.010 Notwithstanding anything to the contrary in Chapter 4.05, which may allow Pre-Moratorium Short-Term Rentals as described in paragraph B of Section 4.05.020, subject to the hardship provisions that are further detailed in subsection 4.05.180.020, all such Pre-Moratorium Short-Term Rentals are prohibited in zones where residential uses are a permitted or conditionally permitted use after February 11, 2018 except as authorized by this subsection 4.05.180.010. The purpose of so deferring the termination of Pre Moratorium Short-Term Rentals is to provide a continuation of certain Pre-Moratorium Short-Term Rentals and/or a reasonable amortization period to the owners of properties with Pre-Moratorium Short-Term Rentals within which they may recoup the costs they reasonably invested for short-term rental use to the extent such costs could not already have been reasonably recouped during the period of short-term rental use of the property and cannot be recouped once the short-term rental use is terminated. The provisions of this section shall supersede any other provisions of this code relating to the continuation or amortization of a non-conforming use.
.0101 With the exception of this subsection 4.05.180.0101 and subsections 4.05.180.0102 and 4.05.180.0103, the provisions of this Section 4.05.180, including without limitation the foregoing amortization period, shall not be applicable to Qualifying Pre-Moratorium Short-Term Rentals, CC&R Restricted Short-Term Rentals or Pre-Moratorium Home Share Short-Term Rentals, even if they are the subject of an application for hardship extension timely-filed with the City under subsection 4.05.180.020; nor shall these provisions be applicable to those short-term rentals within the C-G General Commercial Zone that have been authorized pursuant to a conditional use permit approved in accordance with the provisions of this code prior to the adoption of the moratorium on September 15, 2015.
.0102 CC&R Restricted Short-Term Rentals are prohibited in zones where residential uses are a permitted or conditionally permitted use after December 31, 2022, and shall not continue to operate in such zones after this termination date. Provided that the Short-Term Rental use is timely terminated by December 31, 2022 at the CC&R restricted location and that the Short-Term Rental permit is current and in full force and effect (including payment of all applicable fees), and notwithstanding any other provision of this Chapter, the holder of a permit for a CC&R Restricted Short-Term Rental may, one time only, at any time before or after the termination date, do one of the following:
(a) Subject to filing an application on a form approved by the Planning Director and payment of all applicable fees, convey the existing Short-Term Rental permit to a property that is not located in a community that has CC&Rs prohibiting Short-Term Rentals, provided: (i) the new location for the Short-Term Rental use is approved pursuant to the Minor Conditional Use Permit process set forth in Chapter 18.66 of this Code, and, if the new property is a single family detached residence, it is not within 250 feet (measured from the perimeter of the property) of any existing Short-Term Rental property; or (ii) the permit holder obtains verified written consent to the new Short-Term Rental location from all neighboring property owners as provided in this paragraph, the new location for the Short-Term Rental use is approved by the Planning Director in his discretion pursuant to the Administrative Review process set forth in Chapter 18.62 of this Code, and the Planning Director finds that the approval will not result in a direct or reasonably foreseeable indirect physical change in the environment because there is no possibility that it may have a significant effect on the environment. For purposes of this paragraph, verified written consent means such proof as the Planning Director determines confirms the authenticity of the signatures and ownership interests of 1) all property owners within 75 feet of the proposed new location of the Short-Term Rental property (measured from the perimeter of the property) if that property is a detached single family residence, or 2) any and all property owners who share a common wall, ceiling and/or floor with, as well as any and all property owners who are located within 25 feet (measured from the perimeter of the property) of, the proposed new location of the Short-Term Rental property, if that property is other than a detached single family residence, along with proof that any existing homeowner's association has been notified of the proposed new location of the Short-Term Rental property.
(b) Transfer the existing Short-Term Rental permit to another person who may exercise the original permit holder's one-time opportunity to convey the existing Short-Term Rental permit to a new location subject to the requirements of subpart (a) of this subsection.
