HOT SPRINGS -- An ordinance the Hot Springs Board of Directors adopted Tuesday night subjected more short-term residential rental businesses to the special use permitting process and annual cap on vacation rental business licenses.
The short-term rental regulatory ordinance the board adopted in May established the permitting requirement and annual cap of 500 short-term rental business licenses in areas zoned for residential use. According to information provided by the city, 325 licenses were issued in the city's five residential zones prior to the moratorium on accepting short-term rental business license applications that took effect at the end of May.
The application window for 2022 opened Jan. 4. Existing license holders are exempted from the special use permit, a new requirement created specifically for vacation rentals, provided they renew their business license before May 1. All short-term rental business licenses issued for residential zones are subject to the annual cap of 500.
Such rentals in horizontal property regimes, or residential buildings with individual units that can be bought and sold separately, in residential zones were exempted from the cap and special use permitting process, but horizontal property regimes with master deeds filed after Tuesday are now subject to both requirements under the ordinance adopted Tuesday night.
An amendment District 5 Director Karen Garcia offered prior to the ordinance's adoption included new planned developments in the annual cap and permitting process. Her motion to amend was adopted on a 6-1 vote, with District 1 Director Erin Holliday voting against it.
Planned developments are customized zones not subject to the restrictions of other zoning designations. They have become more sought after as the availability of land that can be developed within the strictures of conventional zoning has diminished. Planned development applicants submit a detailed site plan and list of uses that have to be followed to the letter. Amendments require planning commission and city board approval.
Holliday said given the rigorous review of planned development applications, applying the special use permitting process for short-term rental applicants in planned development zones creates an unnecessary level of scrutiny. She noted that the planning commission and city board could approve a short-term rental as an authorized use for a planned development, but the planning and development department could deny the planned development a special use permit.
"Would that create an issue on behalf of people who want to develop property and be approved for that use from a planning standpoint, but not be approved based on the business license process?" she asked. "We approve the planned development and somewhat bless that use that may still be disallowed through the special permit process. To me, it's creating a circular issue. Later on, they have to go through another process to get a business license, but in theory, we would've already approved it."
Garcia's amendment subjects planned developments approved after Tuesday to the annual cap and special use permitting process, an extra level of scrutiny that she said is needed to prevent short-term rental applicants from using the planned development application process to circumvent the cap and special use permit.
She said residents are concerned owners of large undeveloped tracts in residential areas could apply for planned development zoning and not be subject to the annual cap or the special use permitting process.
Notification requirements for special use permits are similar to a conditional use permit, a dispensation allowing land uses, with conditions, that are otherwise prohibited in a zoning district. Per the city's zoning code, the city is required to provide written notice to property owners within 200 feet of a proposed conditional use location and publish a legal notice at least 10 days prior to the planning commission hearing on the conditional use application. Conditional use applicants have to post a notification sign on their property at least 10 days before the hearing.
Unlike conditional use permits, which are issued by the planning commission and can be appealed to the city board, special use permits will be issued administratively and appealed to the board-appointed Board of Zoning Adjustment. No special use permits have been issued yet.
Planning and development staff is scheduled to meet Friday to review the first round of permit applications.
Another ordinance the board adopted Tuesday night requires habitable rooms with a closet to comply with the city fire and building code's bedroom requirements.
Planning and Development Director Kathy Sellman told the board there has been confusion about what constitutes a bedroom when short-term rental applicants have applied for business licenses. The regulatory scheme the board adopted in May uses bedrooms to determine the maximum overnight occupancy for a short-term rental and the annual business license fee.
Up to two overnight occupants are allowed per bedroom, plus two, meaning a three-bedroom short-term rental is authorized for up to eight overnight occupants.
The business license fee is established by multiplying the maximum number of overnight occupants by $50, meaning a three-bedroom short-term rental pays $400 for its annual business license.
"It would seem like everybody knows what a bedroom is, and they don't," Sellman told the board. "Because of that, we are requesting that a section be added to Hot Springs code."
The city's fire prevention and building code incorporates the state's fire prevention code, which defines a bedroom as having minimum dimensions of 70 square feet plus 50 square feet for each additional occupant, a heat source capable of maintaining 68 degrees, lighting and ventilation requirements, two means of exit and an interconnected smoke alarm.
The ordinance adopted Tuesday makes habitable rooms with a closet subject to those requirements.
Sellman said the requirement isn't retroactive to existing homes.