New Orleans case changes Gig Harbor’s plan for Airbnb-style rentals

The city of Gig Harbor has been trying to set regulations on Airbnb-style rentals since 2021. The proposed rules before the City Council this month are very different from what they last considered.

After city officials received complaints in 2021 that it was difficult to apply for the right permits to operate short-term rentals, they decided to re-evaluate requirements.

Before this, the city was applying the closest permit that they had, but it wasn’t specifically meant for short-term rentals.

Short-term rentals fell under the Lodging Level 1 category, which is for a single-family residence that provides overnight lodging for guests — not to exceed five rooms — and may provide meals for overnight guests.

In September 2021, the city imposed a six-month moratorium for staff and the City Council to draft options for short-term rentals.

After city officials felt they needed more time to find the right option, the moratorium was extended twice, leaving people who’ve been waiting to open an Airbnb-style rental in Gig Harbor waiting.

Almost 18 months later, the moratorium is still in place, set to expire March 12.

The last six months, staff have been re-evaluating their drafted regulations after learning of a legal decision regarding short-term rental regulations in New Orleans, Community Development Director Carl de Simas said Feb. 6.

The U.S. Court of Appeals for the Fifth Circuit recently struck down a New Orleans short-term rental ordinance provision. Similar to Gig Harbor’s earlier draft, the New Orleans ordinance required that — to qualify for a license in a residential neighborhood — the owner must reside on the property and it must be the owner’s primary residence.

In Hignell-Stark v. City of New Orleans, the court held that the “primary residence” requirement violated the U.S. Constitution’s dormant Commerce Clause, which prohibits states and local governments from restricting interstate commerce.

Now, the city’s draft looks completely different.

The 14th drafted ordinance for short-term rental regulations was read Feb. 13 at the Gig Harbor City Council meeting.

A second reading of the draft ordinance will be on Monday. If the council passes the ordinance this month, regulations would go into effect five days later, City Administrator Katrina Knuston said.

The earlier draft that the council was considering in September identified three types of short-term rentals with different requirements and rules for owners to rent out their space.

The latest draft doesn’t get into types of short-term rentals, and it won’t include a primary residence or owner occupancy element.

Those revisions were made in light of the New Orleans lawsuit, de Simas said.

“Now, we’re just categorizing them as having one use, a short-term rental,” de Simas said. “And we’re allowing it in all zones that would permit residential business and some commercial zones.”

A short-term rental owner would need a short-term rental permit and a business license to operate a short-term rental.

The city would allow one permit per person, meaning an owner wouldn’t be able to operate more than one short-term rental within the city, de Simas said.

The new ordinance would not apply to live aboard vessels, because they are already regulated under the Shoreline Master Program, de Simas said.

Some council members were curious how the limitation would affect LLCs and if they could possibly limit corporate owners.

Council member Jeni Woock asked if multiple members who belong to a single LLC could all have their own short-term rental, which de Simas said would be possible.

Council member Seth Storset said he’d like to see a limit on how many short-term rentals can be operated by an LLC, to ensure corporations aren’t buying multiple properties.

He also said he would support owners being allowed to operate up to three short-term rentals, not just one.

A member of the public, Richard Moser, told the council at the meeting that he thought limiting it to one short-term rental per owner was unfair.

Some told the council they did not favor having short-term rentals in residential zones.

“Residential zones are for residents,” Lynn Stevenson said at the meeting.

“Knowing your neighbor is an integral part of having a neighborhood,” Carol Davis said.

“There needs to be a limit in order to allow our residential neighborhoods to thrive,” Vicky Alsaker said. “It’s my opinion that capping the amount of STRs by district or area is a solution. It’s the only way you can stop taking down an entire neighborhood.”

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