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State College Mercilessly Tightens The Screw On Short-Term Rental Landlords
Dated: September 6 2022
Views: 3245
State College enacted a new, highly restrictive ordinance regulating short-term rentals (STR) in the Borough. The new ordinance was executed on August 23, 2022 and will become effective in mid October, 2022, governing all short-term rentals located in the Borough.
Why Did State College Adopt A Short-Term Rental Ordinance?
Borough officials offer the following bullet points about the reasons they crafted and updated the new ordinance:
- Based on current law, the municipality does not have the authority to outright prohibit a property that is occupied by a resident on a long-term basis from also using it on a short-term rental.
- However, the municipality has the authority to regulate the rental activity occurring on the property.
- Currently permitted: a property occupied by a resident on a long-term basis (at least three months of the year) also renting the property on a short-term basis (in terms that are less than seven consecutive days). Results in potentially 312 days of STR use in a year.
- If the resident is not the owner and/or the STR use is for seven or more consecutive days, the same rental activity can occur, but a rental permit is required.
There are approximately 200 - 300 properties in State College that fall into the STR housing bucket, according to Ed LeClear, Planning and Community Development Director at the Borough of State College. The Borough does not have an exact count but it has hired a third-party vendor find out. Granicus will scour STR portals like Airbnb, VRBO, and HomeAway to identify and monitor local property owners participating in the STR housing arena.
In the meantime, efforts are underway to license all short-term rental landlords and monitor their activity and adherence to a new, highly restrictive ordinance regulating their business.
The short-term rental market in State College will constrict. But that's the point.
How many complaints did the Borough receive, triggering major revamping of this ordinance, impacting hundreds of homeowners?
Two.
Two "nuisance" properties triggered this action.
LeClear points to two problematic residential properties in the College Heights area of the Borough where he and a colleague have spent some 150 hours responding to complaints. Residents in that area turned out at local hearings to support more restrictive zoning regulations across the board.
Of course, the local hotel lobby also supports a more restrictive regulatory approach to STR activity. If visitors to the area cannot find an STR, they will book hotel rooms, right?
Local officials, in their eminent wisdom, take a hard pass on an opportunity to collect additional tax revenue from STR operators and throw the hotel lobby a bone. And they can point to TWO cases of egregious local abuse. Two. It makes perfect sense, right?
Short-Term Rental Ordinance Objectives
- Ensure properties renting on a short-term basis are occupied as a primary residence by at least one resident living in the dwelling for at least eight months in a calendar year.
- Protect the residential character of the Borough's residential neighborhoods.
- Address safety concerns by requiring owners have updated liability insurance to cover the short-term rental activity.
- Ensure a fairer tax environment.
- Address concerns regarding nuisance behavior by creating a permit that can be revoked should the property become a nuisance.
State College Borough Council adopted an STR ordinance last year but never implemented it.
Officials determined that some property owners were finding creative ways to get around the intent of the ordinance, so they fine tuned their efforts when they revised the ordinance.
"The real focus here was to make sure that individuals are not buying properties or using properties in our low density, residential neighborhoods, from a zoning standpoint, R1, R2, and R3, that are really commercial activity, that the property is being solely used as a short-term rental," said LeClear.
A principal residence requirement in the ordinance mandates that someone is living in the residence at least eight months of the year.
STR License Highlights
- The STR ordinance incorporates the nuisance provisions of the Borough Property Maintenance Code and ensures license holders follow the same ordinance enforcement provisions as rental permit holders. This includes requiring compliance with the nuisance property provisions and reduces maximum points that may be accrued in a 12-month period from ten to five for STR license holders.
- Requires one off-street parking space for each bedroom rented. Parking spaces must be located on the rented property.
- Granting of a STR license does not confer any additional residency or occupancy rights to owners in conflict with other Borough ordinances (e.g zoning ordinance and property maintenance code).
In fact, local officials concede the ordinance may effectively eliminate an entire class of housing, Tourist Homes, that are permitted in non-residential zoning areas. A Tourist Home is defined in State College Borough Zoning and Land Development documents as a dwelling in which sleeping accommodations in less than 10 rooms are provided or offered for transient guests as a generally continuous practice for compensation.
The dilemma Tourist Homes operators face trying to meet these new restrictions may be one of the first issues that triggers a court challenge by local property owners.
