TO: PLANNING COMMISSION
FROM: BRAD JOHNSON, COMMUNITY DEVELOPMENT DIRECTOR
DATE: NOVEMBER 19, 2024
SUBJECT:
Title
SHORT-TERM RENTALS REGULATIONS REVIEW - STUDY SESSION
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SUMMARY
A short-term rental (STR) is a residential property, dwelling unit, or portion of a dwelling rented to guests for temporary lodging for fewer than 30 consecutive days. This can include renting an entire home, an apartment, a condominium, or individual rooms within a dwelling. Short-term rentals are often facilitated through online platforms such as AirBNB and VRBO or directly by property owners and are typically used for vacation stays, business travel, visiting family, or other short-term accommodations.
The City of Claremont has had a long-standing prohibition on short-term rentals. Additionally, many surrounding cities prohibit vacation rentals outright while allowing for hosted STRs. In April 2019, the Future Financial Opportunities Committee (FFOC) recommended the City Council consider regulating short-term rentals to provide transparency, accountability, and generate additional revenue. In October 2019, staff provided information to the City Council and proposed best practices. The City Council directed staff to prepare guidelines and regulations for future consideration. In March 2020, staff presented regulations to the City Council based on previous City Council direction and provided alternative options for consideration. During that meeting, the City Council provided direction to allow and regulate certain short-term rentals.
Due to the COVID-19 pandemic, the ordinance development process was put on hold. Since the previous ordinance development process, there have been significant shifts in municipalities’ approach to regulating short-term rentals. Additionally, the number of short-term rentals in Claremont has grown significantly. In May 2024, staff presented a STR study session to the City Council to receive direction on potential regulations. The City Council directed staff to conduct community outreach and prepare regulations that would include all STR types.
In late August 2024, the City issued a survey to receive input from the public for input on potential regulatory options. In September 2024, staff presented a STR regulations study session to the Planning Commission. Staff prepared six key decisions for the Commission's input. That input was incorporated into the draft STR ordinance (Attached). The purpose of this meeting is to review the draft ordinance and provide input to staff that will be incorporated into a future ordinance for the Planning Commission’s review.
RECOMMENDATION
Recommended Action
Staff recommends the Planning Commission review the draft short-term rentals ordinance and provide direction to staff.
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ALTERNATIVES TO RECOMMENDATION
In addition to the staff recommendation, there are the following alternatives:
A. Request additional information from staff.
B. Take no action.
FINANCIAL REVIEW
Staff has engaged a compliance company to assist with identifying and analyzing existing short-term rentals, the cost of this service is $3,500 annually. The compliance company also offers additional services such as address identification, permitting and registration, 24/7 hotline, and tax collection support. The cost of these add-on services varies depending on the number of listings. Depending on the services the City decides to use, the annual cost can range from $15,000 to $25,000.
If permitted, short-term rentals would be subject to the collection of permit and registration fees charged to the short-term rental host and Transient Occupancy Tax (TOT) charged to the renter. Permit and registration fees are intended to cover the cost of the short-term rental compliance services and staff time to process applications. The permit and registration fees should be set at an appropriate level to ensure that the registration costs remain lower than the fines for noncompliance; this would encourage current unpermitted operators to comply with the regulations. The Claremont Transient Occupancy Tax is currently levied at ten percent. The revenue generated will depend on the number of short-term rentals in the City, the number of nights they are rented out in a year, the rental prices, and the level of compliance with the TOT remittance. The compliance company estimates that with full compliance with the TOT remittance and STR regulations, the city can receive approximately $70,000 per year from TOT, not including any permit and registration fees.
The staff cost to prepare this report and administer this project is estimated at $2,500 and is included in the operating budget of the Community Development Department.
ANALYSIS
2024 City Council Direction
Staff presented a study session to the City Council in May 2024 due to changes in the short-term rental market following the regulatory recommendations made by the City Council during the March 20, 2020 meeting. During this study session, staff presented updates regarding short-term rentals and prepared four key decisions for the Council's consideration. These decisions would be used to update the prior regulatory recommendations made by the City Council in 2020. Those decisions are summarized below.
Council Key Decision #1: The City Council directed staff to move forward with permitting and regulating short-term rentals.
Council Key Decision #2: The City Council directed staff to move forward with permitting and regulating vacation rentals.
Council Key Decision #3: The City Council directed staff to allow Accessory Dwelling Units (ADUs) to be short-term rentals.
Council Key Decision #4: The City Council directed staff to not implement rental term limits for hosted, un-hosted, and vacation short-term rentals.
With these decisions, the City Council directed City staff to prepare an ordinance to permit and regulate all short-term rentals and conduct a community and commission input process.
2024 Planning Commission Recommendations
In September 2024, the Planning Commission held a study session to discuss STR regulations in Claremont. Staff presented the history of Claremont’s STRs and presented six key regulatory decisions to the Commission for their input.
Commission Decision #1: Should hosted and vacation rentals be permitted with different fees and requirements based on the rental type? This would include creating a more rigorous and higher cost permitting process for vacation rentals.
Commission Recommendation: There was no majority consensus among the Commission as to whether there should be different fees and requirements for each rental type. The draft ordinance applies the same regulations for each rental type. The ordinance does not include fees as those would be within the purview of the City Council, not the Planning Commission. The fees would be set by a separate City Council resolution.
