HomeMy WebLinkAbout9C - Short Term Rentals
4646 Dakota Street SE
Prior Lake, MN 55372
CITY COUNCIL AGENDA REPORT
MEETING DATE: November 15, 2010
AGENDA #: 9C
PREPARED BY: Suesan Lea Pace, City Attorney
PRESENTED BY: Suesan Lea Pace
AGENDA ITEM: Consider Approval of a Report Regarding Short Term Rental
Properties
DISCUSSION: Introduction
The purpose of this agenda item is to seek direction from the Council
regarding whether it wants to direct the staff to prepare an addition to the
Zoning Ordinance to regulate the short term rental of residential property in
the “R-1” Single Family Residential Zoning District; and, if so the extent of
the regulations.
History
The short term rental of a single family residence in the R-1 Single Family
Residential [zoning] District is not listed in the zoning ordinance as a use
permitted, permitted with conditions or allowed with a conditional use
permit. Any use not identified in a use district is prohibited.
The staff has received complaints about such rentals. In one case a renter
asked about a rental taking place in The Wilds. In another case, weekend
and week-long rentals are taking place at a Spring Lake property which has
resulted in complaints from the adjacent property owner. By short-term
rental, we are referring to renting a dwelling unit for less than a month at a
time; most commonly weekend, or one- or two- week vacation rentals. We
are also aware of a considerable number of homes that are advertised as
short-term rental.
In the early-summer the City began receiving complaints from a residential
property owner that the enjoyment of their property was being disturbed by
loud noises and various types of disruptive behavior emanating from the
single family house next to theirs which they claimed was being rented
weekends to different groups of people. The City investigated the
complaints and confirmed the house was being advertised for short term
rental on Craig’s list (weeks, weekends, holidays). Jesse Corrow, the
City’s Code Enforcement Officer, confirmed that groups of people were
intermittently occupying the property, mostly on weekends and sometimes
in large groups. This is not the only situation where the City has received
complaints involving a single family home being used for short term rental.
The situation is particularly prevalent with homes on the lake.
The City advised what appeared to be the absentee property owner that
short term rentals of residential property is not permitted under the Zoning
Code and asked that the rentals be discontinued. The City received a
response from the property owner’s attorney indicating there was nothing in
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the Zoning Ordinance that prohibited the activity and that any attempt to
enforce the City Code would be met with legal opposition. After
concluding the property owner was not going to voluntarily comply with the
City’s requests to discontinue the short term and weekend rentals the City
issued a citation to the property owner for violation of Prior Lake Zoning
Code Section 1102.401. The first citation was issued on July 23, 2010.
This action did not discourage the property owner from advertising the
property for short term rental on Craig’s list or allowing different groups of
people to occupy the property, usually for weekend rental. The first citation
was followed by additional citations on July 27, 2010, August 3, 2010 and
August 4, 2010. The property continues to be advertised for rental on
Craig’s list. Scott County Joint Prosecution is prosecuting the citations.
The property owner has filed for a contested case. The citations were
scheduled for a “probable cause hearing” on November 9, 2010. Two of
the four were deemed to have sufficient evidence for the prosecutor to
proceed to court.
Current Circumstances
Residents in a residential area expect to be able to enjoy the use of their
property especially on weekends. Weekend or short term renters,
particularly of lake shore property, can be less than respectful of neighbors
and inconsiderate about the amount of disruption they cause. The
weekend rental opportunity of a property on Prior Lake can signal a party
atmosphere as the renters and their guests descend on the otherwise
single family residential neighborhood.
The existing ordinance provides as follows:
Section 1101.300 (2) “The only uses which can be made of property are
those listed in the [zoning] district and these are permitted only in
the manner described by this Ordinance.”
Section 1102.401 lists:
The “Permitted Uses in the R-1 Single Family Residential Use
District [are] Single Family Dwellings; State Licensed Residential
Facilities as permitted by Minnesota Statutes; Parks and Open
Space; and Group Homes/Statutory.”
A “Single Family Dwelling” is defined as a “[f]ully detached dwelling
located on a single lot and intended for occupancy by a single
family…” When the property owner rents the house to a group of
individuals for the weekend the dwelling is not “occup[ied] by a
single family,” albeit a particular rental group may indeed be a
family.
In my opinion the short term rental of a single family dwelling, where the
property owner returns to occupy the dwelling when it is not occupied by
renters, or never occupies the dwelling unit, is a commercial activity not
permitted in the “R-1” zoning district.
