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PC-09-20-16 CITY OF SHOREWOOD COUNCIL CHAMBERS PLANNING COMMISSION MEETING 5755 COUNTRY CLUB ROAD TUESDAY, SEPTEMBER 20, 2016 7:00 P.M. MINUTES CALL TO ORDER Chair Davis called the meeting to order at 7:00 P.M. ROLL CALL Present: Chair Davis; Commissioners Bean, Maddy and Riedel; Planning Director Nielsen; and, Council Liaison Siakel Absent: Commissioner Johnson APPROVAL OF AGENDA Director Nielsen noted Item 3 will be continued to the Planning Commission’s October 4, 2016 meeting. Maddy moved, Riedel seconded, approving the agenda for September 20, 2016, as amended. Motion passed 4/0. APPROVAL OF MINUTES  August 2, 2016 Bean moved, Maddy seconded, approving the Planning Commission Meeting Minutes of August 2, 2016, as presented. Motion passed 4/0. 1. PUBLIC HEARING – CONDITIONAL USE PERMIT FOR A SPECIAL HOME OCCUPATION PERMIT Applicant: Patricia Oys Location: 5825 Brentridge Drive Chair Davis opened the Public Hearing at 7:02 P.M. noting the procedures used in a Public Hearing. She explained the Planning Commission is composed of residents of the City of Shorewood who are serving as volunteers on the Commission. The Commissioners are appointed by the City Council. The Commission’s role is to help the City Council in determining zoning and planning issues. One of the Commission’s responsibilities is to hold public hearings and to help develop the factual record for an application and to make a non-binding recommendation to the City Council. The recommendation is advisory only. Director Nielsen explained Ms. Patricia Oys owns the property at 5825 Brentridge Drive. The property is located in the R-1C, Single-Family Residential zoning district. Ms. Oys teaches one-on-one exercise (Pilates) classes in her home. Teaching one student at a time would qualify as a limited home occupation; no permit is required for that. Occasionally she may have two students at once. She wants to address the potential for having more than one student at a time by obtaining a special home occupation permit pursuant to Section 1201.03 Subd. 12 of the Shorewood Zoning Code. A special home occupation permit requires approval of a conditional use permit (C.U.P.). CITY OF SHOREWOOD PLANNING COMMISSION MEETING September 20, 2016 Page 2 of 11 The Code does not limit the number of clients allowed at one time for a special home occupation permit. The City has received a letter from a resident living near Ms. Oys’ property expressing concern about the lack of a limitation. Nielsen noted staff recommends approval of the C.U.P. subject to the condition that any client parking be limited to the existing driveway and that clients’ cars must be parked no closer than 25 feet from the edge of the street. Patricia Oys, 5825 Brentridge Drive, noted she works as a full-time physical therapist for a large healthcare organization. She explained she teaches Pilates in her home on the side on Wednesdays, Saturday mornings and occasionally on a Sunday morning. Currently she has eight clients that randomly come to her home. She learned from Director Nielsen that if some of her clients wanted to pair up for a class she would have to get a special home occupation permit. She thought she may teach some two- person classes and possibly a three-person class although that would be rare. Chair Davis asked Ms. Oys how long she has been teaching Pilates in her home. Ms. Oys stated she started in 2008 as an LLC. Ms. Oys explained she mainly taught one-on-one classes but occasionally taught a two person class. The two-person classes were primarily mother and daughter clients. Sometime they were her neighbors. Director Nielsen told her to stop teaching the two-person classes until she obtained the special home occupation permit. She noted her clients always park on her driveway. Commissioner Bean asked Ms. Oys if her classes are by appointment. Ms. Oys responded yes. In response to another question from Bean, Ms. Oys stated her equipment setup will only accommodate a few clients. Commissioner Maddy asked if a lot of noise is generated during the sessions. Ms. Oys responded no. Ms. Oys noted that at least 25 percent of the women on her block have done sessions with her. Commissioner Maddy asked if MS. Oys’ driveway would accommodate cars being parked at least 25 feet from the roadway and how many cars could be parked at one time. Ms. Oys explained she has a three car garage. Director Nielsen stated three cars each pulled up to the garage could be accommodated. Chair Davis asked what objections her neighbors have expressed. Ms. Oys stated the only objection was from a retired couple who aren’t around a lot. Director Nielsen stated there had been a zoning violation issued for a property along Brentridge Drive regarding a home occupation