, article 6 and all nuisance provisions of the Bozeman Municipal Code. b. A prohibition against making loud noise in such a manner as to disturb the quiet, comfort or repose of a reasonable person of normal sensitivity must be included in the short term rental rules. c. All outdoor activities producing noise discernible from a neighboring property shall cease by 10:00 p.m. This requirement must be included in the short term rental rules. J. Violations; enforcement. 1. Registration suspension or revocation. The director may suspend or revoke a short term rental registration when the registrant commits one or more of the following acts or omissions: a. Failure to comply with any provision of this article; b. Operating or allowing the operation of the short term rental in such a manner as to create a public nuisance, cause a breach of the peace, constitute a danger to the public health, safety, welfare or morals, or interfere with the rights of abutting property owners; c. Cancellation of the health department’s public accommodation license, tax authority registration, or any other required permit; or d. The securing of the registration by fraud or misrepresentation, to specifically include false or incorrect information on the registration application. 2. Procedure. Should the director decide to suspend or revoke a registration, the registrant will be given notice and an opportunity to respond following the procedures in this subsection, except that should the director determine the short term rental or its 509 18, 06-22-17 Packet operation present a safety hazard or require immediate remedy, the director may order operation of the short term rental to cease immediately. a. The registrant will be notified in writing by the director at least seven days prior to the action contemplated and the reasons therefore. b. Upon receipt of the notice, the registrant may request a meeting with the director. Such request must be in writing and must be received by the director within seven days of the registrant’s receipt of the notice. Failure on the part of the registrant to request in writing a meeting and within the specified time period shall be a waiver of the registrant’s right to a meeting. c. If a meeting is requested by the registrant, the director will set a time, date and place and will so notify the registrant, in writing. d. When a meeting is conducted, the city will present the evidence supporting the contemplated action. The director may request evidence be presented by other parties. The registrant may present evidence. The director will take all evidence admitted under advisement and once a decision has been made the director will notify the registrant of the findings and decision in writing. 3. Appeal. Any person aggrieved by a decision of the director will have the right to appeal to the city commission by following the procedures in 38.35.030. 4. Unpaid fee constitutes debt. The amount of any unpaid fee, the payment of which is required hereunder, constitutes a debt due the city. 5. Violation constitutes a misdemeanor. In addition to suspension or revocation under subsection A of this section, a knowing violation of this article constitutes a misdemeanor punishable as described in 38.34.160. Section 7 Grace period. A short term rental as defined in this Ordinance operating as of the effective date of this Ordinance must submit a complete application and appropriate fee within 60 days after the effective date, except that any extended stay lodging facility or short term rental operating legally pursuant to an approved conditional use permit and/or a valid business license may continue in operation without registration of the short term rental until expiration of such business license. Failure to submit a complete application and applicable fees within such time periods is a misdemeanor punishable as described in 38.34.160 and may result in an enforcement action for non-compliance with the requirements of this Ordinance. Applicants who submit a 510 19, 06-22-17 Packet complete application and appropriate fee within 60 days after the effective date may operate pending completion of the fire inspection required in 38.22.250.G.4 by submitting a signed self- certification on a form provided by the city that the short term rental meets applicable safety requirements. Section 8 Reporting. By July 31, 2019 the City Manager must report to the City Commission on the efficacy of the regulations adopted pursuant to this Ordinance. Section 9 Repealer. All provisions of the ordinances of the City of Bozeman in conflict with the provisions of this ordinance are, and the same are hereby, repealed and all other provisions of the ordinances of the City of Bozeman not in conflict with the provisions of this ordinance shall remain in full force and effect. Section 10 Savings Provision. This ordinance does not affect the rights and duties that matured, penalties that were incurred or proceedings that were begun before the effective date of this ordinance. All other provisions of the Bozeman Municipal Code not amended by this ordinance shall remain in full force and effect. Section 11 Severability. That should any sentence, paragraph, subdivision, clause, phrase or section of this ordinance be adjudged or held to be unconstitutional, illegal, or invalid, the same shall not affect the validity of this ordinance as a whole, or any part or provision thereof, other than the part so 511 20, 06-22-17 Packet decided to be invalid, illegal or unconstitutional, and shall not affect the validity of the Bozeman Municipal Code as a whole. Section 12 Codification. This ordinance shall be codified as indicated in Sections 2-6. Section 13 Effective Date. This ordinance shall be in full force and effect thirty (30) days after final adoption. PROVISIONALLY ADOPTED by the City Commission of the City of Bozeman, Montana, on first reading at a regular session held on the _____ day of ________________, 2017. ____________________________________ CARSON TAYLOR Mayor ATTEST: ____________________________________ ROBIN CROUGH City Clerk 512 21, 06-22-17 Packet FINALLY PASSED, ADOPTED AND APPROVED by the City Commission of the City of Bozeman, Montana on second reading at a regular session thereof held on the ___ of ____________________, 