Revisions for 2022
- Change the minimum standard to trigger a STR license from any STR us within seven consecutive days to any STR use within less than 30 consecutive days.
- Add an activity cap on the number of nights a year that a property may be rented for a STR use of no more than 120 days per year.
- Add a limit to no more than nine bedrooms that may be rented at a time as a STR use.
- Require one off-street parking space per bedroom rented for STR use to be located on the property.
- Require the annual activity log and activity information as downloaded by the STR platform to be submitted at the time of STR license renewal.
STR landlords who list their properties on Airbnb or VRBO must download their activities from those web platforms and share them with the Borough annually, or upon request.
LeClear says the Borough is very serious about enforcing the 120-day limit: "I know that our staff is going to be asked frequently about whether properties are going over that cap. I know that we'll have neighborhood oversight that will be asking for us to give reports to the neighborhoods about how frequently these properties are being used. We're going to be under a lot of scrutiny to make sure that properties are not going over that 120-day cap, and we'll be spending a lot of resources on, on making sure that doesn't occur."
Current Conditions: Use Vs. Rental Activity
- Zoning residency requirements allow for unrelated individuals to stay as guests to exceed standard occupancy for up to six days. This limit does not pertain to family (up to and including first cousins).
- Zoning requires a structure to have a principal use: i.e. residential use. Zoning law does not distinguish between owner or tenant status. Renting to a residential tenant does not make the property a commercial use.
- A Tourist Home use (an existing zoning use) is not permitted in most residential zoning districts and is defined as a dwelling in which sleeping accommodations in less than 10 rooms are provided or offered for transient guests as a generally continuous practice for compensation.
- Compliance with zoning for a one-family dwelling use requires at least one resident to live in the residential property on a long-term basis. This may be as an owner or a tenant.
- Borough Property Maintenance Code requires a rental permit be obtained at seven or more days of consecutive days of rental occupancy. This applies to all properties.
Landlords will have to show documentation to prove they live at the property, or that there is a tenant who lives at the property.
When there is a tenant who lives at the property for at least eight months, and the landlord wants to add STR use to the mix, two permits will be required.
(1) If someone lives at the property for seven or more consecutive days, who is not the property owner, then that property needs a rental permit.
(2) The STR license is required when the property is rented 29 or fewer days, and the property is operated as a short-term rental.
Short-Term Ordinance 2022 Implementation Timeline
August 15 - Council adopted ordinance revisions
August 23 - May signed ordinance
August - early October
- Borough staff and third-party vendor Granicus build edits to the application website and licensing databases and integrate the Activity Monitoring module.
- Granicus provides staff training to State College Borough personnel for implementation and staff finalize internal reporting procedures for cross-department activities (e.g. homestead exclusion and income tax reporting).
Mid-October
- Go live date for application web portal and initial mailing to identified property owners.
- Community information campaign regarding requirements and application process.
The Borough is working with Granicus to build a website that will contain information about the program as well as a set of FAQs. The new web portal will let property owners complete their applications online and upload all the necessary documents they will need to obtain or renew their licenses.
The new website will give notice that property owners who presently qualify for PA homestead exemption will most likely lose that property tax relief when they obtain an STR license, according to local officials.
(I created the images in this blog post using AI, inspired by Marc Chagall.)
The full text of the new ordinance appears below:
ORDINANCE #2187
AMENDING THE STATE COLLEGE BOROUGH MUNICIPAL CODE TO REVISE PART I: SHORT-TERM RENTALS IN CHAPTER X: LICENSES AND PERMITS
ESTABLISHING A LICENSING PROGRAM TO REGULATE SHORT-TERM RENTAL PROPERTIES IN THE BOROUGH
Be it ENACTED AND ORDAINED by the Borough Council of the Borough of State College, and it is hereby Enacted and Ordained by authority of same, as follows:
Section 1. Amend the Codification of Ordinances to add a new part, PART I: SHORT-TERM RENTALS, to CHAPTER X: LICENSES AND PERMITS. The new Part will include the following provisions:
§ 10-901: SHORT-TERM RENTAL LICENSE
a. Definitions. The following words and phrases when used in this section shall, for the purposes of this section, have the following respective meanings, except where the context clearly indicates a different meaning:
DIRECTOR
The State College Borough Planning Director or a designee duly authorized to act for the Director.
DWELLING
A house, apartment, or other place of residence.