that did not have the necessary permit. Commissioner Riedel stated it appears the special home occupation permit covers group lessons. It appears the applicant has complied with all of the conditions of the C.U.P. Commissioner Bean stated that in order to address the concern of the resident he asked if the number of clients accommodated at one time could be limited to no more than four or five. Director Nielsen responded yes. Director Nielsen stated a C.U.P. has specific conditions listed. CITY OF SHOREWOOD PLANNING COMMISSION MEETING September 20, 2016 Page 3 of 11 Commissioner Maddy stated that limiting the number of clients for Ms. Oys would be to avoid setting too much precedent for other home businesses in the City. Commissioner Riedel noted he does not think it would set a precedent because it is a C.U.P. Chair Davis stated she likes limiting the number of clients at one time to four. Seeing no one present to comment on the case, Chair Davis opened and closed the Public Testimony portion of the Public Hearing at 7:12 P.M. Maddy moved, Riedel seconded, recommending approval of a conditional use permit for a special home occupation permit for Patricia Oys, 5825 Brentridge Drive, subject to the condition that any client parking be limited to the existing driveway and that cars must be parked no closer than 25 feet from the edge of the street and that there cannot be more than four clients in a class at one time. Motion passed 4/0. Director Nielsen noted Council will consider this item during its September 26, meeting. Chair Davis closed the Public Hearing at 7:14 P.M. 2. PUBLIC HEARING – CONDITIONAL USE PERMIT FOR ACCESSORY SPACE OVER 1200 SQUARE FEET Applicant: Mark Magney Location: 21195 Radisson Road Chair Davis opened the Public Hearing at 7:14 P.M., noting the process will be the same as for the previous item. She stated during this Public Hearing the Planning Commission is going to consider a conditional use permit (C.U.P.) for accessory space over 1200 square feet for Mark Magney, 21195 Radisson Road. Director Nielsen explained Mark Magney owns the property located at 21195 Radisson Road. Mr. Magney has applied for a C.U.P. to construct accessory space in excess of 1200 square feet on the property. He recently remodeled his existing home and added a new attached garage. He had originally considered removing the shed but has since decided to keep it. The new garage, in addition to an existing detached garage and an existing shed, bring the total amount of accessory space to over 1200 square feet of floor area; hence the need for the C.U.P. The property is zoned R-1A/S, Single-Family Residential/Shoreland and contains 40,259 square feet in area. The new garage contains 467 square feet. Combined with the utility shed and the existing garage, the amount of accessory space on the site would total 1258 square feet. The proposed garage would be 30 feet from the side (east) lot line and approximately 125 feet from the northerly front lot line. With regard to the analysis of the case, Nielsen noted Section 1201.03 Subd. 2.d.(4) of the Shorewood Zoning Code prescribes criteria for granting a C.U.P. for accessory space in excess of 1200 square feet. He reviewed how the applicant’s plan complies with the criteria. 1. The total area of accessory buildings (1258 square feet) does not exceed the proposed floor area (1961 square feet) above grade of the existing home. 2. The total area of accessory buildings does not exceed 10 percent of the minimum lot size for the R-1A/S zoning district (.10 x 40,000 = 4000 square feet). CITY OF SHOREWOOD PLANNING COMMISSION MEETING September 20, 2016 Page 4 of 11 3. The proposed garage would comply with R-1A/S setback requirements. The total area of impervious surface on the property would only be 21.4 percent. Since the new structure is tucked into some rather large trees and screened by the existing garage, no additional landscaping would be necessary. 4. The architectural character of the new building is the same as the existing house. Siding and roofing of all the accessory structures is compatible with the house. Nielsen noted that based on the analysis of the case staff recommends granting the C.U.P. Mark Magney, 21195 Radisson Road, noted he and his wife bought their property in March and they have been remodeling it since April. He explained they turned the existing attached garage into living space and added a new attached garage in front of that. The new attached garage is slightly smaller than the original attached garage. He noted his wife Tammy was present. He also noted that his wife’s parents will be moving in with them. Commissioner Riedel asked if there are any plans to remove the shed. Mr. Magney noted their intent is to keep it. In response to a comment from Commissioner