2017. The effective date of this ordinance is __________ __, 2017. _________________________________ CARSON TAYLOR Mayor ATTEST: _______________________________ ROBIN CROUGH City Clerk APPROVED AS TO FORM: _________________________________ GREG SULLIVAN City Attorney 513 22, 06-22-17 Packet 17185, Staff Report for the Short Term Rental Municipal Code Text Amendment Public Hearing Dates: Zoning Commission, May 16, 2017 City Commission, May 22, 2017 Project Description: Amend the Bozeman Municipal Code to address short term rentals. The amendment will create and repeal definitions, establish where short term rentals are allowed, establish what standards apply to short term rentals, and the review process for approval of short term rentals. A requirement for a business license will be removed. Three different types of short term rentals will be authorized. In general, a short term rental is a vacation home; dwelling as defined in 38.42.940; accessory dwelling unit; or room within a vacation home or dwelling, rented by or on behalf of the owner to the general public for compensation for periods of less than 28 consecutive days. Project Location: These amendments apply to all residentially zoned property designated as RS, Residential Suburban District; R-1, Residential Single-Household Low Density District; R-2, Residential Two-Household Medium Density District; R-3, Residential Medium Density District; R-4 Residential High Density District; R-5, Residential Mixed-Use High Density District; R-O, Residential-Office District; RMH, Residential Manufactured Home Community District; REMU, Residential Emphasis Mixed-use District; and NEHMU Northeast Historic Mixed-Use District. The amendments also apply to non-residential districts BP, Business Park; B-2 Community Business District; B-2M, Community Business District – Mixed; B-3, Central Business District; and UMU, Urban Mixed Use District. Recommendation: Approval Zoning Commission Recommended Motion: Having reviewed and considered the proposed ordinance, public comment, and all the information presented, I hereby adopt the findings presented in the staff report for application 17185 and move to recommend adoption of Ordinance 1974. Commission Recommended Motion: Having reviewed and considered the proposed ordinance, public comment, recommendation from the Zoning Commission, and all the information presented, I hereby adopt the findings presented in the staff report for application 17185 and move to provisionally adopt Ordinance 1974. Report Date: May 17, 2017 Staff Contacts: Chris Saunders and Chuck Winn Agenda Item Type: Action - Legislative 514 23, 06-22-17 Packet TABLE OF CONTENTS EXECUTIVE SUMMARY ...................................................................................................... 2 Unresolved Issues ............................................................................................................... 2 Project Summary ................................................................................................................. 3 Zoning Commission ............................................................................................................ 3 City Commission Alternatives ............................................................................................ 4 SECTION 1 - MAP SERIES .................................................................................................... 5 SECTION 2 - RECOMMENDATION AND FUTURE ACTIONS ........................................ 8 SECTION 3 - STAFF ANALYSIS AND FINDINGS ............................................................. 8 Section 76-2-304, MCA (Zoning) Criteria ......................................................................... 9 PROTEST NOTICE FOR ZONING AMENDMENTS ......................................................... 18 APPENDIX A - PROJECT BACKGROUND ....................................................................... 18 APPENDIX B - NOTICING AND PUBLIC COMMENT .................................................... 18 APPENDIX C - APPLICANT INFORMATION AND REVIEWING STAFF .................... 20 FISCAL EFFECTS ................................................................................................................. 21 ATTACHMENTS ................................................................................................................... 21 EXECUTIVE SUMMARY Unresolved Issues 1) The Commission must ultimately determine what set of standards best address the variety of issues affecting short term rentals. 2) Some homes have reduced parking required because a deviation or a PUD relaxation was previously approved to have less parking than the norm. When calculating required parking for STR should the minimum standards as generally applicable today or the approved amount of parking for the existing residential use be applied? 3) The limitation on what type of STR is allowed in the R-2 zone will be reflected in the Northeast Historic Mixed Use District (NEHMU) which is a blend of uses from R-2 and M-1. M-1 does not allow STR. Which does the Commission wish to apply to STR in NEHMU? 515 24, 06-22-17 Packet Project Summary For several years, the City Commission has been considering issues related to the increase in the number of short term rentals (STRs) throughout the City and in particular Bozeman’s lower density residential zoning districts. During the past 9-10 months City staff has, at the Commission’s direction, been studying possible regulation of STRs. The Commission discussed this issue at its regular meeting on July 11, 2016 and a continuation of that discussion occurred on July 18, 2016. The staff memorandum from those policy discussions is available in the City’s online archive of Commission materials. On July 18, 2016 the Commission requested that staff draft an interim zoning ordinance that would prohibit extended stay lodging uses in specific zoning districts until such time as the City was able to study the effects of the increasing number of STRs on existing residential neighborhoods. “Extended stay lodging” was a conditional use in R-1, R-2, R-S and NEHMU, subject to approval of a conditional use permit (CUP) pursuant to 38.19.110, Bozeman Municipal Code (BMC). Interim Zoning Ordinance 1958 repealing and suspending “extended stay lodging” as a conditional use in these zones was adopted on August 8, 2016 and was to expire on February 8, 2017. It was extended by Ordinance 1970 on February 6, 2017 for an additional six months and will now expire on August 8, 2017. Substantial outreach to the community has resulted in participation from hundreds of persons through surveys, attendance at meetings, and written comments. The comments have been wide ranging in the topics and diverse in preferences. The comments are almost evenly divided whether to approve or disapprove STRs. Ordinance 1974 amends several portions of the municipal code. This report is specific to those sections of the ordinance which revise Chapter 38 of the municipal code. Zoning Commission At their public hearing on May 16, 2017, the Zoning Commission did not recommend approval of the ordinance. The recommended motion was made and failed to pass 0-4. The Zoning Commission did not find that there was adequate justification for regulating short term rentals to the degree proposed in the draft ordinance. They found that short term rentals were not an intrusion in residential areas. The video record of the meeting can be seen at http://www.bozeman.net/Video. The Zoning commission discussion included a variety of reasons why they did not support the ordinance including that they considered the ordinance overreached, why STR were beneficial, how Type 3 STR could be segregated, concern on Criterion J and negative effect of the ordinance, cost of administration, STR ability to support income to owners to enable them to afford to live in Bozeman. 516 25, 06-22-17 Packet Thirteen members of the public spoke at the public hearing. Two written comments were received in advance of the meeting and after the distribution of the packet. See Appendix B of this report for a description of the public comments. City Commission Alternatives 1) Adopt the ordinance as presented; 2) Direct revisions to the ordinance prior to adoption; 3) Do not adopt the ordinance; or 4) Request additional information and continue discussion on the ordinance. 517 26, 06-22-17 Packet SECTION 1 - MAP SERIES 518 27, 06-22-17 Packet 519 28, 06-22-17 Packet 520 29, 06-22-17 Packet SECTION 2 - RECOMMENDATION AND FUTURE ACTIONS Having considered the criteria established for a municipal code text amendment, Staff recommended approval as submitted. The Zoning Commission held a public hearing on this text amendment on May 16, 2017, at 6 pm at 121 N. Rouse Avenue, Bozeman. The City Commission will hold a public hearing on the amendment on May 22, 2017, at 121 N. Rouse Avenue, Bozeman. The meeting will begin at 6 p.m. If the Commission provisionally adopts the ordinance, a final adoption action will be scheduled. SECTION 3 - STAFF ANALYSIS AND FINDINGS In considering applications under this title, the advisory boards and City Commission shall consider the following criteria. As an amendment is a legislative action, the Commission has broad latitude to determine a policy direction. 521 30, 06-22-17 Packet In considering the following criteria the analysis must show that the amendment accomplishes zoning criteria A-D or is neutral. Criteria E-K must be considered and may be found to be affirmative, neutral, or negative. A favorable decision on the proposed application must find that the application meets all of criteria A-D and that the positive outcomes of the amendment outweigh negative outcomes for criteria E-K. Section 76-2-304, MCA (Zoning) Criteria A. Be in accordance with a growth policy. Yes. The growth policy does not dictate uses or specific standards to the level of detail contained in the ordinance. It does identify issues and priorities for consideration and does contain goals and objectives that are desirable outcomes. There is no prioritization of one goal or objective over another. In determining appropriateness of a particular zoning ordinance, the Commission needs to find a balance that best advances the interests of the community. The City adopted the current edition of the growth policy, the Bozeman Community Plan, in 2009. The growth policy has 285 pages of data, goals, and description, most of which is not applicable to the discrete issue of short term rentals. A review of the document found goals and objectives applicable to this application. Each is identified and addressed in turn. “Objective G-2.1: Ensure that development requirements and standards are efficiently implemented, fairly and consistently applied, effective, and proportionate to the concerns being addressed.” Response: The public comment on STRs has been extensive. See Appendix B for a summary. A theme in the comments has been to ensure that any regulations are reasonable. This is consistent with the objective. The draft ordinance meets the objective. The regulations match specific concerns with specific standards. For example, a safety inspection is required to ensure that guests have adequate exiting options from sleeping areas in case of fire. The exiting standard will be the same as for other residential properties. This standard has been evaluated by fire and building organizations nationwide and found to be adequate. All STRs who do not meet this standard will have the opportunity to make a correction before beginning operation. If they cannot meet the standard they will not be approved. Implementation of the exiting standard will use existing programs and personnel which is more efficient than creating new standards or programs to address the need. Chapter 3 identifies seven land use principles which are the basis for the chapter. An applicable principle which has also appears in many of the public comments is neighborhoods. “ Neighborhoods. There is strong public support for the preservation of existing neighborhoods and new development being part of a larger whole, rather than just anonymous subdivisions. This idea includes the strengthening and support of existing 522 31, 06-22-17 Packet neighborhoods through adequate infrastructure maintenance and other actions. As the population of Bozeman grows, it is harder to keep the same “small town” feel because residents cannot be on familiar terms with everyone. The neighborhood unit helps provide the sense of familiarity and intimacy which can be lacking