AN ORDINANCE relating to the regulation of short-term rental businesses; adding a new Chapter 6.600, Short-Term Rentals, to the Seattle Municipal Code.
Bill passed and chair of the Senate. Please read the report of the planning, land use and Zoning Committee Action Item number three. The report of the Planning and Zoning Committee. Janet and three Constable 119021 relating to the regulation of short term rental businesses. Adding a new Chapter 6.600 short term rentals to the Cielo Ms. Code. Can we recommend the bill passes amended? Councilmember Johnson. Okay. We are here at the final three bills related to short term rentals. The Council previously adopted per night tax on short term rental operators, and then updated the land use code to define what a short term rental use is. We have in front of us today is the rental uses regulation bill. Currently, short term rental uses are permitted but not regulated, and this bill establishes regulations on the operation of short term rentals to go into effect starting January one, 2019. The bill that came out of committee does a couple of things. Defines and establishes a licensing framework for short term rentals, and the operators utilize short term rental platforms. The legislation establishes a cap on the number of dwelling units a person can operate as a short term rentals to units for units in operation before September 30th of this year and moving forward is capped at the primary housing unit plus one additional unit per operator outside of the downtown and a specific exemption area within the downtown is the downtown uptown self. Again, urban centers and units in certain building types in the first all capital urban center. We also have the ability for those folks who are entering the marketplace after September 30th, 2017 to play in the short term rental field. They are required to play at the primary plus one level. So they're allowed to have one unit on the market place. On a second unit has to be their primary residence. We are going to be discussing several different amendments associated with this. But before we get to those amendments, I just want to again take a moment to say a quick thank you to Allie Bonacci of our council central staff, and Amy Gaw from my office. This has literally been a two year process, and we've sort of inherited this from then Councilmember Burgess and then now Mayor Burgess. And I understand the complicated nature of this fact of this legislation. And I want to say thank you to many of my colleagues who took extra time to send the bill back to committee. It is not a perfect bill, from my perspective, but it certainly is better than the one that we had the last time around. So why don't I stop there, take discussion on amendments, and we'll go from there. Thank you, Councilman Johnson, again, thank you for inheriting this and working so hard through it. I believe there are some amendments. Unless anyone wanted to say anything about the base, legislation will go to potential amendments. Or are there any comments on the base legislation that had come out of committee? Why don't we take the amendments in the order that we discussed them this morning? And so, Councilmember Bagshaw, I think you had the First Amendment. I do think you amendment number one would actually reduce the area of land where we would grandfather units. And I want those of you who have been testifying to know that I've heard you loud and clear. We've got homeowners and condo owners and business owners, large and small, and we have strong opinions on both sides of this . Last week, when we had our meeting, I spent time and actually pulled this amendment off so I could spend more time over the weekend to hear from you, hear from people and go back and read what had been presented to us. So today, again, I'm going to bring what is now Amendment One back, which will reduce the exempted grandfathered area, actually make it about the size of our downtown core hotel area from Cherry to Olive Street. This has fewer affordable units, more hotels, more tourist attractions in the area. This is where our city's hospitality industry already exists in force. I actually happen to live in this area, so I am mindful of what I am doing. But my goal here with this amendment is to ensure that areas such as Belltown, Uptown, South Lake, Union, Pioneer Square, where there are many units that are units for families, some are family sized. We are working very hard to get a school into this area. We want to make sure that we are advocating for a family friendly Seattle. The goal here is going to make sure that people still have still have their ability to have a unit that they can rent out their primary unit and one other , but at the same time increase the number of units that will be available for for families full time. I'm really conscious of what I received from one individual who said, I've got somebody who is running out a unit almost every night to my left, to my right, over my head. And that is not a place that I personally would want to live. And I'm sure that that individual doesn't want to live there in that way. As well. So we're trying to restrict that to a reasonable place. So if you've bought a unit, you've bought a home in a condominium or in an apartment building where others are renting it out, you can assume that you are going to have a place where you can live and have your own quiet nest and not have people who are vacationing around you every night. So that's the reason behind this. And I would like to move forward with Amendment One. Very good. Just to be clear, as I recall, the amendment as I recall, I'm looking at a script here just to be very clear that the amendment and described in the written document. Basically change is the first sentence in the code. 6.600.040. B point to deletes the term Uptown Urban Center or the South Lake Union Urban Center and adds south of all of way and north of Cherry Street. That's the amendment. That's correct. Okay. Is there a second? Okay. Any further discussion, Councilmember Johnson. Not to belabor what has already been a good hour and a half long meeting, but I just want to say to you again, Councilwoman Baxley, I think reasonable people can disagree on this. I'm going to be