Following any transfer or conveyance authorized by this subsection .0102, a Short-Term Rental permit shall only be transferable as provided in Section 4.05.070. The transferee of an existing Short-Term Rental permit transferred to another person pursuant to this subsection shall file a change of ownership application with the Planning Director, accompanied by the payment of such fee or fees as may be established by resolution of the City Council. Such change of ownership application shall contain information reasonably required by the Planning Director, including, at a minimum, identification of the original property to which the existing Short-Term Rental permit had attached, the number assigned to the permit being transferred, the date of the transfer, and the printed names and notarized signatures of the transferor and transferee as well as their contact information. Once an existing Short-Term Rental permit is conveyed to another property pursuant to this subsection, that new property shall be deemed to be a Pre-Moratorium Short-Term Rental and a Qualifying Pre-Moratorium Short-Term Rental.
.0103 Notwithstanding any other provision of this Chapter, and subject to payment of all applicable fees, the holder of a permit for a Qualifying Pre-Moratorium Short-Term Rental property may, on or before December 31, 2019, file an application for conveyance based on compatibility issues with the Planning Director, on a form approved by the Planning Director. The Planning Director shall have discretion under this subsection to approve the conveyance of up to five (5) permits issued to Qualifying Pre-Moratorium Short-Term Rentals that have proven to create compatibility issues with the immediate neighbors or neighborhood in which they exist, due to their size, location, design, layout of amenities, or proximity to neighboring properties and/or the specific characteristics of the neighborhood in which they are located. If the Planning Director approves a conveyance request pursuant to this subsection, the permit holder may exercise a one-time opportunity to convey the existing Short-Term Rental permit to another property, provided i) the new property is not located in a community that has CC&Rs prohibiting Short-Term Rentals, ii) the new property is not within 250 feet (measured from the perimeter of the property) of any existing Short-Term Rental property, iii) the new Short-Term Rental unit does not exceed the square footage of the previous Short-Term Rental unit by more than 15%, and iv) the new location for the Short-Term Rental use is approved pursuant to the Minor Conditional Use Permit process set forth in Chapter 18.66 of this Code. Any conveyance undertaken pursuant to this subsection must be completed, and the new Short-Term Rental use established, on or before December 31, 2022. The Short-Term Rental use must be terminated at the original location prior to establishment of the Short-Term Rental use at the new location. In addition, a person or entity that holds permits for multiple Qualifying Pre-Moratorium Short-Term Rentals may only file one (1) conveyance application under this subsection. Once an existing Short-Term Rental permit is conveyed to another property pursuant to this subsection, that new property shall be deemed to be a Pre-Moratorium Short-Term Rental and a Qualifying Pre-Moratorium Short-Term Rental.
.015 In the event an owner believes that termination of the short-term rental use within the period provided in subsection .010 of this section will not provide the owner a reasonable period of time within which to recoup the costs the owner reasonably invested for short-term rental use, and that such costs cannot be recouped once the short-term rental use is terminated, the owner may apply to the Planning Director for an eighteen (18) month affidavit extension. The Planning Director shall approve the affidavit extension for the additional eighteen (18) months (until August 11, 2019) if the owner (i) has paid any applicable filing fee for the affidavit extension, (ii) has a short-term rental permit or valid pending application and/or has applied for and/or received any applicable renewal permit, (iii) is not the subject of a revocation proceeding in connection with the short-term rental property, (iv) has passed or is awaiting final inspection for the first renewal inspection following the adoption of Ordinance No. 6374 addressing compliance with building standards and health and safety codes concerning the short-term rental, (v) has paid all known applicable transient occupancy taxes for the short-term rental, (vi) has paid any fines relating to notices of violations or citations that are final for the short-term rental, and (vii) signs a declaration under penalty of perjury that the owner cannot recoup the costs reasonably invested for short-term rental use of the property if the short-term rental use is not allowed after February 11, 2018, and (viii) completes, submits and signs under penalty of perjury the form provided by the city for the affidavit extension which makes a prima facie showing of the facts set forth in subparagraph (vii). Unless extended by the Planning Director, the application for an affidavit extension shall be filed by May 22, 2017. The duties and responsibilities of the Planning Director under this section may be performed by the Planning Director's designee.
