State College Borough Council on Monday approved revised regulations to limit short-term housing rentals, setting the stage for a licensing program to go into effect this fall.
After a work session two weeks ago and about two-and-a-half hours of discussion and public input on Monday, council settled on changes that sought to clamp down on businesses and out-of-town investors using borough houses as de facto hotels while giving local community members some latitude to supplement their income by renting their homes through services like Airbnb and Vrbo.
The most substantial revisions include the addition of an activity cap of 120 days a year, a requirement that one parking space per bedroom rented be located on-site and an increase in the license fee from $175 to $300.
Other changes include a limit of no more than nine bedrooms that may be rented for short-term rentals at a time, a requirement to submit an activity log at the time of renewal and upon request, clarifying that only owners may apply for a license and prohibiting leases that require a long-term tenant to vacate a property for a short-term rental.
It also integrates short-term rentals with the nuisance property system, giving the borough the ability to revoke a license when 10 points are accumulated for nuisance and criminal violations within a 12-month period, and sets fines of $300 to $1,000 for violations of the ordinance.
Council originally adopted a short-term rental ordinance last summer and over the last year borough staff have been working on implementation with third-party vendor Granicus, a national short-term rental monitoring and regulatory solutions company that contracts with governments throughout the country.
“We’ve really learned a lot over the last year and I think it would be a disservice to the community to roll out the current ordinance now knowing what we know and the way some operators would be trying to operate outside the ordinance or get around it,” State College Planning Director Ed LeClear said.
Provisions of the original ordinance will also go into effect when the licensing program rolls out in mid-September, including requirements that the home be used as a primary residence for a minimum of eight months a year by at least one resident (owner or tenant), insurance covering short-term rental activity, notice to taxing authorities and that the license number must be included in any advertisement for short-term rental.
State College already had licensing for long-term housing rentals, while bed and breakfasts, hotels and shelters are separately defined and subject to their own regulations. In most of the borough, tourist homes — residential properties that are solely used for short-term rentals — are prohibited.
But before the ordinance passed last year, nothing was in place to govern rental of homes to short-term guests.
Granicus has identified at least 200 properties in the borough currently being used for short-term rentals.
“I think that we will find a significant percentage of the 200 properties that are currently advertising are illegal tourist homes,” LeClear said.
Fourteen community members spoke during public comment, none saying short-term rentals should go unregulated but offering divergent perspectives.
Several residents said being able to rent out rooms in their homes makes it possible to live in the borough’s expensive housing market.
Tusseyview resident Devin Altman said she and her partner offer short-term rentals to afford living expenses and that she was “very concerned” about what the financial impact of an originally-proposed 60-day activity limit would be. They’ve owned their home for five years and have “zero tolerance” for parties and noise disturbance, she said.
“While we understand some of the concerns about the short-term rental market, responsible residents who prioritize following reasonable community rules and being good neighbors should not be penalized,” she said. “I love this community and do not wish to relocate.”
Council member Divine Lipscomb said he sympathized with the worries of low- and moderate-income homeowners.
“While we’re looking at a housing shortage as is, most people can’t afford to buy homes here anyway based on how we’re structured and the inflation,” he said. “Whether it’s based on the Airbnb or the fact that we’re just a successful football town with the university smack dab in the middle, I’m concerned about those who have used their homes to supplement that income what this ordinance will do to them and then I’m also concerned about the enforcement.”
Others, though, said allowing extensive short-term rental activity is hurting the housing market, driving up the already inflated cost of homes by appealing to out-of-town investors who can buy them up. Some real estate agents have even taken to include Airbnb potential in listings, one resident noted.
“There’s a lot of money that’s motivating this short-term rental situation and a lot of it’s coming from outside of State College,” College Heights resident David Geiser said. “And it’s going to increase the value of homes, which on the one hand is a good thing but it also excludes people.”
Geiser and his neighbors have dealt with other effects of those short-term rental investment properties. One home in their neighborhood had been rented out on a regular basis, yielding parties, frequent noise and disturbances. Short-term rentals there have since ceased since the owner was approached by borough staff.
“I do have some serious safety concerns as a mother of two young children under 5 living next to a de facto hotel,” Geiser’s neighbor Jennifer Baka said. “I understand a lot of the concerns from people who are speaking this evening who seem to be operating their Airbnbs responsibly and also living on site. That has not been the experience of us here…”
Some residents asked for a lower activity cap in the range of 30 to 45 days. Others, in correspondence to borough officials, questioned why State College can’t just ban short-term rentals outright.
Court cases in Pennsylvania, LeClear said, have established that if a home has a resident for at least three months out of the year, they are within their rights to use it for short-term rentals, though municipalities can establish regulations.
Several council members asked if the ordinance could differentiate between owner-occupied and tenant-occupied houses, but borough solicitor Terry Williams said that would likely be viewed as discriminatory.
Council member Nalini Krishnankutty suggested limiting an individual to one short-term rental permit, but LeClear said that more aggressive investors would simply create shell LLCs to obtain multiple licenses.
After voting unanimously to adopt the ordinance revisions, council voted 6-1 to increase the license fee from $175 to $300, with council member Deanna Behring voting no. LeClear said that the originally-planned fee would not cover the costs of implementation and enforcement and that each application is expected to take up at least two hours of staff time. Borough Manager Tom Fountaine said on Monday the fee increase will “ensure costs of administration of the ordinance are not subsidized through the general fund.”
With the changes in place, Granicus will complete the application website — all applications and renewals will be able to be done fully online — and license database, while borough staff will go through training and finalize cross-department reporting procedures through early September.
In early-to-mid-September, the licensing program will go live, with notices sent to identified short-term rental owners and a community information campaign about requirements and the application process.
“I just wanted to say thank you to the people that wrote to us, emailed us and spoke up, because it was very educational,” Marshall said. “And the other thing I want to say, I want to thank the planning staff for putting the ordinance together. I think they did a very good job. A very good job.”
