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2022-11-30 - Agendas - FinalD'Andre Jones Council Member Mike Wiederkehr Council Member Ordinance Review Committee Meeting Agenda Wednesday 3:00 p.m. on November 30, 2022 City Hall Room 326 1. Quorum Established and Call to Order Sloan Scroggin Council Member Holly Hertzberg Council Member 2022 Chair Holly Hertzberg will call the roll to determine whether a quorum (three members) is present. If a quorum is present, the Chair will call the meeting to order. 2. Approval of November 16, 2022 Meeting Minutes (attached) 3. Old Business • Review draft amendments to Short -Term Rental Regulation Ordinance (attached). 4. Any new business 5. Adjournment 113 W. Mountain Fayetteville AR 72701 (479) 575-8313 www.fUetteville-angov CITY OF FAYETTEVILLE ARKANSAS MINUTES Ordinance Review Committee Meeting Wednesday, November 16, 2022 Hybrid — Room 326 and Zoom 1. The four members of the Ordinance Review Committee met in person in City Hall Room 326 (Council Members Scroggin and Wiederkehr) and by Zoom (Council Members Hertzberg and Jones). After a quorum was established, the Committee nominated and elected Council Member Holly Hertzberg as the Chair for 2022. 2. The only item of business on the Committee's agenda was the City's short term rental regulations. Jonathan Curth, Development Services Director, provided an overview of the current issues and potential remedies being recommended by staff. Britin Bostick, Long Range Planning/Special Projects Manager provided additional information about the current regulations. Chair Hertzberg opened the floor for discussion by the Committee members. Scroggin stated that he wants to see fines for non-compliance and the option to shut off water to non -compliant STRs. He wants to keep the conditional use permit requirement for residential zones but would be fine removing it for mixed -use and commercial zones. He believes we need better rules to protect neighborhoods and an easier process for revoking a CUP. He also thinks the fees for STRs are inadequate and would support raising fees rather than setting a cap on the number of STRs. He suggested that an STIR approval board could be established rather than making the Planning Commission handled all of the requests. Wiederkehr said that fees need to match the services being provided and that we should not be subsidizing these businesses — the fee should be 100% cost recovery. He would like to see an outside entity managing this work and for that cost to be borne by the STRs. He wants to extend the sunset provision rather than eliminate it and agrees that the CUP process needs more clarification and nuance about where STRs should be allowed by right. The community has said they don't want an overabundance in any neighborhood and that we should look for an objective threshold to limit the number. We need a bigger hammer for compliance and that could include utility shutoffs. He is also concerned about ensuring we are collecting HMR taxes. Chair Hertzberg suggested considering a 2% cap in the downtown area and another 2% outside of that area. Wiederkehr suggesting using census tracts to set caps. Scroggin was concerned that limiting STRs by neighborhood could mean we are limiting them in walkable areas. Mailing Address: 113 W. Mountain Street www.fayetteville-ar.gov Fayetteville, AR 72701 The Committee discussed factors that could be considered by the Planning Commission to approve including street width, availability of sidewalks and on -street parking, benefits to the neighborhood, and accessibility. Jonathan Curth said that the current fees for STRs, including the CUP process and the business license process, are lower than the actual cost of staff time. Based on their calculations, they could justify a CUP application fee of $200, an initial business license fee of $50 and a business license renewal fee of $50. Chair Hertzberg then allowed public comment. City Clerk Treasurer Kara Paxton commented that the appeals process seems to be difficult for some applicants. Tom Overbey made suggestions about administering Type 1 STRs. He said the current method of proving the owner resides in the unit is inadequate. He suggested asking for an Arkansas drivers license, resident income taxes, Arkansas vehicle license, and proof that no homestead exemption is claimed elsewhere. He said rather than requiring them to send copies to the City they could be required to sign an affirmation. Logan Humphrey owns an STR management company with 45 units in Fayetteville. He liked