Commission Decision #2: What should the maximum occupancy limits be for short-term rentals?
Commission Recommendation: The Commission was supportive of staff’s recommendation for a maximum occupancy of two people plus one per bedroom. The commission had concerns regarding how children would be calculated; staff included in the ordinance that the owner may allow for two minor children, age 12 or under, to occupy the vacation rental in addition to the maximum number of occupants. The commission supported allowing for higher daytime occupancy. The draft ordinance would allow for double the overnight occupancy for daytime use. For a two-bedroom STR, there would be an overnight occupancy limit of five people, not including children, and a daytime occupancy limit of ten people.
Commission Decision #3: Should STRs be required to provide on-site parking?
Commission Recommendation: The Commission agreed to require STRs to provide overnight parking on-site but allow daytime street parking. The Commission also shared an interest in limiting the number of vehicles allowed at one STR. The draft ordinance includes a maximum of one automobile per bedroom, plus one additional automobile, which would allow the limit to scale for rentals with more bedrooms.
Commission Decision #4: Should health and safety inspections be required for STRs.
Commission Recommendation: The Commission was in consensus on requiring all rentals, including homeshare, junior vacation rentals, and vacation rentals, to have initial inspections for fire, building, and safety. The rentals would be subject to biannual inspections unless they had any violations, in which case they would be subject to annual inspections.
Commission Decision #5: How should noise and nuisance regulations be enforced?
Commission Recommendation: The Commission did not agree with staff’s recommendation to require operators to install exterior noise monitors but supported reinforcing the City’s existing noise control regulations. The draft ordinance includes the requirement that any noise-making device shall not be audible at the property line of the vacation rental. There was support of implementing a 24-hour hotline that neighbors could utilize if there were any noise or nuisance issues. The draft ordinance would specifically prohibit commercial events such as weddings, baby showers, corporate gatherings, parties, or events exceeding approved occupancy limits.
Commission Decision #6: Should the City implement a cap on the total number of STRs in the City?
Commission Recommendation: A majority of the commissioners supported implementing a cap on the total number of vacation rentals but no cap on homesharing (hosted) or junior vacation rentals. The ordinance would set a cap based on the total number of housing units located in a zone within the City. The zones would be approved by City Council by resolution or ordinance. The Commission also requested staff to develop regulations for unhosted rentals. These would be short-term rentals that are a host's primary residence; however, they reside off-site during the renter's stay. The draft ordinance would allow for these types of rentals, called junior vacation rentals, with a maximum of four annual separate contracts or individual rentals. Junior vacation rentals would not be subject to the zone caps.
In addition to implementing a cap on the total number of vacation rentals, the ordinance limits an owner to one vacation rental at any time. The ordinance also prohibits business entities from being eligible for a vacation rental registration certificate.
Community Survey and Concerns
In late August 2024, the City conducted a community survey to receive input on how the City should regulate STRs. Due to the City Council’s direction for staff to move forward with developing regulations, the focus of this survey was not on whether STRs should be allowed but instead to provide guidance on regulations. The survey also aimed to assess the impact of the existing unpermitted STRs on the community.
The survey allowed respondents to provide open-ended feedback alongside structured answers. Approximately 70% of those who selected the "other option" in response to regulatory questions strongly opposed STRs, particularly vacation rentals. In the final question, which invited respondents to share additional comments or suggestions, 175 of the 377 survey participants provided written responses. While opinions were somewhat divided, the majority expressed strong opposition. Common concerns included housing shortages resulting from STR conversions, disruptions to community cohesion and neighborhood stability, and negative impacts from investor-owned STRs on neighborhood character. Supporters, though a minority, highlighted the potential economic benefits STRs could bring, such as increased accommodation options for visitors and opportunities for stricter regulations to address community issues.
Since the item was presented to the City Council in May 2024 there have been increasing concerns from residents regarding the impact of STRs in the community. A specific concern is the impact they may have on long-term (more than 30 days) rental prices due to housing units being taken off the market for short-term rentals. There is also potential for vacation rentals to increase the price of for-sale housing in the City due to an increase in demand from investors while the supply remains the same.
The draft ordinance aims to strike a balance by addressing these concerns while regulating the City’s existing unpermitted vacation rentals. It includes protections for apartment tenants by prohibiting evictions if the property owner intends to convert the unit into a short-term rental. Furthermore, the ordinance limits vacation rentals to single-family homes and condominiums, explicitly prohibiting their operation in apartments.
RELATIONSHIP TO CITY PLANNING DOCUMENTS
Staff has evaluated the agenda item in relationship to the City’s strategic and visioning documents and finds that it applies to the following City Planning Documents: Council Priorities, Economic Sustainability Plan, 2022-24 Budget,
CEQA REVIEW
This item is not subject to environmental review under the California Environmental Quality Act (CEQA).
PUBLIC NOTICE PROCESS
The agenda and staff report for this item have been posted on the City website and distributed to interested parties. If you desire a copy, please contact natienza@claremontca.gov.
Submitted by: Prepared by:
Brad Johnson Alex Cousins
Community Development Director Senior Management Analyst
Attachment:
Draft Short-Rentals Ordinance