Bean, Director Nielsen clarified there are no setback issues for any of the structures on the site. Seeing no one present to comment on the case, Chair Davis opened and closed the Public Testimony portion of the Public Hearing at 7:20 P.M. Chair Davis stated when the lot was split an effort was made to avoid encountering future compliance issues. Bean moved, Riedel seconded, recommending approval of a conditional use permit for accessory space over 1200 square feet for Mark Magney, 21195 Radisson Road. Commissioner Maddy asked what the maximum impervious surface is for the R-1A/S, Single-Family Residential/Shoreland zoning district. Director Nielsen responded 25 percent. Motion passed 4/0. Chair Davis noted Council will consider this item during its September 26, meeting. Vice-Chair Davis closed the Public Hearing at 7:22 3. PUBLIC HEARING – REZONE PROPERTY FROM R-2A, SINGLE AND TWO- FAMILY RESIDENTIAL TO C-1, GENERAL COMMERCIAL (continued from August 2, 2016) Applicant: John Benjamin Location: 24250 Smithtown Road This item was continued to the October 4, 2016, Planning Commission meeting. CITY OF SHOREWOOD PLANNING COMMISSION MEETING September 20, 2016 Page 5 of 11 4. PUBLIC HEARING – ADMENDMENT TO CITY CODE CHAPTER 1004 RENTAL HOUSING REGARDING SHORT-TERM RENTAL (continued from July 19, 2016) Chair Davis opened the Public Hearing at 7:22 P.M. Director Nielsen clarified that the amendment to the City Code Chapter 1004 (Rental Housing) regarding short-term rental does not technically require a public hearing because Chapter 1004 is not a zoning ordinance. Staff chose to have a public hearing to be completely transparent. Nielsen explained the City has recently had some problems with a couple of houses that were rented out as short-term rentals. Staff believes the City Code regarding the short-term rental of properties could be strengthened and therefore staff has proposed some draft amendments to Chapter 1004. He noted the meeting packet contains a copy of a number of exhibits. Exhibit A The current Rental Housing Code chapter with proposed deletions shown in strikeouts and additions shown in red. Exhibit B City Regulation of Short-Term Rentals by Owners, a brief report on the issue from the League of Minnesota Cities. Exhibit C Assorted emails from residents who have experienced problems with short-term rental properties in Shorewood. Exhibit D Vacation Home Rental Study by Crow Wing County Land Services. Exhibit E Minnesota Vacation Home Rental Task Force Report and Recommendations by Explore Minnesota Tourism dated 2008 He clarified that the material was by no means exhaustive. There are volumes of information on the subject available on the internet. He explained staff assessed two alternatives to address the concern. One was to regulate short-term rentals. The other was to prohibit them. Staff did not pursue the regulation option because the City does not have the staff to do that. He reviewed the proposed findings which would ultimately be incorporated into a formal ordinance amendment. The findings were taken from the various exhibits. If the Planning Commission makes a recommendation on the amendments it would be on the September 26, 2016, Council meeting agenda for consideration.  The potential exists for short-term rentals to become a significant business operation in Minnesota.  Many short-term rental properties may fall under the jurisdiction of state law (those that qualify as hotels, motels, or lodging establishments). The level of state licensing compliance may inevitably be low due to: - The amount of manpower required for monitoring and enforcement. - The fact that new short-term rentals constantly enter the market. - Those offering accommodations not in compliance may be notified and then take steps to avoid further detection from licensing authorities. CITY OF SHOREWOOD PLANNING COMMISSION MEETING September 20, 2016 Page 6 of 11 - These same issues apply to cities trying to regulate short-term rentals  Rental of private homes for temporary occupancy is contrary to the essential character and stability of residential neighborhoods because short-term tenants have little interest in the welfare of the local community, do not engage in activities that strengthen residential neighborhoods, and do not integrate into residential neighborhoods.  Rental of homes for temporary occupancy disturbs residential neighborhoods by creating excessive noise, accumulation of refuse, trespassing, disorderly conduct, vandalism, high occupant turnover, excessive traffic, and excessive numbers of parked motor vehicles.  Regulating rental of private homes for temporary occupancy is necessary to protect the essential character of residential neighborhoods and the health, safety and general welfare of the community.  