voting no on this amendment for many of the issues that you heard from folks and public comment. It reduces jobs. It reduces the amount of funding that we can have for our equitable development initiative. And I'm not sure that it's in that many decisions will actually revert back to the long term rental market. So I'm going to be voting no. Thank you. Very good. Just a quick response to that. I failed to say thank you and my true and deep appreciation, Councilmember Johnson, for you taking this on. It's not been easy. And goodness knows, there have been plenty of amendments that you've dealt with. And I agree with you, reasonable minds can differ. And I appreciate your point of view. Councilmember O'Brien. Thank you. Councilman Bagshaw, thank you for bringing this forward. Today, I will be supporting this. I want to respond to just a couple of things I heard in public comment. One of the last public comment was talked about the struggle for folks who are living in Belltown to be able to afford to live there. And I want to remind everyone what this does do and doesn't do. What it means is there'd be a small area in the downtown area that Councilmember Bexar referred to where folks that are legally operating, Airbnbs would be able to operate an unlimited amount in that range outside that area. People would continue to be able to operate two units. So the example of someone who occasionally leaves their place empty because he goes to his then boyfriend or girlfriend or rents out to make a little extra money that would still be allowed. In fact, people could own speculate or, you know, investments or speculative to units outside this narrower range and rent those out. This only starts to impact individuals who are owning three or more units that they're renting out. What would that impact be? Well, they would could rent them out on a long term rental. They could sell them. Someone can move there. And the jobs front, I just I respect that. There's a lot of folks that are running businesses right now that are employing folks. And I understand that you set those businesses up following all the rules all the time. But as technology changes, as situations change, we make policies that react to that. And I want to just remind folks that people, residents also create jobs, not just tourists create jobs. So it's a shift for sure. But it's not that this is against jobs. There may just be slightly different types of jobs. Thank you, Councilmember. We're just discussing amendment number one, Casper Mosquito. Wonderful. Thank you, Mr. President. I just have a few questions. And perhaps they're best directed to the sponsor of the amendment or to staff, if that's okay, to ask for clarification. So, number one, can you please confirm, just as Councilmember O'Brien just reiterated, that this amendment and the underlying bill does not exclude short term rentals in any part of the city? Correct. Correct. Okay. And in an effort to make sure that the folks who've testified before, who are cleaning the places, making sure that things are getting up and ready, managing, there's nothing that precludes them from continuing to manage. This is really just directed at ownership, is that correct? Oh, so it's it's it is it is good. I would say that it is going to impact jobs. The economy. I'm going to ask the next person like this gentleman is being disruptive. I'm just going to ask I'm going to warn you now. I have to do that. And I'm just going to have you removed. Please. We heard your comments. We we know this is a passion, but let us deliberate and make decisions. Thank you very much. So repeat your question, please. The common was the question was asking around those who are providing cleaning facilities, those who are managing. Is there anything in the amendment or the underlying legislation that changes any of those rules? It doesn't change the rules, but what it will do is it's going to reduce the number that an individual might own. So if somebody is owning and renting out short term and as a number of people have said and this is a concern that I heard loud and clear last week, which is why I paused before bringing this forward. It is going to impact people who have a number of units in an area and that they have, let's just say, those who have cleaning that come in regularly when somebody leaves, that is that will impact them. There is no question about that. And is that information going to be part of the report that we get in six months? And in the report that we get in six months, will we also be able to look at potential impacts on the black market, maybe apartments that are not listed on some of the platforms that we've been talking about? And I think that's really important that we ask for specifically that. Okay, great. Those are some of the things that I'll be looking for. And I just want to thank you for your work on this and Councilmember Johnson and the entire committee. I think that this is a a good hybrid, a good approach. And I've heard from some of the folks that say that they want to be able to stay in the city, raise their kids in the city, make sure that they can afford their first place in the city. And I look forward to supporting our amendment and to talking about the underlying bill soon. Thank you. Very much. And any further comments on amendment number one? It's been moved in second and all those in favor of amendment. Amendment number one, please vote i. I opposed. No. I'll ask you say I if you support it and raise your hand, support the amendment. Number one. I. I. Opposed now 5 to 2, the amendment passes. Amendment number two and three are sort of related. So I'm going to ask Councilmember Brian to walk us through two and three. Council President It's okay. I'd like to walk through 3/1 and I actually do not plan to bring amendment number two. Very good. Amendment three does a couple of things. And I'm going to speak to the first piece of it and allow my co-sponsor, this amendment, Councilmember Herbold, to speak to the second piece. Amendment three specifically. The first piece is just strengthening the language to make it clear that there will be a fee recovery mechanism to fully recover the costs of the directories, administrative, enforcement and other regulatory