the idea of an STR approval committee. He agrees that the CUP and business license requirements are reasonable. He said that the cost of third party host compliance software would be more than the revenue obtained from non -compliant properties. He suggested using the 2% cap rather than the CUP process. The Committee voted unanimously to recommend the following amendments to the City Code and Unified Development Code: • Increase the CUP application fee to $200; increase the initial business license fee and renewal fee to $50 each. • Require a CUP in residential zones but remove it for mixed use and non-residential zones. • Provide a list of factors and conditions that should be considered by the Planning Commission and, on appeal, by the City Council for STRs requiring CUPs. • Extend the sunset provision to December 31, 2023. The Committee wants to continue discussing and considering additional amendments on the following issues: • Third party host compliance/collectors • Density caps based on neighborhoods • Additional non-compliance penalties • Instituting fees for appeals 3. The Committee agreed to meet again on November 30 at 3:00 pm to consider the amendments drafted by staff. 4. There being no new business for the committee to consider, Chair Hertzberg adjourned the meeting around 6:30 pm. 2 ORDINANCE NO. AN ORDINANCE TO AMEND § 118.01 APPLICABILITY AND § 118.02 ENTRY UPON BUSINESS REGISTRY AND ISSUANCE OF BUSINESS LICENSE OF THE FAYETTEVILLE CITY CODE, AND § 151.01 DEFINITIONS, § 159.01 FEES/SCHEDULE, AND § 163.18 SHORT-TERM RENTALS OF THE UNIFIED DEVELOPMENT CODE, AND TO ENACT § 164.26 TYPE 2 SHORT-TERM RENTALS IN NON-RESIDENTIAL AND MIXED USE ZONING DISTRICTS TO INCREASE FEES FOR CONDITIONAL USE PERMITS AND TYPE 2 SHORT-TERM RENTAL BUSINESS LICENSES, TO AMEND THE REGULATIONS FOR TYPE 2 SHORT TERM RENTALS BASED ON ZONING DISTRICT, AND TO REMOVE OUTDATED AND UNNECESSARY PROVISIONS RELATED TO THE 12 MONTH START-UP PERIOD WHEREAS, since Ordinance No. 6427 was adopted on April 20, 2021, and as of November 29, 2022, the Development Services Department has issued 360 business licenses for Type 2 short- term rentals and there is currently a citywide cap of 894 business licenses for Type 2 short-term rentals; and WHEREAS, the City Council Ordinance Review Committee has recommended changes to the City's short-term rental regulations including fee increases to recognize the actual staff time involved in administering theses provisions, removing the conditional use permit requirement for Type 2 short-term rentals in non-residential and mixed -use zoning districts, and to incorporate factors to consider for Type 2 short-term rentals located in residential zoning districts. NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS: Section 1: That the City Council of the City of Fayetteville, Arkansas hereby repeals subsection (E) of § 118.01 Applicability of the Fayetteville City Code and enacts a new subsection 118.01(E) as shown in Exhibit A attached hereto. Section 2: That the City Council of the City of Fayetteville, Arkansas hereby repeals subsection (C)(4) of § 118.02 Entry Upon Business Registry and Issuance of Business License of the Fayetteville City Code and enacts a new subsection 118.01(C)(4) as follows: "Short Term Rentals. Annual fees to submit the business's first Application for Business Registry and License shall be $50.00, except that if a business registers electronically it shall receive a $3.00 credit against its annual fee and only be assessed $47.00. Applications submitted after the October 31 deadline shall incur a fee of $58.00 if submitted by November 30; $61.00 if submitted by December 31, and $72.00 if submitted thereafter. After an initial registration and receipt of a business license, the next year's renewal shall be $50.00 if timely paid ($47.00 if renewed electronically). Otherwise, the late payment fees shall be assessed as above." Section 3: That the City Council of the City of Fayetteville, Arkansas hereby amends § 151.01 Definitions by repealing the last sentence of the definition of "Short-term rental, Type 2". Section 4: That the City Council of the City of Fayetteville, Arkansas hereby amends § 159.01(B)(5) by changing the fee for Conditional use to $200.00 Section 5: That the City Council of the City of Fayetteville, Arkansas hereby repeals § 163.18 Short -Term Rentals of the Unified Development Code and enacts a new § 163.18 Type 2 Short -Term Rentals in Residential Zoning Districts as shown in Exhibit B attached hereto. Section 6: That the City Council