LONG-TERM TENANT
A lessee of the operator with a lease term greater than one month.
OPERATOR
The owner of any dwelling, lodging, or sleeping accommodations offered as a short-term rental, whether in the capacity of the owner or mortgagee in possession. The operator may not be a lessee or sublessee of the owner.
PERSON IN CHARGE (PIC)
Short-term rental agent that is located within twenty-five (25) miles of each short term rental property and available twenty-four hours, seven days a week for a response.
PRINCIPAL PLACE OF RESIDENCE
A residential dwelling unit occupied by an owner or tenant. Occupancy does not require the owner or tenant (s) to be physically present in the unit at all times or continuously, but it must be the usual place of return. At a minimum, the occupant(s) must live in the dwelling for a minimum of eight months of the year, and names(s) must be on the title or the lease. This is validated by documents that include the property address. For the purposes of this ordinance, a minimum of two documents must be provided for review including the property address occupied and one must include a photo of the applicant. The documents that can be provided to prove occupancy must include one from the following list:
I) driver's license,
2) government-issued identification card,
3) passport or
4) a copy of the most recent year's income tax return.
For the second item of documentation, commonly accepted documents include: vehicle registration, voter registration card, canceled checks, statements such as medical or utility services, bank and charge accounts, insurance statements, or pay stub. These documents shall be used to establish if the residential dwelling unit is the primary place of residence of the owner or long-term tenant.
SHORT-TERM RENTAL
The provision of a room or space that is suitable or intended for occupancy for dwelling, sleeping, or lodging purposes, for a period of fewer than 30 consecutive days, in exchange for compensation for the occupancy.
SHORT-TERM RENTAL LICENSE
The annual license issued to persons engaged in a short-term rental business.
SHORT-TERM RENTAL PLATFORM
A portal, listing service, website, or business through which a person, other than an STR owner, facilitates a booking transaction. A booking transaction is an agreement between an STR guest and an STR Owner relative to an STR. The most recognized Platforms are online services such as Airbnb or VRBO.
SUBSTANTIATED COMPLAINT
A complaint in which a violation has been issued and the disposition of that violation is any of the following: guilty, nolo contender, acceptance into an alternative adjudication program, fine has been paid, or a warrant has been issued for the violation.
b. Scope. No person, firm, LLC, corporation, or other entity may offer, operate, rent, or otherwise make available or allow any other person to make available for occupancy or use a short-term rental without a short-term rental license. Offer includes through any media, whether written, verbal, electronic, web-based, digital, mobile, or otherwise. This Part shall require the licensing of all short-term rentals as defined in § 10-901 (a).
c. Purpose and Intent. The regulation and licensing of short-term rentals is established for the following purposes and intents:
(l) Protect the health, safety, and welfare of persons affected by or subject to the provisions of this Part.
(2) Preserve the residential character of residential neighborhoods.
(3) Ensure that owner(s) of a short-term rental, persons-in-charge, and tenants are informed of, and adhere to, all applicable code provisions governing the use and maintenance of short-term rentals; and
(4) To monitor and mitigate impacts created by occupancy of short-term rentals; and
(5) Ensure appropriate entities have the required taxation information for operators of short-term rentals; and
(6) Ensure the availability of parking spaces for occupants of the short-term rental.
(7) Ensure properties renting on a short-term basis are occupied as a primary residence by at least one resident living in the dwelling for at least eight months in a calendar year.
(8) Address safety concerns by requiring owners have updated liability insurance to cover the short-term rental activity.
(9) Address neighborhood concerns regarding nuisance behavior by creating a permit that can be revoked should the property become a nuisance.
(10) Ensure a fairer tax environment.
(11) Create a system to identify short-term rental (STR) properties and improve the identification of illegal Tourist Home properties. Utilizing a third-party vendor will significantly increase the identification of properties advertising for short-term rental and allow enforcement to move beyond a solely complaint-based approach.
(12) Ensure sufficient off-street parking for STR uses.
(13) Adopt an ordinance under the business license authority which allows violations to be addressed immediately with non-traffic citations instead of the lengthy time frame required by state statute for zoning violations.
d. Administration. The Borough of State College Planning Department, as directed by the Borough Manager, shall be responsible for ensuring the equitable and effective administration of this Part.
§ 10-902: APPLICATION FOR SHORT-TERM RENTAL LICENSE
a. Application. Application for a short-term rental license within the Borough of State College shall be submitted to the Planning Department.
