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1080-2023

Ordinance

Amend permit fee schedules for all Type A Accessory Short-Term Rentals

Referred

The City of Portland ordains:

Section 1.  The Council finds:

  1. The Bureau of Development Services (BDS) promotes safety, livability, and economic vitality through efficient and collaborative application of building and development codes.
  2. BDS administers Portland City Code (PCC) Title 33, Planning and Zoning Regulations related to permitting and enforcement and began regulating and permitting accessory short-term rentals (ASTRs) in 2014.
  3. The past and current fee rate charged for processing Type A, Accessory Short-Term Rental applications and renewals has never achieved cost recovery nor had the necessary resources in technology and staffing to manage the demand.
  4. Increasing all, Type A, Accessory Short-Term Rental fees will:
     
    • Allow BDS to launch and maintain an online portal for customers to apply, to renew and to pay their ASTR fees;
    • Ensure funding to maintain staff resources for processing applications, renewals and tracking activity; 
    • Allow BDS to meet many of the recommendations in the 2018 City Auditor’s report, such as improved data collection, improved compliance with city code and ensuring safety and livability for neighborhoods;
    • Allow BDS to meet cost recovery for this program; and
    • Will support this industry, as an important part of Portland’s economic recovery, providing alternative lodging for visitors.
       
  5. Furthermore, increasing fees will have a direct impact on Type A, Accessory Short-term Rental Hosts, as their operating cost for this type of home occupation will increase to $180 per year. In addition, Hosts will also receive the benefit of being able to process their application easily and quickly and submit payment via an online portal, thus greatly improving the past delays in processing.

NOW, THEREFORE, the Council directs:

  1. All Type A, Accessory Short-Term Rental fees be increased as set forth in Exhibit A and in effect as of February 1, 2024.

Impact Statement

Purpose of Proposed Legislation and Background Information

The Bureau of Development Services (BDS) collects Accessory Short-Term Rental (ASTR) fees to fund associated permit application, renewal, compliance, and enforcement. This program has the goal of being self-supporting. Currently, the ASTR fee structure is inadequate to support the costs associated with administering Accessory Short-Term Rental (ASTR) program.

While the bureau recognizes the impact of increased fees on its customers, an increase to Type A (1 & 2 family and Multi-family) ASTR application and renewal fees is necessary to improve service levels, respond to current and future service level demands, and to operate closer to cost recovery. BDS is therefore proposing an ASTR fee increase to $360 every 2 years.

BDS researched the fees charged by other cities for Accessory Short-Term Rental permitting/licensing.  Prices charged ranged from $89 to $863 for initial applications providing either 1- or 2-year permits.  Renewal prices ranged from $50 to $750 for either 1- or 2-year permit renewals.  In addition, some jurisdictions had complicated fee calculations, for example Seattle only charges $75 per year for the permit/license but also charges a $4 per night booking fee and Los Angeles has a tiered approach based on number of nights booked annually. The below table is a summary of jurisdictional data:

City, StatePopulation (US Census 2022)Permit SpanInitial Permit FeeRenewal FeeNotes and Additional Charges
Alamosa, CO9,8451 year$750$300plus 5% cap # issued per neighborhood
Austin, TX974,4471 year$863$490
Chicago, IL2,665,0391 year$125$250renewals are for 2 years
Denver, CO713,2521 year$50$100
Los Angeles, CA3,822,2381 year$89 or $850$89 or $850< 120 days of > 120 days
Portland, OR635,0672 years$360$360(proposed new fee amount)
Rockaway Beach, OR< 5,0001 year$500$500
Sacramento, CA528,0011 year$230$160
San Diego, CA1,381,6232 years$250$250
San Francisco, CA808,4372 years$750$750
Santa Monica, CA89,9471 year$100$50
Seattle, WA749,2561 year$75+$75+plus $4 for each night booked

Financial and Budgetary Impacts

There are currently 2,153 active ASTR permits. At the current rate of $179 for a 2-year permit this represents annual estimated ASTR collections of $192,694 ($385,387 bi-annually). The current annual estimated cost of the ASTR program is $378,728, leaving a funding shortfall of approximately $186,034. An increase of the ASTR permit fee to $360 is estimated to increase collections by $194,847 which would eliminate the funding shortfall.

This legislation does not create, eliminate, or re-classify positions now or in the future.  Additional staff time required is limited to performing outreach, preparing the revised fee schedules, and this subsequent legislation. Existing BDS staff will implement and administer the revised fee schedule as part of the existing workload. There is no change to demographic impacts or changes in staffing. The legislation does not result in a new or modified financial obligation or benefit, including IAs, IGAs, MOUs, grants, contracts, or contract amendments

Community Impacts and Community Involvement

For struggling property owners across Portland, being able to apply for and legally host an accessory short-term rental at their property, can provide needed additional income to avoid displacement and abandonment of property.

Increasing ASTR fees will help BDS staff support this industry of providing alternative lodging for visitors, as an important part of Portland’s economic recovery.

Increasing fees will have a direct impact on property owners hosting Type A, Accessory Short-term Rental, as their operating cost for this type of home occupation will increase to $180 per year. However, this cost is comparable with and is less than many other cities that permit Accessory Short-term Rentals. 

Since the program launched in 2014, online advertising platforms and hosts (ASTR owners) have requested an easier process with a streamlined online portal for permit applications, renewals, as well as payment.  This will be a benefit for our customers.

Agenda Items

Passed to second reading

Passed to second reading December 20, 2023 at 9:30 a.m.

1080 Regular Agenda in December 20, 2023 Council Agenda

Referred to Commissioner of Public Utilities

Contact

Beth Benton

Property Compliance Division Manager

Michael Liefeld

Planner, Supervising • Zoning Nusiance & Site Inspections

Requested Agenda Type

Regular

Date and Time Information

Requested Council Date