of the City of Fayetteville, Arkansas hereby enacts § 164.26 Type 2 Short -Term Rentals in Non -Residential and Mixed Use Zoning Districts into the Unified Development Code as shown in Exhibit B attached hereto and made a part hereof. PASSED and APPROVED this 20t' day of December, 2022. APPROVED: ATTEST: LIONELD JORDAN, Mayor KARA PAXTON, City Clerk/Treasurer 118.01 Applicability _(E) Short -Term Rentals. A residential dwelling unit, portion of a dwelling unit, or bedroom within a residential dwelling unit, leased and/or rented to a guest(s), for a period of less than thirty consecutive (30) days. (1) Short -Term Rental, Type 1. A short-term rental where the principal use of the property remains as a full-time residence. The occupants or owner rent their primary residence as a short-term rental. A copy of the Homestead Tax Credit or long-term lease agreement for the subject property is required to be classified as a Type 1 rental. The occupant or owner must occupy the residence for nine (9) months of the year. Accessory dwelling units (ADUs) as defined in Unified Development Code Chapter 151 shall be considered a Type 1 short-term rental. (2) Short -Term Rental, Type 2. A short-term rental that is not occupied by a permanent resident. The owner lists this property full-time as a short-term rental and has no intention of having permanent residents living in the property. A conditional use permit is required for a Type 2 short-term rental in a residential zoning district prior to the city issuing a business license, except as defined ;n §1 Q 0 l-lln1 (3) License Required. No dwelling unit in the city shall be used as a short-term rental unless: (a) The owner of the dwelling unit or operator of the short-term rental possess a valid and current business license for the dwelling unit, and fully complies with all legal requirements and duties imposed herein with respect to each and every short-term rental; and (b) The owner has designated an agent, where said agent fully complies with all legal requirements and duties imposed herein with respect to every short-term rental. The owner may serve as their own agent. (c) The owner of the dwelling unit or operator of the short-term rental provides proof of a valid and current homeowners insurance rider policy which fully covers each unit when operated as short- term rental unit. (Supp. No. 25) Created: 2022-07-06 12:48:43 [EST] Page 1 of 3 (ed) Applications submitted priorte the end ofthe 12 month startup peried shall expire sixty (60) days after the start up period has ended Of the business license has not been issued by the City by that time. (§4) A separate business license shall be required for each dwelling unit used as a short-term rental. (65) Any change in ownership requires a new or amended business license. (76) If any required contact information changes for the associated business license, the person to whom the license was issued shall immediately notify the Development Services Department in writing. (97) License Application. The application for a business license shall include at minimum, the following information from applicants: (a) The property owner's information including legal name, mailing address, immediate contact phone number, and immediate contact E-mail address. (b) Information for the dwelling unit subject to the application, inclusive of the physical street address assigned by the city. (c) The type and total number of dwelling units located on the lot of record containing the dwelling unit subject to the application. (d) If the owner is not their own agent, the owner designated agent's information including legal name, mailing address, immediate contact phone number and immediate contact E-mail address. (e) Documentation of approval of a life safety and egress inspection by the City Building Safety Division for the dwelling unit subject to the application. (f) Proof of application for remittance of hotel, motel and restaurant tax to the City of Fayetteville, and verification that all sales, use, and hotel, motel and restaurant taxes are current. (g) Any additional data as deemed necessary or desirable for permit approval by the Development Services Director. (488) License Renewals. Business licenses for short-term rentals shall be renewed in accordance with Chapter 118 of the Business Regulations (Business Registry and Licenses). (-149) Legal Duties of License Holders. An owner possessing a short-term rental license shall comply at all times with the following requirements: (a) Occupancy. Short-term rentals shall