Regulation of

Short Term RentalsNorfolk City Council

May 8, 2018

Winter 2016 – General Assemblyo No locality could restrict short term rentals

o Same bill had to pass in 2017

June 16, 2016 – City Councilo Recommend continuing prohibition

o Recommend working to get “good neighbor” legislation

Summer 2017 – Chapter 741 (Senate Bill 1578)o Localities can require registration

July 11, 2017 – City Councilo Consider regulations for

• Homestays

• Vacation homes

History

July, 2017o City Manager tasks Neighborhood Action Team (NAT) to analyze

the issue

August-September, 2017o Neighborhood Action Team sets up STR subcommittee

• Planning

• Neighborhood Quality

• Police

• Fire

• ODU

• Health Department

• Commonwealth’s Attorney

o STR subcommittee completes research and recommends

allowing activity: “carrot & stick” approach

History

November 11 & 13, 2017

o Town Halls (Pretlow Library and Virginia Arts Festival)

o High turnout of STR supporters

March 1, 2018

o New Zoning Ordinance• Only permitted in single-family dwellings in R-C (Residential

Coastal) district

• Requires CUP from City Council

History

Analysis

The Market

o Airbnb in Norfolk = 279 listings 1

o VRBO (Homeaway) in Norfolk = 10 listings 1

o Flipkey (Tripadvisor) in Norfolk = 1 listing 1

o Average annual revenue per operator for Airbnb in Norfolk =

$5,700 2

o Average stay is 2 nights 2

o 8% occupancy tax = $456

o $2.00 Room night tax = $225 3

o With 150 active hosts, annual tax revenue from Airbnb would be

± $100,000 4

1 Search performed May 7, 2018, 2 adult guests, rental on June 29 for 2 nights2 Source: Airbnb, letter from Brandon K. Hatton to Mayor Alexander (Jul. 18, 2017)3 Assuming avg. rate of $100/night4 Assuming 100% host compliance

Looked at other localities

Analysis

o Annapolis, MD

o Austin, TX

o Charleston, SC

o Chicago, IL

o Louisville, KY

o Memphis, TN

o Portland, OR

o Santa Monica, CA

o Albemarle (County)

o Arlington (County)

o Bedford (County)

o Blacksburg (Town)

o Botetourt (County)

o Charlottesville (City)

o Roanoke (City)

o Warren (County)

o Williamsburg (City)

Analysis

Registry alone is not a solution

o STR operations occurring now, with no permitting

o Prohibition does not result in preventing the activity

o Registration only presents a burden for:• Lawful operators

• Unlawful operators who get caught

o Registry authorized by 2017 legislation has many exemptions

o Mandatory registration has low compliance in other cities

Enforcement alone is not a solution

o Current prohibition has not prevented the activity

o Additional enforcement might result in less activity

o Unlikely that the activity can be stopped entirely

o Del. Knight (Va. Beach-Ches.) introduced HB824:• Prohibit Lexington from regulating any stays longer than 30 days

• Prohibit Lexington from requiring a business license or BPOL taxes

• Declare that SRT in Sandbridge is a “principal use” subject to

applicable City of Va. Beach regulations

Analysis

A Cautionary Taleo Localities have generally taken a permissive approach

o Lexington adopted a new zoning ordinance in Oct. 2017

o Regulated short term rentals:• Inspections

• Permit and business license required

• Parking rules

• Contact person

• Taxes

Analysis

Subcommittee identifies “carrot & stick” approach

o Work with the market• Enable good operators

• Discourage bad operators

• Retain control to stop operators that start good but turn bad

o Make it easy to operate in the open• Free registration

• By right operation with registration

o Enhance enforcement and impose monetary penalties• Search out illegal operations using online resources

• Impose penalties for zoning violations

o Level the playing field with other transient occupancy

businesses

o Do not overregulate and invite a “fix” from the General

Assembly

Proposal

Homestay

o Allowed by right citywide

o Owner must be present

o Zoning Certificate required• Not allowed where an Accessory Dwelling Unit (ADU) already

exists on the property

o Max. Occupancy = 2 guests per bedroom

o Max. Length of Stay = 29 days (per guest per year)

o If a boarder resides in the home, one bedroom must be set aside

for each boarder (maximum of 2)

o Business license and transient occupancy taxes required

Proposal

Vacation Home

o Allowed in two ways:• By Zoning Certificate, if operator registers

• By Conditional Use Permit (CUP)

o Specific operational conditions imposed as part of the

Certificate or CUP• Off-street parking spaces required (1 per br.)

• In-town manager on call

• Fire inspection

• Posting of City ordinances on noise, trash pick-up, etc.

conspicuously in guest areas

• Max. occupancy

• Expires in 1 year

o Max. Length of Stay = 29 days

o Business license and transient occupancy taxes required

Proposal

Registration

o Not required – optional

o Information to be submitted by operators who register:

• Name of operator

• 24-hour emergency contact

• Annual fire inspection (no charge)

• Operator keeps log of stays and guests

• Provide proof of liability insurance

• Identify number of bedrooms available to guests

• Identify adequate parking (1 space per guest br.)

• Valid for one year (must renew annually)

o Benefits• “Norfolk Registered” badge appears on listing

• Vacation Homes not required to secure CUP

• Listed on City website: “Norfolk Registered”

Proposal

The 3-part Approach

o Create the opportunity to operate legally• Including neighborhood protection rules for Vacation Homes

o Set up a Registry• Enable open, lawful, safe operations

o Increase Enforcement• Help good operators crowd bad operators out of the market

• Protect neighborhoods

• Maximize operator revenues = maximize tax revenues