costs. The language in the underlying bill, I believe, is pretty clear on that already, but this amendment makes it, I think, pretty explicit . So it's unambiguous. Specifically, what Section D would say is the director shall review annually any of the licensing fees in the subsections listed here and shall make any necessary adjustments in a director's rule to ensure the fees achieve full cost recovery of the directors, administrative, enforcement and other regulatory costs and no more. So specifically, what I want to just state in layman's terms what this is intending to do is platforms that will need to be in compliance with the city's new regulations, will pay some sort of regulatory fee, and that fee will be set by directors on an ongoing basis and can be adjusted up or down as necessary in order to ensure that they're fully covering the costs it takes to administer the regulations we're putting in place. Councilmember Herbold, would you wanna speak to the latter part of the same amendment? Sure. The latter part of the same amendment clarifies that as the director is making recommendations on a fee structure to ensure full cost recovery, as Councilmember O'Brien explained that they will consider both a per night fee, as well as a graduated annual fee with tiers based on the numbers of listings on a platform. The idea being that some folks wanted an approach for the fee to be something other than a per night fee. The suggestion would be was a flat annual fee. I had a concern about a flat annual fee because it would treat platforms with many participants the same as platforms with fewer participants. And so that's why I sort of keyed up the notion of, yes, let's look at a an annual fee instead of a per night fee, but let's look at one that's graduated according to platform size. And it clarifies as well that fees will produce a written status report to the Council by June 2018. For our consideration and any potential next steps, there is no net. There are no next steps required by the Council but by us getting that report by June, when this is supposed to go into effect January 2019, it gives us an opportunity to ask Act if the recommendations from our face are not aligned with these objectives. Very good. So we have an amendment number three in front of us. Any further comments regarding amendment number three? And it has once you formally move it and you get a. Second, go ahead and move. Amendment number three. Has been moved. And second, any further comments on amendment number three? All those in favor of amendment number three. Please say I and raise your hand. I opposed the ayes have it. So there you go. And Brown. So he's not bringing forward number two. So we're still stuck with amended legislation with anyone else like to make any comments about the overall legislation comes from O'BRIEN Yeah. I just want to speak briefly to amendment number two, which I will not be bringing forward. Colleagues, I appreciate getting the clarity on the language. And now that we have, I think, unambiguous certainty that there will be some sort of regulatory fee to cover the costs instead of setting a specific fee. At this point, we can wait for the director to come up and do that process now that we've given them that authority. So I will withdraw amendment number two. Very good. Any further? Any any further. If skies are to councilmember a. Cigaret. Have this man please escort it out, please and have this gentleman escort it out as to thank you. Councilmember Herbold. I want to speak to some of the the frustration that we're hearing from folks about the exemptions to the caps. I want to clarify that these are exemptions that that not from the ability to participate in short term rental market as an income generating activity, but it is an exemption to make sure that folks outside of the exemption area are not hampering the access to to to permanent long term housing, whether it's rental housing or or homeownership opportunities. And, you know, I think Seattle's legislation that we are poised to to vote on is really much more generous to folks who are engaged in this activity than many other cities. Councilmember Mosqueda shared some research from her office last week that shows each Denver, Los Angeles. San Francisco. Santa monica, Portland and New York City. All limit. Short term rentals to units within people's primary residence. I think, you know, we are trying to balance the fact that people rely on this income to maintain their own mortgages, their own expenses, as well as give folks opportunities to to employment within this within this industry. And in doing so, I again, I think we're more generous than than many other cities that we are seeing that are moving into this this area. Very good. Any further comments on that? Because Councilmember Johnson. So, you know, we have ended in a very different place from where we started. And I want to recognize that. And I think one of the important distinctions here is we started with a process that was intended to solely just focus on regulation. And I think some of the differences here between some of the difficulties between comparing our model to other cities models is that we are different in that this was an allowable legal use for a long period of time, which is different from what other cities have gotten into where they've started to regulate a use that wasn't legally allowed. So that distinction is important as we got into a lot of the negotiations with many of the folks who are legally operating businesses in the city. But I don't want to lose sight of, I think, what it was an important change for us as a council and as a city, which was to talk about revenue model as well as a regulatory model. We started this process with just an objective of reducing the number of units that could be on the short term rental market platform. And we changed that about nine months ago to talk about not just the regulations, but also the opportunity for revenue here. And that was no small part started by many of the folks who are out in the audience today. And I want to recognize those folks, because rarely is an elected official D.C. individual stand up and raise their hand and say, please tax me. Because I believe that that is the