in larger communities. The neighborhood commercial/activity center and local parks provide opportunities to casually interact with other nearby residents. Not all neighborhoods are of equal size or character.” Response: This excerpt from the plan notes that neighborhoods are both important and vary in character and size. People often make reference to their neighborhood in describing where they live. The personal mental map of what defines the neighborhood are influenced by familiarity, availability of notable features, social connections, and travel patterns. Neighborhoods are often difficult to define objectively as a specific geographic area and may not have strongly marked natural edges as perceived identity may changes with proximity to a characteristic feature. A neighborhood is defined in the glossary to the growth policy as: “Neighborhood. An area of Bozeman with characteristics that distinguish it from other areas and that may include distinct economic characteristics, housing types, schools, or boundaries defined by physical barriers, such as major highways and railroads or natural features, such as watercourses or ridges. A neighborhood is often characterized by residents sharing a common identity focused around a school, park, business center, or other feature. As a distinct and identifiable area, often with its own name, neighborhoods are recognized as fostering community spirit and a sense of place, factors recognized as important in community planning.” The definition nor the reality of neighborhoods rely on zoning district boundaries as distinguishing features. The City’s Neighborhoods program does defined specific geographic areas as individual neighborhood areas in association with the owners and residents of the proposed neighborhood. The map of organized neighborhoods shows that 12 of 14 recognized neighborhoods span zoning district boundaries. As discussed in Appendix B, the City conducted substantial outreach to the public regarding STRs. The majority of comments supported allowing STRs in all zoning districts. Some comments suggested STRs with a less intensive use level would be a better fit for zoning districts with more restrictive and less intensive other uses. Chapter 3 contains multiple goals and objectives. Two goals are specifically applicable to short term rentals. “Goal LU-1: Create a sense of place that varies throughout the City, efficiently provides public and private basic services and facilities in close proximity to where people live and work, and minimizes sprawl. Rationale: A sense of community is strengthened by distinctive areas which facilitate neighborhood identity. This is strengthened when essential services are available and 523 32, 06-22-17 Packet encourage informal interactions. Full featured neighborhoods allow extensive interaction and build identity with a specific part of the community. A sense of place does not prohibit change or continued evolution of the community.” Response: The draft ordinance respects the existing zoning district structure which contributes to the development of a varied sense of place within the City. Objective LU-1.3: Encourage positive citizen involvement in their neighborhood and community. Response: The City’s outreach efforts for STRs has fulfilled this objective for this text amendment. See Appendix B. Further, the draft ordinance requires those seeking approval for a Type 2 or Type 3 STR to provide notification to nearby residents and to provide contact information. This is a higher level of notice than would be required otherwise. Use of an existing residence as an STR falls within the scope of a sketch plan review for zoning compliance as described in Section 38.19.070 of the municipal code. Section 38.40.030 of the municipal code describes the level of notice required for all applications. Sketch plans do not require independent notice. Working directly with local residents and owners strengthens understanding of respective concerns of STR owners and adjacent residents who may be affected by the STR. “Objective LU-1.4: Provide for and support infill development and redevelopment which provides additional density of use while respecting the context of the existing development which surrounds it. Respect for context does not automatically prohibit difference in scale or design.” Response: The online listings for STRs show them distributed throughout the community. Short term rentals occur within previously approved residential buildings which reviewed for compliance with all applicable zoning criteria. Therefore, the objective is met for the physical characteristics of the site. The draft ordinance creates three categories of STRs because there is a wide diversity of operations from incidental to a owner occupied residence to a full-time wholly occupied building. Conversion from a full time residence to an STR is redevelopment within the meaning of this objective. The procedures and standards of the draft ordinance require an STR to operate in a manner that respects the existing context by limiting intensity of use, requiring adequate parking, and ensuring that users are informed of noise restrictions. “Goal LU-3: Strengthen the Historic Core of Bozeman to preserve the community character, economic resource, and historical connection represented by this area. Rationale: The Historic Core, as defined in the glossary, is one of Bozeman’s most distinctive and valued features. Loss of or injury to this area would lessen the community’s cultural, economic, and social assets and reduce the sense of place Bozeman holds within the community, state, and nation.” 