Fiscal Summary

NOT SIGNIFICANT

Bill Summary

RENT CONTROL BY LOCAL GOVERNMENTS PROHIBITED

Present law prohibits a local government unit, or any subdivision or instrumentality thereof, from enacting, maintaining, or enforcing any ordinance, resolution, regulation, rule, or other requirement of any type that does the following:

(1) Requires the direct or indirect allocation of existing or newly constructed private residential or commercial rental units to be sold or rented at below market rates;

(2) Conditions any zoning change, variance, building permit, development entitlements through amendment to the zoning map, or any change in land use restrictions or requirements, on the allocation of existing or newly constructed private residential or commercial rental units to be sold or rented at below market rates; or

(3) Requires a person to waive the person's constitutionally protected rights related to real property in order that the local government unit can increase the number of existing or newly constructed private residential or commercial rental units that would be available for purchase or lease at below market rates within the jurisdiction of the local government unit.

However, present law specifies that the above provisions do not apply if there is a law to the contrary. This bill clarifies that the provisions of this bill control if in conflict with the provisions above.

LOCAL GOVERNING BODIES—ELECTION TO BE GOVERNED BY HOMES

The provisions under this heading only apply to a local governing body if, after the effective date of this bill, any of the following occur: (i) the local governing body passes an ordinance, resolution, regulation, rule, or other requirement of any type that expressly provides that the local governing body elects to be governed by this bill; and (ii) all ordinances, resolutions, regulations, rules, or other requirements of any type governing short-term rental units within the jurisdiction of the local governing body are entirely in compliance with the Short-Term Rental Unit Act ("act"); or (iii) a referendum to require that the local governing body be governed by this bill is passed within the jurisdiction of the local governing body by a simple majority of the people voting in the election.

Except as otherwise provided by state law and this bill, this bill prohibits a local governing body that is subject to this bill from prohibiting, effectively prohibiting, or otherwise limiting the ability of a person to use commercial property, owner-occupied property, or renter-occupied property as a short-term rental unit. However, a local governing body that is subject to this bill may regulate, as long as the local governing body allows for reasonable compliance with the regulation, owner-occupied property or renter-occupied property by:

(A) Requiring the owner or renter of the property to provide proof annually that the property is the principal residence of the owner or renter;

(B) Comparing the local governing body's database of permits to the Automated Electoral System (AES), and immediately revoking the permit for an owner-occupied property or renter-occupied property and preventing the continued use of the property as owner-occupied property or renter-occupied property if the AES indicates a change in an owner's or renter's primary residence; and

(C) If the short-term rental unit is also the principal residence of the owner or renter and the owner or renter is not residing in the principal residence for the duration of the rental, (i) limiting the total number of days the owner or renter of the property may use the owner's or renter's principal residence as a short-term rental unit if the minimum number of days permitted for rental is not less than 90 total days per calendar year; (ii) requiring that the owner or renter contract with an emergency management contact person licensed pursuant to state law, to provide 24-hour-a-day support for the purposes of responding to and addressing any complaints about the property whenever the owner or renter is absent; and (iii) requiring a renter to provide proof that the renter's written lease agreement expressly allows the renter to use the property as a short-term rental unit.

However, this bill provides that (C) above does not apply to (i) other residential dwellings located on owner-occupied property or renter-occupied property that are not the principal residence of the owner or renter; or (ii) property that is subject to the protections of the act and that was used as a short-term rental unit prior to the enactment of a regulation adopted pursuant to (A)-(C) above.

For property that is located in a residential zone and whose continued use of property is not otherwise protected by the act, a local governing body that is subject to this bill may require as a condition of using the property as a short-term rental unit that the owner of the property provide other residential dwellings located on the property to be sold or leased per year at a below-market rate, as long as such requirements comply with the following provision.

If an owner of a property described in the provision immediately preceding this provision elects to use the owner's property as a short-term rental unit, then a local governing body may require the owner to:

(1) For property being developed by the owner to be sold, require that the owner sell an equal number of residential dwellings located on the property at a below-market rate as may be sold for use as a short-term rental unit; or

(2) For property being leased by the owner of the property, require that the owner lease an equal number of residential dwellings located on the property at a below-market rate as may be used by the owner as a short-term rental unit if (i) the term of a below-market lease required by the local governing body is no greater than one calendar year; (ii) the property owner may recalculate the below-market rate upon the expiration of each lease; and (iii) the property owner can choose not to renew a below-market lease upon the expiration of that lease and cease to lease the residential dwelling at a below-market rate, as long as the property owner also ceases to use an equal number of residential dwellings as a short-term rental unit.

Further, this bill prohibits such local governing body from setting a below-market rate at less than 6 percent of fair market value, and placing any additional requirements on the residential dwellings that can be used on the property as short-term rental units in any other way than the local governing body places on other short-term rental units located elsewhere within the jurisdiction of the local governing body.

MEANING OF "USED AS A SHORT-TERM RENTAL"

Under present law, "used as a short-term rental' means the property was held out to the public for use as a short-term rental unit, and for property that began being held out to the public for use as a short-term rental unit within the jurisdiction of a local governing body that did not require a permit to be issued or an application to be approved pursuant to an ordinance specifically governing short-term rental units, the provider remitted taxes due on renting the unit pursuant to state law for filing periods that cover at least six months within the 12-month period immediately preceding the later of: (i) May 17, 2018; or (ii) the effective date of an ordinance, resolution, regulation, rule, or other requirement by a local governing body having jurisdiction over the property requiring a permit or an application to be approved pursuant to an ordinance specifically governing short-term rental units.

This bill revises (ii) above to provide, instead, the effective date of such requirement by a local governing body having jurisdiction over the property prohibiting or effectively prohibiting short-term rental units, or requiring a permit or an application to be approved pursuant to an ordinance specifically governing short-term rental units.

COURT COSTS

This bill requires a court to award litigation costs and fees, including reasonable attorney fees, and authorizes a court to award punitive and compensatory damages, including lost rent, to a plaintiff who prevails in a civil action.