2023-24 Ordinance Amending City Code Chapter 51.5 Hotel Use Tax

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City Clerk DATE: 4/17/2023 MEMO: TO: Honorable Mayor Pro Tem Lisa Gregory and City Council Members FROM: Scot Wrighton,City Manager Jon Kindseth,Deputy City Manager SUBJECT: The licensure and regulation of short term rentals(STRs)in the city of Decatur such as Airbnb or Vrbo. SUMMARY RECOMMENDATION: Staff recommends adoption of an Ordinance amending City Code Chapter 51.5 Hotel Use Tax to include short term rentals,to include collection of hotel/motel taxes and the imposition of various other conditions. BACKGROUND: Over the past couple of years there has been an increase in the number of complaints that the City receives about short term rentals. The complaints are often related to loud behaviors,parking concerns,and problems related to garbage accumulation. While the vast majority of short-term(Air BnB and Vrbo-type)rentals are not problematic or disruptive to neighbors,there have been complaints from a small number of properties. For this reason,and as a matter of tax equity,the City Council requested that staff draft an ordinance with the provisions that have been included in the recommended version. The recommended ordinance will require the owners of short-term rentals to obtain an annual license from the City,which could be revoked for noncompliance. This Ordinance will also require short term rentals to collect and remit to the City the same hotel/motel taxes that traditional hotels are required to collect. This helps to level the playing field between single family houses used for overnight stays and traditional hotel/motels. The Ordinance proposes a fee of just$25 for the annual license,making this very affordable even for incidental short term rentals.A$25 annual fee will not cover the city's costs for administration and inspection;but it was not intended to cover the full costs,and the ordinance is not proposed primarily for the purpose of generating revenue. The ordinance is intended to make sure hotel/motel taxes are paid,and to make sure that short-term rentals do not create a nuisance and neighborhood disturbance. The proposed fine amounts are compatible with minor nuisance fines already contained in the City Code in other chapters. City staff will have the discretion to enforce administrative rules and conditions of licensure via the fines/penalties listed in the ordinance, or by revocation of the license(although revocation will require a due process hearing first). The administrative rules(not placed into the language of the ordinance)are not included in this packet,but they will be distributed to the City Council on Friday. Section 7 of the proposed ordinance says: "The City Manager is hereby authorized to promulgate and publish rules and regulations and to establish procedures not inconsistent with the provisions hereof which said Manager may deem necessary or desirable to administer and enforce the same." These administrative rules will include provisions dealing with loud noise,excess car parking,excess or improper trash accumulation/storage,etc. Our current draft of these administrative rules will be sent out Friday,April 14. BUDGET/TIME IMPLICATIONS: The budgetary impact of this Ordinance is unknown,it will provide only minor revenue to the city since staff estimates there are only two to three dozen short-term rentals in the city. ATTACHMENTS: Description Type Ordinance Amending City Code Chapter 51.5 Hotel Use Ordinance Tax