(1) Every person engaging in a short-term rental business shall annually file with the Director an application for a short-term rental license and pay a fee as established by Council resolution. The application shall be filed at least 30 days prior to the start of a short-term rental business, or within sixty days the effective date of this ordinance. The application shall be on a form prescribed by the Director and shall contain:
a) The name, address, telephone number, and email address under which the application operates or intends to operate the short-term rental business.
c) The permanent address of the applicant.
d) The property's parcel identification number.
e) The applicant's tax identification number or, if a social security number, the last four digits only.
f) The list of months and dates the owner or tenant making the property a principal residence will be living in the dwelling.
g) Total square footage of the dwelling and total square footage of the dwelling that will be used as a short-term rental.
h) Number of bedrooms rented as a short-term rental use.
i) The name, address, telephone, and email address of the Person in Charge (PIC) that is located within twenty-five (25) miles of each short-term rental property.
j) Certification that the property is the principal place of residence of either the owner or at least one tenant of the property.
k) Certification that the operator will provide and make available one off-street parking space per bedroom available for short-term rental on the property.
1) Confirmation of whether the owner of the property currently receives the homestead exclusion on real estate taxes on the property.
m) Confirmation that the operator is aware the Borough of State College will provide the information submitted on this application to the relevant taxing authorities.
n) Confirmation that the operator understands that the short-term rental activity is limited to no more than one hundred twenty (120) days per year. Year is defined as the annual term of the short-term rental license.
o) Such other information as the Director may require to achieve the objectives of this Part.
(2) Attached to, and concurrent with submission of the application, the owner shall provide a notification letter stating:
a) A description of the operation and number of bedrooms that will be rented.
b) How to contact the owner of the short-term rental property, and the Person-in Charge (PIC).
(3) Attached to, and concurrent with submission of the application, the owner shall provide proof of general liability insurance in the amount of $100,000 in minimum coverage and an insurance declaration that clearly indicates coverage specifically for rental or includes written acknowledgment of the same from the insurance provider. The applicant shall notify the Borough of any changes in insurance policies for the property under license.
(4) If the owner is leasing the property to a long-term tenant, the owner must attach and submit the current lease in place at the time of application. Anytime a new lease is executed during the term of the license, the new lease shall be presented to State College Planning Director within I 5 days of its execution.
b. Registered Short-Term Rentals. Upon approval of the application by the Director, and payment of any required fees, a license shall be issued for each location from which a short-term rental business is to be conducted or operated in the Borough.
(1) The license shall be conspicuously displayed at all times at the place of business for which it is issued.
(2) Licenses cannot be transferred or assigned or used by any person other than the one to who it is issued or any location other than the one it is issued to.
(3) The license number shall be published in every print, digital, or internet advertisement and any property listing in which the short-term rental is advertised.
a) Failure to obtain a license and advertise a property without publishing the license number in every print, digital, or internet advertisement will result in a fine to the property owner.
(i) 1st Violation - Warning letter sent to the property owner. The property owner has 14 days to apply for a short-term rental license. Once a license is obtained, the operator must begin immediately using the license number in all advertisements.
(ii) 2nd Violation - Upon a second or subsequent violations, the Borough of State College may fine the property owner for the violation. The fine shall be in the amount as defined in Section I 0-907.
§ 10-903: SHORT-TERM RENTAL LICENSE EXPIRATION
Short-Term Rental License Expiration. A license for a short-term rental shall expire a year from the date of issuance by the Borough for said property and may be renewed on an annual basis. Acceptable evidence of principal residency as indicated in this ordinance must be provided at the time of renewal.
§ 10-904: SHORT-TERM RENTAL LICENSE AND MINIMUM OFF-STREET PARKING REQUIREMENTS
Short-Term Rental License and Minimum Off-Street Parking Requirements. An operator of a property with a short-term rental license must provide and make available one off-street parking space per bedroom available for short-term rental on the property.