.020 In the event an owner believes that termination of the short-term rental use within the periods provided in subsections .010 and .015 of this section will not provide an owner a reasonable period of time within which to recoup the costs an owner reasonably invested for short-term rental use, and that such costs cannot be recouped once the short-term rental use is terminated, an owner may apply to the Planning Director for a hardship extension. The duties and responsibilities of the Planning Director under this section may be performed by the Planning Director's designee. The application for a hardship extension shall be made, processed, and acted on in accordance with the following provisions:
.0201 Not later than April 10, 2017, unless the Planning Director, in his or her sole discretion, extends the deadline for filing such an application, an owner with a short-term rental permit or valid pending application may file an application with the Planning Director for the hardship extension, along with such fee or fees as may be established by the City Council by resolution. The owner shall sign the application under penalty of perjury. The application, which the owner may continue to supplement with additional information and documents until the effective date of Ordinance 6405, shall set forth the amount of additional time that the owner contends is necessary, beyond the period provided in subsection .010 of this section, to recoup the costs the owner reasonably invested for short-term rental use which cannot be recouped once the short-term rental use is terminated. The application shall fully set forth the owner's justification for such additional time and shall also include the following information:
(a) The date the property was acquired by the owner, the price and other terms of the acquisition that materially affected the price, and the purpose for which the property was acquired by the owner. If the property was acquired by a means other than an arms-length purchase (including without limitation a gift or inheritance), then the owner shall provide information concerning the most recent arms-length purchase involving the property.
(b) Each use the owner has made of the property since the owner's acquisition and the period of each such use.
(c) A detailed listing of expenditures made by the owner for capital improvements to the property for the purpose of putting the property to short-term rental use, since it was acquired, including the purpose of each expenditure, the amount, the date, the payee, and any other relevant information for each expenditure. The owner shall provide receipts, executed construction contracts and/or other written proof of each expenditure.
(d) A detailed listing of expenditures made by the owner for capital improvements to the property other than those made for the purpose of putting the property to short-term rental use, since it was acquired, including the purpose of each expenditure, the amount, the date, the payee, and any other relevant information for each expenditure. The owner shall provide receipts or other written proof of the each expenditure.
(e) A detailed listing of all expenditures incurred by the owner for the purpose of putting the property to short-term rental use, other than capital expenditures, including the purpose of each expenditure, the amount, the date, the payee, and any other relevant information for each expenditure. The owner shall provide receipts or other written proof of each expenditure.
(f) A detailed listing of all gross receipts received in connection with the use of the property for short-term rental purposes during such time as it was lawful to use the property for such purposes.
(g) For each short-term rental use that has been made of the property since such uses were permitted, the owner shall provide details on the duration of the rental, the amount of rent and other payments made to the owner for the rental, and the expenses directly associated with that rental (including but not limited to commission fees). The owner shall provide the date the property first was used as a short-term rental, the number of days that the property has been occupied as a short-term rental since that use commenced, and the average rent paid per day for short-term rental use since that use commenced. The owner shall state whether during the period that short-term rental use has been allowed for the property, the property has been put to any other uses (including without limitation residential use by the owner or others) and, if so, detail the number of days for each such use and any income generated from each such use.
(h) A detailed projection of the income and expenses that are anticipated if the requested hardship extension is approved.
(i) An identification and description of any contracts with third parties that commit the property to a future short-term rental use to a third party, including the dates of the committed use, the rental to be charged for the use, and any other relevant information relating to the contracted future use. The owner shall provide written evidence of the contacts identified.
(j) An identification and description of any long term commitments, whether leases, mortgages, or other commitments, that have been made by the owner in reliance on the ability to use the property for short-term rental purposes. The owner shall provide written documentation for each such commitment.