be subject to, and may not exceed, the occupancy limits approved with the business license. (b) Advertisements. A short-term rental shall not be advertised if it violates occupancy, density, safety, and any of the other provisions of the Fayetteville Code. No short-term rental unit shall be advertised prior to having obtained a business license and the business license number shall be included in the advertisement listing. (c) Information and Posting. Business licensees shall provide to guests and post conspicuously in the common area of the short-term rental unit the city phone number to report a safety complaint. (1210) Owner or Agent Accessibility. The property owner shall ensure that they or a designated agent are available at all times during guest occupancy, including nights and weekends, in order to facilitate compliance with this section. For the purposes of these regulations, 'availability' means that the owner or agent is accessible by telephone, and, able to be physically present at the short-term rental within three (3) hours of being contacted. (1311) Guest Records. The owner shall maintain summary guest registration records, which shall contain the actual dates of occupancy, total number of guests per party per stay, and the rate(s) charged, but (Supp. No. 25) Created: 2022-07-06 12:48:43 [EST] Page 2 of 3 shall not contain any personally identifiable information about guests. Such records shall be maintained for three (3) years and shall be provided to the City upon request. (44412) Health and Safety. The owner shall ensure that each dwelling unit governed by this section complies with the applicable provisions of the Unified Development Code Chapter 173, Building Regulations. (1513) Criminal Activity. The owner shall timely report any known or reasonably suspected criminal activity by a guest to the Fayetteville Police Department within twelve (12) hours maximum. (1614) Taxes and Fees. Except for those instances in which a hosting platform bears the responsibility for collecting and remitting taxes and fees applicable to short-term rentals, the property owner shall timely remit in full Fayetteville Hotel, Motel and Restaurant tax and other applicable local, state, and federal taxes and city fees owed in connection with any short-term rental. The failure of a hosting platform to collect and remit taxes and fees shall not relieve an owner of the obligation to pay taxes and fees owed pursuant to this section. (1715) Authorization to Occupy, Use, and Operate. Authorization to operate a short-term rental may be granted by the Development Services Director through the issuance of a City of Fayetteville Business Registry and License (Business License). (1816) Density For Type 2 Short -Term Rentals. A city-wide density cap of 2% of all dwelling units in the Fayetteville city limits may be utilized as Type 2 rentals. Total dwelling units are determined from current United States Census Bureau and/or American Community Survey numbers, whichever number is higher. A conditional use permit may not permit: (a) More Type 2 short-term rentals than what is allowed by the city-wide density cap. Type 2 short- term rentals in commercial and mixed -use zoning districts where hotel/motels are permitted by right shall not contribute to the city-wide density cap. (b) More than 10% or a single unit whichever is greater; of total dwelling units as Type 2 rentals within a multi -family dwelling complex. (c) Individual 2-, 3- and 4-family buildings that are owned by the same person or entity and are not a part of a multi -family complex shall have no more than one (1) Type 2 short-term rental unit per building complex. (d) Where attached residential units are held separately through condominium association, horizontal property regime, fee simple, or similar ownership structure, no cap shall be applied to buildings with attached residential dwellings. Structures of attached residential dwellings where applicants seek more than 10% of total units for licensing as Type 2 rentals shall be evaluated by the Building Safety Director and/or Fire Marshal for adequate fire protection as defined by the adopted Arkansas Fire Prevention Code. Where inadequate fire protection is identified, improvements may be required prior to issuance of a business license. (1517) Suspension and Revocation. If the Development Services Director has reason to believe that any of the grounds specified in §118.03(A) of the Fayetteville Code exist, or that any rental unit was rented for less than one (1) full night, or to more