Conclusion
Given that short term rental is not permitted in the R-1 zoning district, the
Council should consider the following options to determine which, if any, it
desires to pursue.
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ISSUES: The issue of whether to permit, permit subject to regulations, permit subject
to licensure, do nothing or prohibit the short term rental of residential
property in the single family low density (“R-1”) zoning district raises a
number of considerations:
1. The City Council should determine if an ordinance amendment is
justified given that only two complaints have been received by the
staff.
2. The Council must balance individual property rights –both of the
owner and of the owner(s) of adjacent properties.
3. The Council needs to consider whether the City has the resources
to enforce a license or permit scheme and or zoning regulations.
The Council has several alternative options to address the issue of
short term rentals.
4. The City Council needs to determine what length of time constitutes
a short term rental. Should the duration of the rental or frequency of
rentals be considerations subject to regulation?
5. The City Council should determine what language will help the staff
to verify that short term rental is taking place rather than gift or
barter.
6. The Council should also consider the administrative and
enforcement costs and whether revenues can defray a significant
portion thereof.
The Council has various options with respect to ordinance clarification.
1. Option 1: The first option is to do nothing and maintain the current
status. If the Council decides to maintain the status quo it would
nonetheless be helpful to add a specific definition of “short term
residential rental” to Section 1101.400 Definitions in the Zoning
Ordinance. A definition of the activity characterized by use,
activity, various other indicia and duration will be helpful in surviving
a probable cause hearing when prosecuting violations. For
example Short Term Rental of Residential Property could be
defined as:
The use of a single family dwelling for a period not to exceed
thirty (30) days, by individuals whose permanent domicile is
not the subject property and who provide monetary
compensation (“rent”) to the owner or resident of the
dwelling in exchange for the owner or resident temporarily
vacating the dwelling while it is occupied by the renter and
returning when the renter departs.
With this option, short term rentals remain not permitted in the “R-1”
Use District because they would not be listed as Permitted,
Permitted with Conditions or allowed subject to obtaining a
Conditional Use Permit.
2. Option 2 is to explicitly prohibit short term rentals in the “R-1” Use
District and potentially other residential use districts. Due to the
condition of the economy property owners may be advertising and
renting their homes on a short term basis in order to realize some
extra income. It is not difficult to imagine how attractive it may be
for a couple or group of friends to rent a house on Prior Lake for a
long summer weekend – especially if the house comes with water
toys and or a boat. However, groups of renters coming and going
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on the weekend can create all sorts of issues; e.g., from traffic and
parking problems to problems from litter, lights, and sound
amplification, to name only a few. These issues can deprive
occupants of neighboring properties the quiet use and enjoyment of
their homes.
3. Option 3 is to regulate “short term rentals” in the Zoning Ordinance.
Short Term rentals could be listed as allowed as Permitted with
Conditions or allowed subject to a Conditional Use Permit.
Permitted with Conditions or allowed with a CUP would allow the
City to set out a list of performance standards that renters must
comply with. The property owner should be accountable for the
conduct of individuals allowed to use his or her property. If there is
any interest in Option 3 I would recommend designating short term
residential rentals as a use Permitted with Conditions rather than
allowed with a CUP. The cost and process involved in obtaining a
CUP are considerations. However the types of conditions
developed for short term rentals could mitigate some of the
problems adjacent property owners’ experience.
4. Option 4 is to license short term rentals under the Business
Regulations section of the City Code. Similar to a CUP conditions
can be imposed on a license.
5. Option 5 is to require property owners to obtain an appropriate
license from the Minnesota Department of Health. This Option
would assure the cleanliness and maintenance of a dwelling.
Obtaining a license from the state, if the criteria for licensure is met,
will require the property owner to report rental income to the
Department of Revenue. (See attached Star Tribune article).
6. Option 6 is to allow short term rentals by revising the Zoning
ordinance to require property owners to obtain a permit from the
City before a single family dwelling can be used for short term
rental. It is unlikely that the revenues generated by the permits will
cover the cost of permit issuance, administration, inspection and
enforcement.
FINANCIAL The impact of administering and enforcing certain of these options
IMPACT:
throughout the City can be considerable. A cost estimate should be
completed for the alternative the Council prefers.
ALTERNATIVES: The Council has three alternatives:
(1) Refer this matter for further discussion at a work session; or
(2) Decide which option or options to pursue and direct the staff
accordingly.
(3) Take no action at this time and direct the staff to prepare additional
information on the subject.
RECOMMENDED Alternative 1.
MOTION:
Reviewed by:
Frank Boyles, City Manager
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