(k) The fair market value of the short-term rental property as of August 11, 2016, had there been no prohibition on short-term-rentals in zones permitting or conditionally permitting residential uses compared to the fair market value of the short-term rental property as of August 11, 2016, if sold for non-short-term rental use. The owner shall provide the factual basis and analysis substantiating these values, including comparable sales information, income approach elements and/or cost approach elements.
(l) Whether there has been or will be an increment in value accruing to the property as a result of the ban on new short-term rental properties that became effective on August 11, 2016, which ban limits the number of short-term rentals available in the city, and the factual basis and analysis substantiating that increment in value.
(m) Whether there has been or will be an increment in potential monthly rental income that the short-term rental property could generate from short-term rental use for the remaining period of allowed short-term rental use, by having a pre-moratorium right to short-term rental use while other properties (in zones permitting or conditionally permitting residential uses) could not be used for short-term rental purposes, other than those properties that benefitted from the pre-moratorium right to short-term rental use. If so, the owner shall provide the factual basis and analysis substantiating the increment in potential monthly income for the period of permitted use.
(n) The amortized or depreciated value of the short-term rental property used for tax purposes.
(o) A financial analysis demonstrating the amount of time that will be required for the owner to recoup the costs reasonably invested for short-term rental use to the extent such costs could not already have been reasonably recouped during the period of short-term rental use of the property and cannot be recouped once the short-term rental use is terminated. The analysis should identify reference sources for each item of data included and set forth the basis for all assumptions made. The Planning Director may provide the owner with a requested form and/or format for the financial analysis, and if provided, such form and/or format shall be completed and submitted by the owner.
After receiving a timely filed application, the Planning Director may request any additional information reasonably necessary to ascertain relevant facts and circumstances; and if requested, the owner shall provide the requested information within thirty (30) calendar days of the Planning Director's request, unless the Planning Director provides for a longer period. The Planning Director may deem an application to be incomplete, and return it to the owner for additional information, if the information set forth in the application is not provided in a manner that is comprehensive and understandable and that demonstrates how the factual information provided leads to the conclusion that the requested hardship extension is necessary. If an application is returned as incomplete, the owner shall correct the deficiencies and provide the requested information within thirty (30) calendar days of the Planning Director's request, unless the Planning Director provides for a longer period. The Planning Director, in his or her sole and absolute discretion, may waive one or more of the items listed above if he or she determines the purpose and intent of the amortization provisions of this section can be adequately achieved without the submittal of such item(s), but no waiver shall be effective unless in writing and signed by the Planning Director.
.0202 The burden shall be on the owner to establish the need and grounds for a hardship extension and to establish the reasonableness of the requested duration of the extension. Any alleged hardship that is based upon action or expenditures not reasonably taken or made in light of the circumstances, shall not be grounds for an extension. Any expenses for modifications or improvements to the short-term rental property incurred after August 11, 2016 shall be presumed not to be reasonably incurred unless (i) the owner proves that they were reasonably necessary to operate the short-term rental in a way that would ultimately reduce the duration of the extension otherwise necessary, because the modifications or improvements will allow for quicker recoupment of the owner's qualifying costs, or (ii) the expenditures were incurred in order to satisfy fire-safety requirements that were not in place before August 11, 2016, or (iii) the expenditures were incurred in order to satisfy a requirement of the city on the continued use and operation of the property. If there is a sale of the short-term rental property after August 11, 2016, the costs to be considered for purposes of a hardship extension shall be those of the owner prior to August 11, 2016, and the new owner's purchase price and costs shall not be a basis of qualifying for a hardship extension. The Planning Director shall approve an extension upon determining that the owner has shown that since the commencement of the use of the owner's property as a short-term rental property, the owner has not had and will not have, within the time limit set forth in Section .010 above, plus any affidavit extensions provided under Section .015 above, a reasonable period of time within which to recoup the costs the owner reasonably invested for short-term rental use, and that the costs cannot be recouped once the short-term rental use is terminated. In the event an extension is approved, the Planning Director may not approve an extension of time longer than is necessary to allow the owner a reasonable time for recoupment of such costs. The determination of the extension of time permitted includes a process of weighing the public gain to be derived from a speedy removal of the nonconforming use against the private loss which removal of the use would entail.