Rental of residential homes for temporary occupancy is often undertaken without adequate on-site management, compliance with state and local codes for commercial lodging establishments, and other safeguards for those renting the home.  Operating a commercial business venture in close proximity to neighboring residences can lead to conflict and undermines the fundamental principles of zoning.  Short-term rentals render a significant number of housing units unavailable for long-term residents and raise the cost of housing.  Short-term rentals have the potential to diminish property values. He explained that based on those findings staff is recommending the changes shown in Exhibit A (the Rental Housing Code Chapter). He highlighted the proposed changes to the Code. Section 1004.06 Short-Term Rental Prohibited was added to list of sections in Chapter 1004.  Under 1004.02 Definitions   Lodging establishments was added to the definition of dwelling unit.  The definition of operator was changed.  A definition for remuneration was added.  The definition of rent was changed.  A definition of rental was added.  A definition of short-term rental unit was added.  A definition of transient was added. Section 1004.06 Short-Term Rental Prohibited was added. It includes the following subdivisions.   Subd. 1 Purpose  Subd. 2 Prohibition  Subd. 3 Enforcement Nielsen noted Shorewood’s Rental Housing Code was originally adopted, in part, to provide safe and healthy places for people to live, not places for people to stay. The proposed amendments are intended to reflect that original purpose. Chair Davis suggested the Commission address Commissioner Johnson’s email dated September 20, 2016. She noted that she totally agreed with Johnson’s recommendation to include a mechanism for an exception for unique situations such as the Ryder Cup, Super Bowl, Final Four and so forth. It would be done via a permitting process. She would want the owners of the neighboring properties to be notified about an upcoming short-term rental. Director Nielsen noted he agreed and stated he would like to handle what is before the Commission as a separate amendment. CITY OF SHOREWOOD PLANNING COMMISSION MEETING September 20, 2016 Page 7 of 11 Director Nielsen stated after this is considered by Council there needs to be an amendment to the City Zoning Code. For example, the violator for the current troublesome short-term rental situation was not cited as a hotel because the common definition of hotel talks about renting out rooms or dwelling units and typically providing food and beverage services. That is not always the case with a hotel. The definition is a little out of date. He then stated he thought there should be a separate study regarding what types of events should qualify a property owner for a short-term rental exception and what type of process would have to be followed. Commissioner Bean stated three households have filed complaints about the current short-term rental properties across Shorewood. He questioned if there is really a wide-spread problem that needs to be addressed. He noted that he assumes those individuals that have filed the complaints probably think the problem is horrendous. Chair Davis asked if staff has spoken with representatives from the City of Excelsior about what Excelsior is doing or planning on doing. There are a lot of homes that are being rented out during the Ryder Cup event. Director Nielsen stated different cities view short-term rentals differently. He then stated Excelsior is more of a “resort type” of community. It may welcome the short-term rental type of use. Chair Davis asked how the short-term rental ordinance would be enforced. In response to a comment from Commissioner Bean, Director Nielsen explained with the current Rental Housing Code the City puts out notices to people who have rented out their house in the past when their license expires. For people who are renting their property out for the first time they are handled on a complaint basis. Chair Davis stated renters have to renew their license every year. Director Nielsen clarified every three years. Commissioner Bean stated compliance is about fixing the problem. He asked what the penalty would be for renting a property for less than 30 days. Director Nielsen noted it would currently be a misdemeanor and the penalty for that can be as high as $1,000. Director Nielsen explained the City has an Administrative Enforcement of Code Regulations section in the City Code and it lists the three types of classifications which he thought were Class 1, Class 2 and Class 3. Class 1 is a $100 penalty. Class 2 is a $200 penalty. Class 3 is a $300 penalty. Staff has discussed possibly having a stiffer penalty for violating the short-term rental regulations. Commissioner Maddy