524 33, 06-22-17 Packet “Objective LU-3.1: Ensure that development and redevelopment of this area, including the adaptive reuse of historic buildings, is done in a manner which enhances, and is compatible with, the current community fabric.” Response: Public comment is mixed on this goal. Some asserts that STRs may be more carefully maintained than longer term rentals in the same area. Some asserts that a vacant home is more or less disruptive than one used as an STR. In 2016, 5,200,000 million persons drove through Bozeman and of those 1,900,000 spent at least one night in Bozeman. The downtown area is one of Bozeman’s most prominent physical and social features. Proximity to downtown can be an asset to visitors. Well-established residential areas with a wide mix of housing types surround downtown. The historic core encompasses commercial, residential, institutional, and industrial uses. There are competing viewpoints of what will best strengthen the historic core. Reinvestment in building maintenance will support the preservation of the distinctive buildings and streetscapes. Reinvestment can be by a fulltime resident owner or by a business operator of an STR. Public comment contains assertions that the opportunity to meet visitors to STRs strengthens social bonds and assertions that short term visitors do not contribute to the social structures that build the local community. Neither assertion invalidates the other as both can be occurring at different levels of interaction. Section 3.4 Land Use Category Descriptions. “ Residential. This category designates places where the primary activity is urban density dwellings. Other uses which complement residences are also acceptable such as parks, low intensity home based occupations, fire stations, churches, and schools. High density residential areas should be established in close proximity to commercial centers to facilitate the provision of services and employment opportunities to persons without requiring the use of an automobile. Implementation of this category by residential zoning should provide for and coordinate intensive residential uses in proximity to commercial centers. The residential designation indicates that it is expected that development will occur within municipal boundaries, which may require annexation prior to development. Community Core. The traditional core of Bozeman is the historic downtown. This area has an extensive mutually supportive diversity of uses, a strong pedestrian and multi- modal transportation network, and a rich architectural character. Essential government services, places of public assembly, and open spaces provide the civic and social core of town. Residential development on upper floors is well established. New residential uses should be high density. The area along Main Street should be preserved as a place for high pedestrian activity uses, with strong pedestrian connectivity to other uses on nearby streets. Users are drawn from the entire planning area and beyond. The intensity of development is high with a Floor Area Ratio well over 1. Future development should continue to be intense while providing areas of transition to adjacent areas and preserving the historic character of Main Street. 525 34, 06-22-17 Packet Response: The residential designation underlays all residential zoning districts. The description is broad and does not compel one or another district on a given location. The focus is on housing use, not housing ownership. Rentals are equally acceptable as owned dwellings in all areas with a residential designation. Short term rentals are consistent with this designation as they occur within residential structures and the use can begin and end without any change to the structure. Public comment submitted from AirBNB (see Attachment 3, 2017 comments hyperlink) asserted that there were 300 active hosts with 350 listings, average guest stay was 3.3 nights, and a typical listing was for 49 nights per year, and 5 percent of listings were for more than 180 days per year. Staff has no data to dispute these assertions. Assuming this data is representative of the overall industry, 95% of STRs appear to classify as Type 1 or Type 2 which occur within the owners principal residence and average 15 visits per year. According to the US Census Bureau’s American Community Survey 2015, Bozeman had an estimated 18,293 dwellings. If the number of Type 3 STRs were three times that indicated by AirBNB’s comments then Type 3 STRs would comprise 0.29% of all the housing in Bozeman. This appears to fit within the “Other uses which complement residences…” element of the Residential land use category description. The community core description supports inclusion of STRs through its call for diversity of uses and its draw for users from within and without the planning area. The draft ordinance includes STRs in most mixed use and commercial districts. The establishment of an STR would first require approval for residential uses according to the standards of the district. Chapter 4 opening statement. “Community Quality refers to those things that make Bozeman a special, attractive and enjoyable place to live, work, and play. Community Quality issues include the ways neighborhoods are designed, the way new development looks, the way our streets feel including our urban forest, parkland, trails, commercial districts, new and old residential neighborhoods, open spaces, views to the mountains that surround the City, the historic and new architectural styles, and the core of Downtown Bozeman. An important component of Bozeman’s uniqueness and livability is the quality of the people who live and work here. Community quality, regardless of design, is ultimately meaningless without citizens that respect each other and treat one another and the City landscape with decency.” Response: The draft ordinance requires notification, registration, and option for revocation of registration for those who do not operate an STR in accordance with established standards. Public comment included assertions that part of what makes Bozeman desirable is its welcoming character to visitors and new residents. It also included assertions that visitors to STRs can be disruptive and disrespectful. Both can be factual. Police and fire response data do not show a disproportionate impact from STRs. This could be a deficiency in reported issues. A majority of 526 35, 06-22-17 Packet public comment respondents found that owner present short terms rentals were the most acceptable. This is the Type 1 option. Goal H-1: Promote an adequate supply of safe, quality housing that is diverse in type, density, cost, and location with an emphasis on maintaining neighborhood character and stability. Rationale: A community needs a variety of housing stock to accommodate the diversity in personal circumstances and preferences of its population. The type of housing required may be different throughout a person’s life. A