§ 10-905: SHORT-TERM RENTAL LICENSE ACTIVITY LIMITATION
a. Short-Term Rental Activity Limitation. Use of the licensed property as a short-term rental is limited to no more than one hundred twenty (120) days per year. Year is defined as the annual tenn of the short-term rental license.
c. Short-Term Rental Activity Leasing Limitation. Any lease arrangements made by the operator of the short-term rental with a long-term tenant may not include any requirement that the long-term tenant vacate the property at any time in order for the operator to lease the property on a short-term rental basis.
d. Short-Term Rental Activity Documentation. An operator of a property with a short term rental license must maintain an activity log of all short-term rental activity at the property occurring for, at a minimum, the previous twelve-month period. This activity log must include the number of nights rented for short-term rental activity, the number of individuals occupying the property for each rental, and the number of cars parked at the property by the short-term rental tenants for each rental. The activity log must be made available to Borough representatives at request. The activity log for the previous twelve-month period must be submitted to the Borough as part of the annual short-term rental license renewal. In addition to the activity log, operators of licensed properties must download rental activity information from all short-term rental platforms where they list the licensed property and provide to Borough representatives at request. The rental activity information from the short-term rental platforms must also be submitted to Borough as part of the annual license renewal.
§ 10-906: SHORT-TERM RENTAL LICENSE AND OTHER REQUIREMENTS
a. Short-Term Rental License and Other Requirements. Approval of a short-term rental license does not remove, override or abrogate any operator from any other requirements of Borough Ordinances, such as the Borough Zoning Code and Building Safety & Property Maintenance Code.
§ 10-907: VIOLATION AND REPEAT OFFENSES
a. Occupancy Without a License. It is unlawful to rent, offer to rent, or advertise for rent a dwelling unit located on any property within the Borough as a short-term rental without a license authorizing such use that has been approved and issued in the manner required by this Part. The Director may waive penalties if the failure to register was due to no fault of the operator. Until such time as the operator pays the penalty and registers such property, the operator may not continue to offer such property for short term rental.
b. Nuisance Complaints. Properties with a short-term rental license are subject to the requirements of Section 806 of the Centre Region Building Safety & Property Maintenance Code for enforcement of permit suspension for nuisance and criminal violations. The short-term rental license shall be suspended whenever 10 or more points for offenses have accumulated individually or collectively at the property within a 1- year period and the property owner has received the required notice. The I-year (12- month) period is a rolling year and shall be counted as the 12-month period that immediately precedes the date of the most recent offense. For the purposes of this ordinance, all provisions of Section 806 will be enforced as if the term "rental permit" was replaced by the term "short-term rental license" with the exception of Section
806.8 are removed and do not apply. Any appeal of the short-term rental licenses will go directly to the Rental Housing Revocations Appeals Board. Moreover, the timeframes in Section 806.9 for appeal (for the purposes of this ordinance, the appeal would be directly for the initial suspension, not to the Manager's decision), will be modified. The appeal shall be filed, in writing, within 10 calendar days of receipt of the suspension notice. The RHRAB shall notify the appellant of the date, time, and location of the hearing, which shall be held within 20 calendar days of receipt of the request for a hearing. The RH RAB is empowered to void, suspend or sustain the suspension. A fee for an appeal wil1 be set by resolution of Borough Council from time to time.
c. Occupancy of Uninhabitable Space. No person shall occupy for sleeping purposes, and no owner or person-in-charge shall allow a person to occupy for sleeping purposes, the uninhabitable spaces, as defined in the Centre Region Building Safety and Property Maintenance Code, of a short-term rental. Each day that a vio]ation exists sha11 constitute a separate offense.
d. Short-Term Rental License Activity Violations. Violations of any provisions of Section 10-905 Short-Term Rental License Limitations are subject to penalties and fines as defined within Section 10-907(e).
e. Penalty. The provisions of this ordinance are declared to be for the health, safety, and welfare of the citizens of the Borough, and any person violating any provision of the Chapter shall, upon conviction thereof before a Magisterial District Judge, be sentenced to pay a fine of not less than $300.00 nor more than $1,000 and costs of prosecution and, in default of payment of such fine and costs, such additional enforcement remedies as may be available at law including, but not limited to, injunctive relief and contempt. Each day during which any violation of such provision shall continue shall be deemed a separate offense.
f. Severability. If a section, subsection, sentence, clause, or phrase of this ordinance is, for any reason, held to be unconstitutional, such a decision shall not affect the validity of the remaining portions of this ordinance.
Frances Thorsen
Frances Thorsen is a leading real estate author and thought leader. She got her real estate license and became a REALTOR® in 1985. She was an early adopter of real estate technology on the Interne....
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