noted that Section 1004.06 Subd. 3 states “An owner, operator, tenant or occupant of any building or property in violation of the provisions of this section may be charged and found guilty of a misdemeanor and may be held responsible for the cost of enforcement in addition to penalties.” Commissioner Bean asked if that should be moved under Administrative and Enforcement. Director Nielsen noted the City Attorney thought it should be where it is because it is the enforcement specific to short-term rentals. Chair Davis asked if landlords pay sales tax on rent. Director Nielsen stated the City Attorney has told him that if he rents an apartment there is no sales tax. For short-term rentals such as hotels there is. Davis stated that in Duluth when she rented out a house she had to pay sales and lodging taxes. Nielsen noted CITY OF SHOREWOOD PLANNING COMMISSION MEETING September 20, 2016 Page 8 of 11 that the renter of one of the problem properties has told the City that it pays sales tax. A rental operation does require paying sales tax. Commissioner Bean asked if there should be a definition for lodging establishments. Director Nielsen stated that is in the Zoning Code and noted he intends to make that definition consistent with the State Health Department’s definition. For now, the definition in the Zoning Code will be used. Chair Davis stated that in the documentation included in the meeting packet from other cities there is consistency in saying how difficult it was to track down the short-term rentals within a community. Director Nielsen stated that even for long-term rentals the City relies on resident complaints to learn of issues. Commissioner Bean stated that it was his understanding that the enforcement of the Short-Term Rental Code will be complaint driven. Staff will then investigate the complaint to determine compliance. Commissioner Maddy stated he thought it may be somewhat difficult to enforce. Director Nielsen stated some might be. There was ensuing discussion about the current problem short-term rental situation. Director Nielsen noted that if a single family rents a home on a short-term basis and does not cause any trouble that would likely go unnoticed. Commissioner Maddy stated he thought the short-term rental issue will be fluid for a while. He thought those issues will eventually end up in court. Director Nielsen noted there has been state legislation proposed that would make short-term rental a permitted use in a single-family residential district. He thought that would be a bad law. Chair Davis noted that Airbnb recently went to instant booking so you cannot run a background check on anyone wanting to rent a property. Commissioner Maddy commented that he likes having that instant booking option. Davis asked what would happen if the ordinance amendment gets passed and then the State implements something in conflict with the City’s ordinance. In response to a question from Council Liaison Siakel, Director Nielsen explained if Council wants to move forward with the regulation option he would have to tell Council that there needs to be an increase in staff to do that. Council Liaison Siakel stated she is aware of a situation where an owner can rent out their condo once a month. Chair Davis stated that could be discussed as part of the special event / circumstance exception discussion for short-term rentals the Commission would have during a future meeting. Director Nielsen noted there is an exception for when someone sells their house. In response to a question from Council Liaison Siakel, Chair Davis stated that when the Commission initially discussed short-term rentals there were 63 properties in the Shorewood / Excelsior / Tonka Bay area listed on various short-term rental sites. Davis noted there are quite a few less now. CITY OF SHOREWOOD PLANNING COMMISSION MEETING September 20, 2016 Page 9 of 11 Commissioner Bean stated there are some people out on the islands who rent out their house for a short- term. Commissioner Riedel stated he thought that banning short-term rentals outright makes more sense than allowing it through a permitting process. If Shorewood was more of a resort community it would be a different discussion. Director Nielsen noted the Comprehensive Plan states Shorewood is a residential community; its intent is to be a bedroom suburb. Council Liaison Siakel stated for the current problem property if the rental was restricted to once a month the revenue the leesor could make would be reduced significantly. She suggested the Commission discuss a once-a-month rental exception when it discusses special event exceptions. Chair Davis stated having had rental property renting it once a month would not be worth the effort because of all of the work that has to be done to get a dwelling