than one (1) part of guests for the same period of time, or otherwise failed to comply with all terms and conditions of this section, the Development Services Director may suspend or revoke the short-term rental's business license pursuant to the procedures detailed in §118.03 and in §118.04 of the Fayetteville Code. (-2-818) Short-term rentals must comply with all applicable codes underthe Unified Development Code including the regulations contained in §163.18 and § 164.26 and must successfully obtain a business license prior to operation. (Supp. No. 25) Created: 2022-07-06 12:48:43 [EST] Page 3 of 3 118.02 Entry Upon Business Registry And Issuance Of Business License (C) Fees. (1) Home Based Business. A resident conducting a non -traffic generating occupation, profession or business within the resident's dwelling unit who is registering for the first time shall pay an annual fee to submit an Application For Business Registry and License of $22.00 if submitted by October 31, except if the home based business owner registers electronically, the owner shall receive a $2.00 credit against the annual fee and pay only $20.00. Applications submitted after the October 31 deadline shall incur a fee of $24.00 if submitted by November 30; $26.00 if submitted by December 31; and $30.00 if submitted thereafter. After an initial registration and receipt of a business license, the next year's renewal fee shall be $15.00 if timely paid. Otherwise, late payment fees shall be as assessed above. (2) All Other (Non -Home Based) Businesses. Annual fees to submit the business's first Application For Business Registry and License shall be $35.00 if submitted by October 31, except that if a business registers electronically it shall receive a $3.00 credit against its annual fee and only be assessed $32.00. Applications submitted after the October 31 deadline shall incur a fee of $38.00 if submitted by November 30; $41.00 if submitted by December 31, and $52.00 if submitted thereafter. After an initial registration and receipt of a business license, the next year's renewal shall be $15.00 if timely paid. Otherwise, the late payment fees shall be assessed as above. (3) Partial Year Registration Fee for New Business. If a new business or entity registers and applies for a license after March 1, the fee for the business license through November 30 of the same year shall be $17.00 except that if a business registers electronically it shall receive a $2.00 credit against its partial year fee and only be assessed $15.00. (4) Short Term Rentals. Annual fees to submit the business's first Application for Business Registry and License shall be $50.00, except that if a business registers electronically it shall receive a $3.00 credit against its annual fee and only be assessed $47.00. Applications submitted after the October 31 deadline shall incur a fee of $58.00 if submitted by November 30; $61.00 if submitted by December 31, and $72.00 if submitted thereafter. After an initial registration and receipt of a business license, the next year's renewal shall be $50.00 if timely paid ($47.00 if renewed electronically). Otherwise, the late pavment fees shall be assessed as above. (Supp. No. 27) Created: 2e22-11-21 11:02:01 [EST] Page 1 of 1 151.01 Definitions Short-term rental, Type 2. A short-term rental that is not occupied by a permanent resident. The owner lists this property full-time as a short-term rental and has no intention of having permanent residents living in the property. A conditional use permit as reqUiFed feF a Type 2 short teFM rental prier to the Eity issuing a business IiEense. (Supp. No. 25) Created: 2022-07-06 12:48:45 [EST] Page 1 of 1 159.01 Fees/Schedule (B) Fee schedule. (5) Zoning. Rezoning $325.00 Conditional use $100.99200.00 Manufactured home: Initial permit $25.00 Renewal $12.50 Home occupation: Initial permit $25.00 Renewal $12.50 Planning Commission or Board of Adjustment Variance: Before any violation has occurred $100.00 After any violation has occurred $200.00 Appeal of Zoning and Development Administrator interpretation $100.00 Zoning Verification Letter $50.00 (Supp. No. 27) Created: 2022-11-21 11:02:04 [EST] Page 1 of 1 163.18 Type 2 Short -Term Rentals in Residential Zoning Districts (4A) Residential Zoning Districts. Type 2 Sshort-term rentals maybe permitted as a conditional use in all zening di5tFiGt5 where residential uses are allowed by rightthe following residential zoning districts:: 1 R-A 2) RSF-.5 3 RSF-1 4 RSF-2 5 RSF-4 6 RSF-7 7 RSF-8 8) RSF-18 9 RI-12 10 RI-U 11) RMF-6 