healthy community has a wide range of citizens with differing age, education, economic condition, and other factors. Stable neighborhoods encourage reinvestment, both financial and emotional that strengthens and builds the community. Objective 1.1 - Encourage and support the creation of a broad range of housing types in proximity to services and transportation options. Objective 1.2 – Encourage the preservation and rehabilitation of the existing housing stock to protect the health, safety, and welfare of Bozeman residents. Objective 1.3 - Promote the provision of a wide variety of housing types in a range of costs to meet the diverse residential needs of Bozeman residents. Goal H-3– Encourage an adequate supply of affordable housing and land for affordable housing. Rationale: There will always be a portion of the population which earns less than the median income. This may be for many reasons. This affects the ability to find market rate housing which is adequate for basic housing needs. Lack of adequate housing effects health, social stability, and many other issues which can have severe negative and inter- generation effects. Objective 3.1 – Encourage the provision of affordable housing. Objective 3.3 – Promote the development of a wide variety of housing types, designs, and costs to meet the wide range of residential needs of Bozeman residents. Response: Some comments on the issue of affordable housing asserted that use of homes for STRs can remove dwellings from the stock of homes for long term use and therefore increase pricing. Other comments asserted that the ability to obtain additional income from rentals was helpful in being able to meet housing costs. Type 1 or Type 2 STRs occur within the principal residence of the owner or lessee. Therefore, they do not remove dwellings from the housing stock. According to the US Census Bureau’s American Community Survey 2015, Bozeman has an estimated 18,293 dwellings. Public comment submitted from AirBNB asserted that there 527 36, 06-22-17 Packet were 300 active hosts with 350 listings, average guest stay was 3.3 nights, and a typical listing was for 49 nights per year, and 5 percent of listings was for more than 180 days per year. Staff has no data to dispute these assertions. Assuming this is representative of the overall industry then only 5% of the STRs would be Type 3, which are not the owner’s principal residence. Type 3 STRs would remove a dwelling from the general housing stock for at least a part of the year. If the number of Type 3 STRs were three times that indicated by AirBNB’s comments (assuming additional units with different listing services) then Type 3 STRs would comprise 0.29% of all the housing in Bozeman. This is a very small percentage and appears unlikely to have material impacts on housing prices. The draft ordinance does include a restriction on the operation of STRs within dwellings where financial affordable housing support was provided by the City. This restriction ends when the City has recaptured the support. It is expected that this will prevent redirection into a non-owner occupied condition. Overall, after considering the public comment, text of the growth policy, and the draft ordinance staff finds that the growth policy does not prohibit STRs in any area of the community. Neither is there specific direction in the growth policy to compel unlimited authorization for STRs throughout the community. The draft ordinance is responsive to applicable goals and objectives of the growth policy. The City Commission in their final action on the draft ordinance has authority to weigh the various considerations and determine what ordinance ultimately best balances the interests of the community. This includes the decision to not regulate. B. Secure safety from fire and other dangers. Yes. Required initial and periodic follow-up inspections will help ensure that locations are safe. Designs which cannot demonstrate adequate exiting from sleeping areas, fire suppression or access, or compliance with other adopted safety standards will not be approved. Site with less owner supervision are subject to greater inspection and information to guest requirements. See also criterion C. C. Promote public health, public safety, and general welfare. Yes. The essential standards for provision of public services such as water and sewer will not be modified. The balance of proposed standards are expected prevent overcrowding or other negative impacts. Examination of police and fire records do not show any unusual demand for services from STRs. The Health Department’s implementation of state law requires a public accommodation license for all STRs. This in turn requires safety inspections performed by the Health Department and Fire Department to address sanitation, emergency exiting, and other issues. Structures which do not pass these inspections will not be allowed to be STRs. The City will coordinate its review process for STRs with the Health Department to ensure that all required inspections have been passed prior to approval of use of an STR. 528 37, 06-22-17 Packet D. Facilitate the provision of transportation, water, sewerage, schools, parks and other public requirements. Neutral. Short term rentals are the use of an existing residence within a residential or non- residential zoning district. The determination of whether a residence is appropriate in that location is previously determined by application of a zoning district through a zone map amendment and by review of a site specific development. Use as an STR does not materially change the essential use of the property or the physical characteristics of the residential use as it applies to this criterion. Demand for services from STRs is expected to be similar to other residential uses. Mitigation for residential impacts will be addressed either during subdivision or site development review of the property. Billing for sewer or water consumption will follow standard practice and offset public expenses. E. Reasonable provision of adequate light and air. Neutral. The basic standards for setbacks, dedication of parks, etc. that affect this criterion are not altered with the proposed ordinance. Minimum standards for windows and air circulation/venting remain in the building codes. There is