ready to rent. Commissioner Maddy clarified the way the ordinance is written would not allow any rental for less than 30 days. Director Nielsen asked Council Liaison Siakel if she wanted the code to accommodate someone twelve times a year by allowing a once-a-month rental. Council Liaison Siakel stated that a total restrictive ordinance is being proposed because there is one company that is abusing a short-term rental situation. She noted there are some individuals who live by a lake who rent their house out. Commissioner Bean stated he thought it would be best to handle short-term rental exceptions for events though a permit process. Chair Davis stated as part of that process the City should provide the person renting the house out with a list of things that should be in the house to prepare for the rental. Commissioner Riedel stated that because the restriction will not go into effect until after the Ryder Cup event is over he suggested moving forward with a recommendation to prohibit short-term rentals at this time. He does not think there is a sense of urgency for dealing with the exceptions at this time. He then stated he was unsure if there are residents who would object to the ban. Commissioner Maddy asked if would be better to put the Short-Term Rental ordinance in the Zoning Code. He thought having it in the Zoning Code might make it easier to defend in the courts. Director Nielsen stated similar changes will be made to the Zoning Code and the Planning Commission will discuss that during its November 2016 meeting. Commissioner Riedel asked how it would be in the Zoning Code. Nielsen explained the Zoning Code would include the definition, updates to other definitions, and the prohibition of short-term rental for example. Director Nielsen noted the State Health Department is quite interested in the problematic short-term rental situation in the City. Seeing no one present to comment on the case, Chair Davis opened and closed the Public Testimony portion of the Public Hearing at 8:09 P.M. CITY OF SHOREWOOD PLANNING COMMISSION MEETING September 20, 2016 Page 10 of 11 Davis moved, Maddy seconded, recommended approval of the proposed amendment to the City Code Chapter 1004 (Rental Housing) regarding short-term rental as presented by staff. Motion passed 4/0. Commissioner Bean asked if Council will consider the amended during its September 26, 2016, meeting. That was confirmed. Chair Davis recommended the Planning Commission start discussing special event exception during its November 2016 meeting. Director Nielsen stated discussion about the zoning amendment will begin in November and the discussion about exceptions can also begin at that time. Commissioner Maddy asked if the notification of this Public Hearing was published in the September 2016 newsletter. He noted he was surprised no one showed up. Director Nielsen stated he was a little surprised that residents living near the problem properties did not show up. He noted that the City did not send out a specific notice to them because it is a general ordinance amendment. He clarified that the owners of the property that have the worst case short-term rental situation are well aware of what the City is doing. Chair Davis noted the rental of that property is managed by a company that manages many rental properties. Chair Davis closed the Public Hearing at 8:15 P.M. 5. MATTERS FROM THE FLOOR There were no matters from the floor presented this evening. 6. OLD BUSINESS / NEW BUSINESS 7. DRAFT NEXT MEETING AGENDA Director Nielsen stated there is the continued public hearing regarding rezoning slated for the October 4, 2016, Planning Commission meeting. There will be discussion about the zoning ordinance related to special activities which was mentioned during the discussion of Item 4 on the agenda. He will try and have a draft copy of the amendment to the Commissioners before that meeting. 8. REPORTS • Liaison to Council Council Liaison Siakel noted she did not attend Council’s September 12, 2016, meeting. Chair Davis noted she went to the ribbon cutting ceremony on September 12 for the Smithtown Road east sidewalk extension. She also attended the ground breaking ceremony for the Oppidan Shorewood Landing Senior Living project. Director Nielsen noted that on September 26 at 6:00 P.M. there will be a ribbon cutting ceremony for the new artificial play field in Badger Park. He explained the striping on the field is almost exclusively for lacrosse. The field will be used for football as well. CITY OF SHOREWOOD PLANNING COMMISSION MEETING September 20, 2016 Page 11 of 11 • SLUC • Other 9. ADJOURNMENT Davis moved, Bean seconded, adjourning the Planning Commission Meeting of September 20, 2016, at 8:22 P.M. Motion passed 4/0. RESPECTFULLY SUBMITTED, Christine Freeman, Recorder