12) RMF-12 13) RMF-18 14) RMF-24 15) RMF-40 16 NC Short term rentals may be permitted by right or by conditional use in planned zoning districts subject to the zoning regulations enacted by the Citv Council for each district. Short-term rentals in non-residential zoning districts. mixed use zoning districts. or other zoning districts not listed above are not required to apply for a conditional use permit. (2) Gommercial and 444ed Use Zoning Distr4ets. Short term rentals may be peFmitted in all zening diStFiGtS where hetel/metel uses are permitted by Fight and Shall Rat eOURt tOWaFds the Type 2 SheFt teffn rental density eap in these diStFiets exeept an multi family buildings as speEified an GhapteF 118 of the Fayetteville Gity Code. (3B) Occupancy. Maximum of two (2) people per bedroom, plus two (2), for the entire unit when operated as a short-term rental. (4C) Parking. Parking is limited to the maximum number of vehicles as allowed by the underlying zoning district for the residential building on the property. (�D) Special events are not permitted in a short-term rental. Example of special events include, but are not limited to, weddings, receptions, anniversaries, private parties, fundraisers and business seminars. (6E) Short-term rental units are allowed in any structure established as a permanent residential dwelling including an accessory dwelling unit. No recreational vehicle, trailer, other vehicle or structure not classified as a permanent residential dwelling may be used as a short-term rental. rental epeFatOFS Shall have twelve (12) Fnenths to submit aA appli6atieR fOF a business license. A#eF the twelve (!2) MORth StaFt up peFi0d, all SheFt term reRtal units must have a business lieense te be (Supp. No. 25) Created: 2e22-07-06 12:48:49 [EST] Page 1 of 2 (8F) Exceptions. Exceptions to the short-term rental standards, except proposals that would exceed the city- wide density maximum, may be granted by the Planning Commission as a conditional use permit. (-9G) Short-term rentals must comply with all applicable codes under City Code §118.01 and successfully obtain a business license prior to operation. (H) Short-term rentals in residential zoning districts may be subject to denial or additional conditions based upon the Planning Commission's findings on the following factors: 1) Adequate parking infrastructure; 2) Adequate adjoining or nearby streets for on -street parking; 3) Frequency or concentration of nearby licensed Type 2 short-term rentals; and 4) Prior zonine or code violations. (Supp. No. 25) Created: 2e22-07-06 12:48:49 [EST] Page 2 of 2 164.26 Type 2 Short -Term Rentals in Non -Residential and Mixed Use Zoning Districts (A) Commercial and Mixed Use Zoning Districts. Type 2 short-term rentals may be permitted in all zoning districts where hotel/motel uses are permitted by right and shall not count towards the Type 2 short- term rental density cap in these districts except in multi -family buildings as specified in Chapter 118 of the Fayetteville City Code. Type 2 short-term rentals in all other non-residential and mixed -use zoning districts may be permitted but shall count towards the Type 2 short-term rental density cap. Short term rentals may be permitted by right or by conditional use in planned zoning districts subject to the zonine reeulations enacted by the Citv Council for each district. (B) Occupancy. Maximum of two (2) people per bedroom, plus two (2), for the entire unit when operated as a short-term rental. (C) Parking. Parking is limited to the maximum number of vehicles as allowed by the underlying zoning district for the residential building on the property. (D) Special events are not permitted in a short-term rental. Example of special events include, but are not limited to, weddings, receptions, anniversaries, private parties, fundraisers and business seminars. (E) Short-term rental units are allowed in any structure established as a permanent residential dwelling including an accessory dwelling unit. No recreational vehicle, trailer, other vehicle or structure not classified as a permanent residential dwelling may be used as a short-term rental. (F) Exceptions. Exceptions to the short-term rental standards, except proposals that would exceed the city- wide density maximum, may be granted by the Planning Commission as a conditional use permit. (G) Short-term rentals must comply with all applicable codes under City Code §118.01 and successfully obtain a business license prior to operation. (Supp. No. 25) Created: 2022-07-06 12:48:49 [EST] Page 1 of 1