a maximum occupancy standard keyed to the number of bedrooms in each STR to limit excessive occupancy. Maximum occupancy is most restrictive in Type 1 STRs where the owner must be present during the time of use. F. Effect on motorized and non-motorized transportation systems. Neutral. The current allowances and requirements for parking apply based on the number of bedrooms in the structure. Presently, any residential development may count a certain number of on-street parking spaces and provide for parking on-site as well. The draft does not require enclosed parking of any sort. Enclosed parking is allowed if the owner chooses to provide it. This is the same standard that applies to other residential development. STRs must provide the same perimeter sidewalks as all other development. Short term rentals occur within residential or mixed use structures. Evaluation of overall traffic effects will occur during subdivision or site development review. This standard is no different from other residential development. G. Promotion of compatible urban growth. No. The ordinance does not change any development standard that would enhance the ability to expand the City. The ordinance does not impede the expansion of the City. Therefore, the ordinance is neutral rather than a promotion of urban growth. H. Character of the district. Yes. Residences are an allowed use in all R and most B zoning districts. There are options for administrative approval in all districts where residences are allowed. Short Term Rentals are a form of residential use therefore, they are consistent with the character of each district. They may only occur within structures which comply with development standards applicable 529 38, 06-22-17 Packet to that district. The proposed ordinance places more intensive uses into districts which allow more intensive uses. Registration will enable the City to track use and follow up if there are problems with a particular location. Some public comment asserts that STRs are not residential uses and should not be allowed in some zoning districts. The majority of public comments asserts that STRs should be allowed in all zoning districts. All zoning districts provide for a variety of principal and conditional uses. Those uses vary by district. The uses range in intensity and likely size. No single use defines the entirety of any zoning district. The draft ordinance identifies STRs as principal uses. This shows a determination that the use is consistent with the overall character of the district represented by the total of all uses and development standards applicable to each district. Short term rentals must abide by the same physical standards for setbacks, building heights, lot coverage and others which apply in each district. The draft ordinance finds that STRs are a residential use of property. The classification of three types of STRs enables the intensity of respective use to be fitted to individual districts. Therefore, this criteria is met. I. Peculiar suitability for particular uses. Neutral. Short term rentals are the use of an existing residence within a residential or non- residential zoning district. The determination of whether a residence is appropriate in that location is previously determined by application of a zoning district through a zone map amendment and by review of a site specific development. Use as an STR does not materially change the essential use of the property or the physical characteristics of the residential use. Conversion from an STR to a permanent residence requires no zoning review or alteration to the property. J. Conserving the value of buildings. Yes. The standards and procedures for STRs do not alter the standards for building location, size, or other physical development standards. No structure will be non-conforming due to the proposed ordinance. The proposed standards for STRs offset or prevent the physical effects of their use. Adequate parking must be provided prior to approval of a registration. Utilities will have the same connections as other dwellings. K. Encourage the most appropriate use of land throughout the jurisdictional area. Neutral. Short term rentals are similar in impact to many other uses allowed in zoning districts. Type 1 and Type 2 STRs are operated intermittently within an existing residence and are not expected to have a material impact on the overall use of land. Type 3 occupy an entire home but have the same lot area, parking, and other development requirements as a dwelling. If a dwelling has not already been approved and deemed appropriate for an area an STR will not be allowed. 530 39, 06-22-17 Packet PROTEST NOTICE FOR ZONING AMENDMENTS IN THE CASE OF WRITTEN PROTEST AGAINST SUCH CHANGES SIGNED BY THE OWNERS OF 25% OR MORE OF THE AREA OF THE LOTS WITHIN THE AMENDMENT AREA OR THOSE LOTS OR UNITS WITHIN 150 FEET FROM A LOT INCLUDED IN A PROPOSED CHANGE, THE AMENDMENT SHALL NOT BECOME EFFECTIVE EXCEPT BY THE FAVORABLE VOTE OF TWO-THIRDS OF THE PRESENT AND VOTING MEMBERS OF THE CITY COMMISSION. For this text amendment application the applicable calculation of protesting owners would include the entire ownership of all affected residential districts. APPENDIX A - PROJECT BACKGROUND Project Background: The City Commission received a memo from the Assistant City Manager prior to their policy discussion on April 24, 2017. That memo describes the history of this issue and is included with this report to provide background for this text amendment. APPENDIX B - NOTICING AND PUBLIC COMMENT This application is for an amendment to the municipal code. Therefore, the required notice is publication in the newspaper per Table 38.40.030, BMC. Notices were published on April 16, 23, and 30th, 2017 in the Bozeman Daily Chronicle. In addition to this notice, a notice of the proposed amendment as well as the text of the amendment were posted on the City’s website. Information was distributed through the InterNeighborhood Council and Neighborhood Coordinator. The City advertised a public workshop held on May 12, 2017 to explain the proposed ordinance. Twenty persons attended. The Zoning Commission held a public hearing on May 16, 2017. Thirteen persons spoke regarding the ordinance. Primary issues were: 1) Character of zoning districts. Some spoke in favor of protecting the R-1 from STR and others questioned the validity of treating R-1 so differently and that all residential districts in Bozeman should be good quality places to live. 2) Several persons questioned whether there was a demonstrable problem requiring a solution. 