Petaluma adopts rules for short-term vacation rentals

Petaluma on Monday became the latest Sonoma County city to adopt new rules regulating short-term vacation rentals, setting parameters around the already popular practice and taxing property owners similar to a typical hotel.

Approved by the Petaluma City Council Monday evening after more than a year of public meetings and deliberation, the rules follow the explosive popularity of websites like AirBnB, Flipkey, VRBO and others, which make it easy for property owners to rent out spare rooms or even entire homes on a temporary basis.

Those meetings have been a venue for contentious public debate over the practice among homeowners in Petaluma, ranging from those who rely on income from such rentals to afford their own mortgage payments to those who see them as a detriment to neighborhood cohesion that diminishes the availability of long-term housing stock.

Several council members described the framework as balanced and necessary in light of a fast-emerging trend that had grown unregulated in Petaluma for several years.

“It’s not that I’m campaigning for AirBnB. There are going to be impacts,” said Mayor David Glass. “But all that is going to happen regardless of this legislation. I do think the city is better served by having some legislation on the books.”

The rules include a 90-day cumulative annual limit on short-term rentals for properties where the owner is not present, but would not limit such rentals in cases when the owner lives on the parcel. It is a tighter cap than the 120 days included in a proposed framework in June, meant to tilt the economic interest more in favor of long-term tenants for vacant properties.

Owners offering short-term rentals will be required to obtain a business license, and will be subject to existing business taxes and the transient occupancy tax paid by the city’s established hotels. Owners will also be required to demonstrate the existence of at least two available parking spaces at or adjacent to the property, with non-conforming situations approved at the city’s discretion.

Penalties for violations of noise, alcohol or other codes centered on public nuisances will be larger than for a typical resident - $500 for the first confirmed violation and $1,000 for subsequent violations. Managers must be located within 45 minutes of the property to deal with any problems, and could have their license revoked if the city’s building board of appeals finds them guilty of three confirmed violations in a calendar year.

The rules do not limit the concentration of short-term rentals in a certain area nor specify any areas where such rentals will be forbidden. Occupancy will be limited to two individuals for every bedroom, plus two additional people, and neighbors within 100 feet of the rental property will be notified when a license is granted.

Petaluma already boasts a variety of short-term rental options. One popular site, AirBnB, showed 75 available properties in the city, ranging from $85 rooms at the edge of town to private residences costing more than $200 per night.

The stakes of such regulations are high in a county where tourism spending amounts to hundreds of millions of dollars each year, including $284 million in spending on lodging alone in 2012, according to the most recent Annual Tourism Report by the Sonoma County Economic Development Board. One projection by city staff showed the city’s annual windfall from tax and licensing income for short-term rentals at $134,250, which assumes 50 approved owners renting at 90 days per year for $260 per night.

Yet some argue that the impact on the character of neighborhoods exceeds the economic benefits. While many municipalities have placed some limit on short-term rentals, Sonoma, for example, upheld an outright ban on the practice in April.

The differences in approaches reflect a broader national debate around the so-called “sharing economy,” where websites and mobile apps have made it easy to provide not only short-term rentals, but taxi services and more. Cities like Petaluma have been forced to play catch-up as those services have burst into the mainstream.

While applauding the regulation as one of compromise, Nancy Sasser, a Petaluma resident, said at the council meeting she remained concerned about the impact that a growing short-term rental industry will have on the city’s neighborhoods.

“I believe the neighborhoods close to downtown are going to become less safe, simply because people will become more accustomed to strangers in their neighborhood,” she said.

Chris Albertson, the council’s sole dissenter, criticized the rules for allowing the renting of vacant properties.

“Forty-five minutes puts the property owner in Napa, in San Francisco, in Windsor - a long way from here if an issue arises,” he said. “The host, in my opinion, should be residing on the property, so they can take full responsibility for their guests.”

Margarethe Kircher, a Petaluma resident since 1965 and participant in the short-term rental market, was among those who spoke in support of the practice.

“Short-term rentals bring tourist dollars to Petaluma,” she said.

The council approved an automatic three-year review of the regulations, ensuring that the framework would once again be on the public stage after playing out for several years. That provision does not prevent the subject from coming before the council sooner if needed, said Councilman Dave King.

“Like many laws that get passed, there can be a need for adjustment as time goes on,” he said.