05-05-26 City Council Meeting Packet

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STAFF REPORT DATE: May 5th, 2026 Regular TO: City Council FROM: Jason Stopa, Community Development Director & Miranda Moulis, Planning Assistant AGENDA ITEM: Zoning Text Amendment – Short Term Rentals CORE STRATEGIES: ☐Vibrant, inclusive, connected community ☒Responsive, transparent, adaptive governance ☒Managed Growth ☐Efficient, reliable, innovative services ☐Balanced Finances now and future ☐Resilient Infrastructure BACKGROUND: Current city code prohibits the use of short-term rentals (30 days or less) which are not owner-occupied residences. As part of city code housekeeping last year, staff proposed removing the requirement that Bed and Breakfasts (short-term rentals) be owner-occupied. The amendment went before the Planning Commission on January 27th, 2025, and was not recommended for approval. The item was removed from the housekeeping amendment to be further researched by staff. Staff presented their findings to the City Council at their November 12th, 2025, workshop and to the Planning Commission at their December 8th, 2025, meeting for feedback. Councilors were 3-1 in favor of permitting short- term rentals with some restrictions. Commissioners were 4-2 against permitting short-term rentals. Concerns included cost and difficulty of enforcement, negative impacts to safety and character of neighborhoods, and housing market competition. Some benefits include protecting private property rights and adding specific guardrails to City Code to aid in enforcement issues. Councilors and Commissioners discussed potential restrictions including limiting the use by zoning district, requiring parking minimums, and limiting the number of lodging rooms, the number of guests, and the total number of short-term rentals within the City. The topic was briefly discussed during review of the Planning Commission 2026 work plan at the joint workshop on January 13th, 2026. Staff were directed to write an ordinance and bring it to Planning Commission and City Council for a vote. Staff met with Washington County Department of Public Health and Environment, which licenses lodging facilities including short term rentals, to understand and coordinate with their licensing requirements. Staff met with the cities of Stillwater, Cottage Grove, and Maplewood to discuss their experience with permitting short- term rentals. Staff at these cities provided insight into licensing processes, restrictions and requirements, and enforcement issues. Staff at each of these cities confirmed that other than unlicensed properties, noncompliance and complaints are rare. Staff also met with the Washington County Sheriff to discuss their response procedures for nuisance complaints and understand concerns specific to short-term rentals. ISSUE BEFORE THE CITY COUNCIL: The City Council is being asked to make a decision on the proposed text amendments.