.0203 In determining whether the owner has had and will have a reasonable period of time for recoupment of costs, the Planning Director shall consider the period of time that the owner has had for short-term rental use since the owner began to incur such costs as well as the time available for continued short-term rental use under Section .010 above along with the available affidavit extension. In addition to the information contained in the application submitted by the owner, the Planning Director may consider such additional competent and relevant information that the Planning Director may obtain by staff investigation or from other sources as the Planning Director may choose to consult or obtain; however, the Planning Director shall not be obligated to conduct any independent investigation or to seek information outside the scope of the owner's application. Upon request of the Planning Director, the owner shall be reasonably available to respond to questions or to review and discuss relevant information.
.0204 In considering the application and making a decision, the Planning Director may take into account all relevant information that relates to the determination of whether the owner has had or will have a reasonable period of time to recoup the costs the owner reasonably invested for short-term rental use, and that the costs cannot be recouped once the short-term rental use is terminated, including but not limited to any of the following matters he or she deems relevant:
(a) The information submitted in the owner's application.
(b) The period of time that the owner has had for short-term rental use since the owner began to incur such costs.
(c) The amount of investment or original cost incurred by the owner.
(d) The fair market value of the short-term rental property as of August 11, 2016, had there been no prohibition on short-term-rentals in zones permitting or conditionally permitting residential uses compared to the fair market value of the short-term rental property as of August 11, 2016, if sold for non-short-term rental use.
(e) The increase in value that the property benefitted from due to the market for real estate in the area, independent of any added increase that may have occurred as a result of the availability of the property for short-term rental use.
(f) Any increment of value that the property received by having a pre-moratorium right to short-term rental use while other properties (in zones permitting or conditionally permitting residential use) could not be put to short-term rental use, other than those that benefitted from the pre-moratorium right to short-term rental use.
(g) Any increment in potential income that the property could generate from short-term rental use by having a pre-moratorium right to short-term rental use while other properties (in zones permitting or conditionally permitting residential use) could not be put to short-term rental use, other than those that benefitted from the pre-moratorium right to short-term rental use.
(h) The income potential of the property since it was allowed to be used for short-term rental purposes and the income actually received by the owner from short-term rental use since it was allowed to be used for short-term rental purposes.
(i) Any amortization or depreciation of the improvements to the property that has been prepared for tax purposes.
(j) The extent of the owner's investment that is unique to the short-term rental use and does not serve any conforming use of the property.
(k) The extent of the owner's investment that will not be recovered on sale of the property.
(l) The owner's investment-backed expectations in light of current and pending regulation at the time that the investment was made.
(m) Replacement cost of improvements that might have been made that only serve the short-term rental use; and the length of time that the owner has had the benefit of the investment before the termination of the use.
(n) Any other information that bears upon the reasonable period of time for the owner of a Pre-Moratorium Short-Term Rental to recoup the costs reasonably invested for short-term rental use to the extent such costs could not already have been reasonably recouped during the period of short-term rental use of the property and cannot be recouped once the short-term rental use is terminated.