3) Several persons felt the proposed standards were excessive to address the issues identified. 4) Several persons spoke regarding the registration process, possible costs, and discouraging persons from complying. 531 40, 06-22-17 Packet 5) Several person spoke regarding the need to allow existing STR to continue forward and to apply the proposed standards only to new STR. 6) Some persons challenged or supported the public survey data and other comments to date as an adequate basis for decision making. 7) Several persons described their positive experiences with STR. 8) One person identified privacy concerns from listing registration materials on the City’s website. 9) One person asserted that Type 3s have a negative impact on affordable housing and two questioned whether there is enough Type 3s exist to make a material difference. A recording of the public hearing is available at http://www.bozeman.net/Video. Background: Subsequent to the adoption of the Interim Zoning Ordinance and in preparation for this discussion, City staff took a proactive approach to soliciting community input. We initiated three major opportunities for citizen input into this initiative: • Online City Hall Forum • Public Forums • Written Public Comment Online City Hall: The internal team drafted and launched an Online City Hall survey which began on December 19, 2016 and ran through January 31, 2017. The City received 768 survey responses with 177 of those from registered, identified users. Survey highlights (rounded to nearest percentage): • 73% of people surveyed believed there are STRs in their neighborhood. • When asked about the positive effects of STRs, o 84% believed STR properties are usually well cared for, o 47% believed there are fewer empty/dark houses in their neighborhood, and o 47% believed that it provided an opportunity to meet new people. • When asked about the negative effects, o 65% were concerned with parking, o 56% were concerned with the effect on the supply of housing, and o 44% were concerned with changes to the character of their neighborhood and noise. • 62% agreed there should be a permit and fee for operating an STR • 64% agreed there should be a limit on the number of guests • 79% agreed there should be a local property manager or responsible person • Primary reasons for owning or operating an STR: o 44% own or operate an STR to make additional income, o 35% to pay the mortgage, and 532 41, 06-22-17 Packet o 21% because they live there part-time and did not want to leave their property empty. When asked about the areas in which STRs should be allowed, 73% felt they should be allowed in all city residential zoning districts. Public forums: Assistant City Manager Winn led three public engagement meetings in January 2017. The public meetings were scheduled on different days of the week in the evening at three different locations in an effort to boost attendance. The meetings were organized in a consensus format with all participants’ input captured in their words. 103 people attended the community forums. Participants were asked to describe their “worst fears” and “best possible outcomes”. Staff captured these ideas in the speaker’s own words on large pads of paper. At each meeting, discussions were lively and the participants were engaged and respectful of the different viewpoints offered. Overall, we received very positive feedback on the usefulness of these meetings. A summary of the feedback received at these public forums can be found in Attachment 1. Written public comment: At the time of this writing, the City has received 77 written comments related to STRs as of the writing of this report. These comments were submitted to agenda@bozeman.net and the Neighborhood Coordinator including comments submitted for a related CUP application for a property at 304 W. Cleveland (see hyperlinks below for 2016 comments and 2017 comments online). These comments reflect a wide range of viewpoints. The InterNeighborhood Council (INC), which is composed of an elected representative from each of the 13 neighborhood associations, formed a working group to investigate STRs and their effect on neighborhoods. This resulted in a set of recommendations that were supported by the INC. Regarding the zoning districts that should allow STRs, INC’s recommendation is that the rental of a room should be allowed in all zoning districts, and that STRs which are not the owner’s primary residence should not be allowed in R-S and R-1. They were not able to reach a consensus on where to allow STRs that are the owner’s primary residence. See Attachment 3, 2017 comments for INC’s recommendation. APPENDIX C - APPLICANT INFORMATION AND REVIEWING STAFF Applicant: Bozeman City Commission, PO Box 1230, Bozeman MT 59771 Report By: Chris Saunders, Policy and Planning Manager 533 42, 06-22-17 Packet FISCAL EFFECTS Minimal budgeted funds will immediately be expended for implementation of this text amendment. Costs will be incurred for review of individual registration requests. If the Commission chooses to use an online compliance monitoring service costs will be incurred. Costs vary depending on what level of service the community desires. Revenue will be obtained by application fees. The Commission has not yet established the fee for registration. Total balance of costs and revenues will depend on how many applications are submitted and for of what type of STR. ATTACHMENTS The full application and file of record can be viewed at the Community Development Department at 20 E. Olive Street, Bozeman, MT 59715. Provisional Ordinance 1974 Public Comments (available by web link) - Attachment 1 – Summary of public workshops (Attachment E of the April 24, 2017 memo to the City Commission regarding short term rentals) - Attachment 2 – Survey responses - Attachment 3 – Web link to 2016 comments and 2017 comments Short term rental review process diagram Large scale map of zoning districts by STR type allowed. Available electronically only. 534 43, 06-22-17 Packet