City of Cupertino
Report & input on developing a regulatory program for Short-Term Rentals
The Planning Commission will provide comments for the development of a short-term rental regulation program.
At the February 5, 2018 study session, Council requested that staff explore Transient Occupancy Tax (TOT) collection from STRs and the development of a regulatory framework for STR compliance.
Based on reports on the STR platforms, there are roughly 300 STRs available within City limits. Currently, the City does not have a program to regulate STRs. Enforcement of STRs has been complaint-based and focused on zoning requirements.
Section 19.120.050 of the Municipal Code lists boarding and/or rooming homes for more than two guests as an excluded home occupation since it is neither incidental nor secondary to the use of a residence as a home.
Therefore, those who are interested in running an STR business in Cupertino must comply with the following:
- The property owner or property leaseholder must be the primary resident at the property and be on-site during the lease period.
- The number of transient guests must be limited to two (2) or fewer.
- All transient rentals must be an incidental use.
- All building alterations must comply with R1 regulations and building code requirements including occupancy regulations.
- The property owner, main property leaseholder, or person otherwise conducting any short-term rentals, must comply with the requirement of Chapter 3.12 of the Municipal Code prior to the commencement of any short-term rental leases.
STRs meet the definition of “hotel” in Section 3.12.020 under Cupertino’s TOT regulations. People or “transients” occupying these STRs are subject to a 12% TOT on the rent charged during the first 30 days of occupancy. Proprietors or “operators” of these STRs are required to register and obtain a Business License and a Transient Occupancy Registration Certificate from the City within 30 days of commencing business as well as collect TOT from renters. To date, the City has not received any TOT remittances from short-term rental operators in the City. If the City moves forward with a regulatory program for STRs, a process for TOT collections from STRs would need to be established.
At the June 19, 2018 Council meeting, Council approved changes to the City’s TOT ordinance to allow for a voluntary collection agreement (VCA) with the STR platform Airbnb, which will generate roughly $350,000 in TOT revenue annually from STR operators in Cupertino using the Airbnb platform. Airbnb will begin collection in August 2018. At that meeting, Council reiterated its interest in creating a regulatory program for STRs with review by the Planning Commission.
Next Steps: Staff will proceed to develop a regulatory program for STRs and identify required municipal code amendments. It is expected that the recommended program and associated amendments will be presented to the Planning Commission for its review and recommendation to Council in Fall 2018.
Where: Cupertino Planning Cmsn
When: July 24, 2018, 6:45 pm
Link to item: http://cupertino.legistar.com/gateway.aspx?M=F&ID=c43d8d36-bef7-4715-8e53-4402b912d449.doc
Link to agenda: https://cupertino.legistar.com/View.ashx?M=A&ID=584206&GUID=D0402D91-0694-439D-A87B-C46A899723CA
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