Petaluma cements its once-controversial vacation rental policy after five years of use

Five years after adopting a fraught, but temporary vacation rental program amid sharp divisions and packed public meetings, Petaluma leaders this week quietly moved to extend the policy indefinitely.

The Petaluma City Council on Monday night voted 5-1 to abolish a sunset clause after the initial five-year run unearthed few complaints or long-term impacts.

“When we adopted it, it was pretty controversial,” Petaluma Mayor Teresa Barrett said last week. “And there were a lot of issues around the country at the time about what kind of implications AirBnB and VRBO was having on neighborhoods and housing stock and thigs like that.”

Barrett is one of the three council members who were in place at the time of the original program’s implementation and accompanying debates. Council members Mike Healy and Dave King also served on the city council five years ago.

Some of the regional anxieties connected to vacation rentals also played out in Petaluma, with neighbors complaining some homes were used as disruptive party sites and others asking if unregulated vacation rentals would eat into an already squeezed housing market.

As Airbnb, VRBO and other vacation rental sites gained popularity several years ago, cities like Petaluma struggled to regulate the industry. Some banned short term rentals outright, while others let the industry exist unregulated.

Petaluma chose to enact its permitting policy, adopted in September 2015, requiring vacation rental hosts to obtain a city permit, pay hotel taxes and require vacant or un-hosted units be rented for up to 90 days per calendar year.

The program officially expired Dec. 31, 2020, though renewals for 48 properties were mistakenly approved by city staff early January, with staff unaware of the sunset clause date, Planning Manager Heather Hines said.

Council’s decision this week ensures those renewed properties continue to operate, while lifting a freeze on a handful of new rental permits that have been in limbo since December.

The city first adopted regulations on short term vacation rentals in 2015, and encountered a rocky launch. Many hosts were either unaware they needed a permit or ignored the new requirements altogether.

As a result, in 2017, the city contracted with Host Compliance, a vacation rental site monitoring firm, which identified unpermitted hosts in order to force them into compliance. The contracted service continues to handle enforcement and permit checks for the city at a cost of about $7,000 annually.

Since the adoption of the regulations requiring individuals renting out their properties for vacation stays be permitted with the city, 115 total permits have been issued for both new and renewing locations, and 48 vacation rentals are currently operating in the city.

Hines said about nine of those units are un-hosted, meaning the property owners don’t live on site. Under a city policy designed to curb the use of those types of rentals as party pads for vacationers, those units are required to limit occupancy to 25% of the year.

Petaluma resident Christopher Neugebauer said during Monday’s meeting that he lives near a short-term vacation rental that can only be occupied one-quarter of the year. He took issue with the city’s mandate that limits certain types of properties’ occupancy levels.

“That short term vacation rental is keeping a family from living here,” he said at Monday’s meeting. “I find it unconscionable that the city is interested in permanently implementing a program that will keep houses off the rental market for people who want to come here and live in Petaluma.”

Despite some lingering concerns, Barrett said the lack of extensive public comment, along with the staff report, indicated that the program is successful. She joined four other council members in approving the extension of the program by canceling the sunset clause.

Council member Dave King was absent from the meeting, and council member Mike Healy voted no, citing the need for more information and data to make an informed decision. Vice Mayor Brian Barnacle cast an abstention, which was counted as a yes vote, based on a similar desire to see more extensive review.

“If we don’t know how many days they’re being rented out, we don’t know how many tourism dollars we’re seeing, if we’re taking housing units off the market,” Barnacle said.

About $75,400 in revenue is collected annually from Transient Occupancy Tax generated by short term vacation rentals, according to city staff reports.

Contact Kathryn Palmer at kathryn.palmer@arguscourier.com, on Twitter @KathrynPlmr.