.0205 A decision by the Planning Director to deny an application for a hardship extension, in whole or in part, or to limit the duration of an extension to a shorter period than requested by the owner, may be appealed by the owner pursuant to the provisions established in Section 4.05.150 (Appeals and Administrative Hearing Procedure for Administrative Determinations) of this chapter, subject to the following additional provisions. At the city's option and expense, the hearing may be conducted by (i) the Employee Hearing Officer, or (ii) the City Hearing Officer, as defined in paragraph .0101 of subsection .010 of Section 1.12.110 of the code, or (iii) an economist or accounting professional who is experienced in accounting methodology and practice, or, if the parties stipulate, to such other person as may be mutually agreeable (each of these is hereinafter referred to as the "Hearing Officer"). The Hearing Officer shall conduct the hearing, receive evidence and make the final decision on behalf of the city. The deadline for filing an appeal shall be thirty (30) calendar days after the date the written notice of the Planning Director's decision is mailed (via first class delivery) to the owner. Such an appeal may be filed only if the owner timely submitted a complete application to the Planning Director for a hardship extension. The Hearing Officer shall conduct a de novo appeal hearing; however, the owner may not submit information to the Hearing Officer other than that which was submitted to the Planning Director in connection with the owner's application for hardship extension, except to the extent the information could not have reasonably been provided to the Planning Director with the application or to the extent that the information is necessary to rebut or respond to information submitted by the city or any other person to the Hearing Officer. The Hearing Officer's decision shall be based on all relevant information, including the categories of information set forth in paragraph .0204 of subsection .020 of Section 4.05.180. The burden shall be on the owner to establish the need and grounds for the hardship extension and to establish the reasonableness of the requested duration of the extension. Any hardship that is based upon actions or expenditures not reasonably taken or incurred in light of the circumstances shall not be grounds for an extension. Any expenses for modifications or improvements to the short-term rental property incurred after August 11, 2016, shall be presumed not to be reasonably incurred unless (i) the owner proves that they were reasonably necessary to operate the short-term rental in a way that would ultimately reduce the duration of the extension otherwise necessary, because the modifications or improvements will allow for quicker recoupment of the owner's qualifying costs, or (ii) the expenditures were incurred in order to satisfy fire-safety requirements that were not in place before August 11, 2016, or (iii) the expenditures were incurred in order to satisfy a requirement of the city on the continued use and operation of the property. If there is a sale of the short-term rental property after August 11, 2016, the costs to be considered for purposes of a hardship extension shall be those of the owner prior to August 11, 2016, plus those subsequently incurred costs, if any, authorized by this paragraph, and the new owner's purchase price and costs shall not be a basis of qualifying for a hardship extension.
.0206 An owner may designate in a hardship extension application filed in accordance with subsection 4.05.180.020.0201, or by other written notice to the Planning Director, filed prior to the deadline for filing a hardship extension application, that the owner is applying for a hardship extension pursuant to a "capped extension" process. If an owner timely does so, and the owner is granted a hardship extension for an additional two (2) years beyond August 11, 2019 (i.e., until August 11, 2021) pursuant to the capped extension process, the owner waives the right to claim a hardship extension beyond that period. The Planning Director shall not be obligated to grant any extension pursuant to a capped extension process. If the Planning Director (or his/her designee) does not grant an extension for an additional two (2) years beyond August 11, 2019, the decision shall not be appealable, and the owner's application shall be processed pursuant to the otherwise applicable hardship extension application process. In such case, the owner shall have a right to supplement the owner's hardship extension application within 30 days of being provided notice that the requested two (2) year extension has not been granted pursuant to the capped extension process. The Planning Director or his/her designee may grant an extension for an additional two (2) years beyond August 11, 2019 pursuant to the capped extension process if the Planning Director or his/her designee determines that the hardship extension application contains substantial evidence to establish that the owner has not had and will not have, prior to August 11, 2021, sufficient time within which to recoup the costs the owner reasonably invested for short-term rental use, and that the costs cannot be recouped once the short-term rental use is terminated.
.0207 Upon the conclusion of the amortization period, including any hardship extension or affidavit extension, the Pre-Moratorium Short-Term Rental use shall cease. Thereafter, the owner's property may be used as a long-term residence, a long-term residential rental, or for any other lawfully permitted or conditionally permitted use in the zone.
(Ord. 6375 § 1; July 12, 2016: Ord. 6393 § 5; January 10, 2017: Ord. 6405 § 1; April 4, 2017: Ord. 6466 § 1 (part); June 18, 2019.)