Should city allow short-term vacation rentals?

Council discussion yields more questions than answers
By Nicholas Johnson | Sep 20, 2017
Photo by: Nicholas Johnson This screen shot shows a listing on Airbnb.com for a private room in a house in Mukilteo.

Demand for short-term vacation rentals is well established in Mukilteo, but how the city plans to deal with them is only just starting to take shape.

The City Council discussed the issue Monday, Sept. 11, concluding there are more questions than answers and tasking Community Development Director Patricia Love with resolving some of those questions through further research.

The issue will likely be added to next year’s workload for the city’s planning department, which already includes updating the Shoreline Master Plan and the sign code.

In a review of listings on popular vacation rental websites this summer, city staff counted just fewer than 50 short-term rental housing units, with the most – some 28 – showing up on Airbnb.com. These rentals are typically centered in Old Town and along bluffs with views of Puget Sound.

Considering Mukilteo’s 8,380 housing units, these rental units account for less than 1 percent of the city’s total housing stock.

“Our code really didn’t envision these types of uses because it was mostly written in the ‘70s or ‘80s,” Love said.

Currently, the city’s land use rules don’t directly address short-term rentals, which are typically defined as lasting less than a month, or fewer than 27-30 days.

If the City Council decides to allow short-term rentals, it would need to address issues of zoning, taxation and business licensing. If it decides not to allow them, the city may face challenges with enforcing that ban. Either way, Mayor Jennifer Gregerson said, the city would likely struggle to enforce its rules.

Currently, such establishments as hotels, motels, and bed and breakfasts pay the city’s lodging tax. According to a review by Daniel Kenny of Ogden Murphy Wallace in Seattle, that tax should also apply to short-term rentals.

Airbnb, however, is the only service known to collect and pay applicable state and local taxes. In fact, Mayor Jennifer Gregerson said the city received some $5,000 in lodging tax payments from Airbnb last year.

Love said enforcement efforts would need to be addressed and likely increased whether or not the city decides to allow these rentals, and the cost of enforcement would likely outpace anticipated revenue from taxes and business licensing fees. She also said the city’s current system of land use code enforcement is complaint based.

“We have received some complaints in the city and most of them have to do with noise from people coming and going,” Love said. “I think we’ve had two complaints in the city in the last couple of years.”

Council member Christine Cook, who lives in the Chennault Beach neighborhood, said she’s had neighbors bring complaints to her, but not the city. She said she’s concerned about what could happen if the city does not take action to regulate the rentals.

“I’m concerned about the Airbnb situation just from problems I’m having in my own neighborhood,” she said. “Also, when I went to visit San Diego I saw a lot of signs in people’s yards against Airbnb, saying it was just taking over their community. It’s possible that if we’re not careful it could become a nuisance. And if people can fly in here, it may even get worse.”

Love distinguished Airbnb rentals as different from those made through other websites in that Airbnb tends to focus on renting out rooms in a house where the property owner remains on site, as opposed to renting a full house or condo with no property on site.

The city’s zoning code does allow “rooming and boarding,” which limits the number of guests a property owner can host, but not the length of their stay. Since the code also does not explicitly allow short-term renting of an entire property, attorney Kenny concluded that Airbnb rentals could be allowed, while those through sites like VRBO.com that offer more private rentals of entire homes would not.

Council president Bob Champion said he wants to see all short-term rentals treated the same.

“My personal belief is we need to be consistent in our coding,” he said. “If we have a model where someone is generating income for themselves and not paying the appropriate taxes, I think we need to be fair.”

Champion also said he hopes to learn more about the role of private property rights and how they could limit the city’s ability to regulate.

Love said she hadn’t looked into whether any the short-term rentals in the city have business licenses, but she said she doubts they do. She said only one bed and breakfast – The Hoglund House in north Mukilteo – has a city business license.

Council member Steve Schmalz said it seems disingenuous to accept lodging taxes from Airbnb while not recognizing those rentals as businesses with licenses.

“If we know they’re Airbnbs, then we’re accepting money for a business we haven’t issued a license to,” he said. “Does that mean we recognize them as a business?”

Cook agreed, saying, “If we’re taking their taxes, we’re condoning it.”

But Love said the solution is more complicated than simply issuing these rentals business licenses.

“Because of inconsistencies in the code, it’s not a black-and-white solution to just issue a business license,” she said, noting that concerns around land use, building safety, level of occupancy and hours of operation remain.

In his review, Kenny noted that some renters might choose to rent out an accessory dwelling unit, or a mother-in-law house, where the owner remains on the property, but not in the same physical residence. He also noted that the city might consider requiring licensed rentals to be up to a higher level of building code than normal residences, include smoke detectors and carbon monoxide detectors, and offer informational brochures.

The hardest part, Kenny noted, would be enforcement.

“…even if the code is perfectly written, the City will likely struggle to enforce the code with a hidden industry like short term rentals,” he wrote in his July 28 memo to city staff.

Love said the top complaints that neighbors raise nationwide include noise from arrivals and departures, and late-night and outdoor socializing.

“I suspect 80 percent are pretty good, but 20 percent cause problems in the neighborhoods and make it difficult for adjacent property owners,” she said.

In a letter to the City Council, Paula Sullivan of Old Town said she has turned in three neighboring properties to the city for operating short-term rentals.

“Our goal as Old Town residents, is to squash this so we do not have transient tourists in our neighborhoods with the potential of constant party houses and hang-houses for all the weddings at Rosehill, and general mayhem that non-residents cause,” she wrote. “This is a safety and quality of life issue for us. This is not what we bought into when we moved here. Taxes are nice, but we would really rather have it go away. We want them shut down, rather than regulated.”

Love said many residents share Sullivan’s concerns, such as on-street parking, noise, traffic, trash, and purchasing of homes to use solely for short-term rentals. She also noted some benefits of such rentals, including tax revenue, tourism and supplemental income for households with limited income.

As it has in cities across the country, Love said the short-term rental debate is likely to divide the community.

“There are tough conversations going on across the country, balancing the benefits with the negative effects,” she said. “If we move forward with the discussion on this, we’re going to have that same divide.”

Comments (2)
Posted by: Joe Kunzler | Sep 20, 2017 15:48

Good work Nicholas.  I really don't see the negative impacts of AIRBNB - most folks using it, such as I do so for a spare bedroom in a preexisting home.  Many AIRBNB users also use AIRBNB in conjunction with public transit.  I'll stay tuned how this plays out...



Posted by: Lynn McKinney | Sep 21, 2017 08:20

There is another site out there, Vacasa Rentals, that is like AIRBNB, but acts as a management company.  As long as it's short term, and private owner, I don't really see how the City has any say in it.  Quite common in Seattle...and the owner's don't have to have business licenses.



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