right thing. And not only I want you to tax me, but I also want you to tax me and have it fund projects that are going to benefit my community. So a change here towards a tax that is going to fund equitable development should not be one of the things that's lost in the shuffle of what has been a really complicated set of negotiations around regulation. So I want us to not lose sight of that fact. I think that the bill in front of us is certainly not the bill that I thought we were going to end up with. I don't think it's a bad compromise by any stretch of the imagination. And I want us to remember that in the long run here we met a really diverse set of objectives with a very diverse set of stakeholders. And I'm hopeful that as we get into 2018 and talk about implementation, that we can continue to work collaboratively together, together across all the different entities. Thank you, Councilman Johnson. Any further comments can bring back. As a just a moment of personal privilege. There seems to be some concern in the audience. I don't own any real estate other than the one in which I live, and my particular condo does not allow short term rentals. So if anybody has any concern that there's a financial interest here, not the case. Councilmember O'Brien, thanks for clarifying that. I want to I want to take a minute to just highlight that one of the driving principles for me in this process was centering racial equity around this policy decision. And I want to thank the folks in our community who have been doing analysis about the racial disproportionality of both, who benefits from the existing system and the proposed legislation, and who was hurt by it. And I also want to thank the individuals who came and testified today, specifically using a racial equity lens to help us think through this. We know we live in a city that is in a society that, frankly, is not equal. And a lot of those inequities fall along racial lines. And I think it's critically important if we want to undo the unfair system that unfortunately creates huge disparities, often based on race. And we need to be centering that approach as we make these policy decisions. And as someone I think said a very eloquently in comments today, you know, people of color benefit less than white people in this program, and they're disproportionately hurt by the displacement because of homeownership patterns. I think everyone in our community I'd like to think everyone our community wants to get beyond that, where homeownership is equally shared by people regardless of race. But we're not there today. And we have to recognize that the policies we make in a system that is unfair have disparate impacts. And so I'm proud of where we gone today. I think we've created a path where people can continue to operate successful businesses. There will be some changes for sure. And I think those changes overall will be better for the city. Well stated, Councilmember Mosquito. Thank you, Mr. President. And thanks to the council, especially to Councilmember Johnson, for shepherding this through. I have learned a lot from the last few conversations that I've had over not just the last two weeks in this role, but in the last year or so, as I've heard about this issue, I want to echo Councilmember O'Brien's appreciation for the community that's come forward, especially for Puget Sound Stage and the research that she put together with the limited data that we have so that we do have a better analysis on who will benefit and how we can continue to create greater equity in this city. This is an issue that I take very seriously and personally as well. I know individuals that have been able to stay in their home, keep their home and live with financial security because of the ability to rent out and a mother in law unit or a downstairs unit, as many of you said, or your second home. The legislation before us, I think, allows for people to maintain that mom and pop approach to keeping their units afloat. And also, I will, as I mentioned in the questions ahead of time, be looking to see what the impact will be on those who do the cleaning and the preparations for these short term rentals. I think that this is a priority to make sure that individuals can stay and be financially stable in our city, recognize the entrepreneurial spirit in which these units became available, but also try to create as much housing as we need as we have a housing crisis so that we're looking to constantly bring more homes onto the market . I am very sympathetic to the need to make sure that people can raise their kids here, can live in the city that they work and create opportunities for greater home ownership. So to those of you who've emailed me and met with me on this point, I hear you and I look forward to working with you, especially as we have this report coming up in six months. I also want to make sure that we address the concerns that Councilmember Bagshaw and others have brought up about wanting to make sure we don't have de facto hotels. And with the legislation that's already been passed, I know we've taken some tremendous strides to looking at health and safety , making sure that we're creating regulation. And this is the final puzzle piece I think helps us lead in terms of creating greater stability. And I also end by just saying this is an issue that I think can help be level setting as we look at other cities and in terms of how they get new economies under regulation , trying to be creative and innovative, recognize the entrepreneurial, entrepreneurial spirit while we protect workers and while we protect our safety of our residents and our visitors. I do look forward to working with you and appreciate all the work that went into this and I'll be voting yes. Thank you, Councilmember Mosquito. Okay, I think we are ready to vote, so please call the roll on the passage of the amended Bill Bagshaw. Gonzalez Herbold, Johnson, Machado O'Brien, President Harrell seven in favor and unopposed. The bill passed and chair sign it. Please read the next agenda item and you can read the short title. The Select Budget Committee Gentlemen four Accountable 119 148 Relating to funding for Housing and Community Development Programs, Committee recommends the bill passed.