Philadelphia Zoning Code Changes, Part 2: Airbnb Regulations and More
Written by: Alan Nochumson
New Airbnb Regulations
On June 23, Mayor James Kenney signed into law Bill No. 210081 that amends Section 14-604 of the Philadelphia Zoning Code titled “Accessory Uses and Structures;” as well as Chapter 9-3900 of The Philadelphia Code, entitled “Property Licenses and Owner Accountability;” Section A-906, entitled “Property License Fees;” and Chapter 19-2400, entitled “Hotel Room Rental Tax.”
Section 14-604 of the Philadelphia Zoning Code outlines the accessory uses and structures permitted in conjunction with allowed principal uses and structures.
Under the amended law, the Philadelphia Zoning Code was amended to define the term ”limited lodging” to track Airbnb use more closely.
Limited lodging is now generally defined under Section 14-604(13)(a) as “the accessory use of a dwelling unit for temporary rental for occupancy for dwelling, sleeping or lodging.”
Under the amended law, it specifically provides that “the standards of this section are intended to ensure that limited lodging will not be a detriment to the character and livability of the surrounding neighborhood.”
The Philadelphia Zoning Code now limits such limited lodging to a “natural person” who is deemed a primary resident of the property. Under the amended law, a property’s primary resident is considered one who owns and resides in it or a renter who lives in the property as the renter’s primary domicile for more than half of the year and who is authorized in writing by the property owner to provide such limited lodging.
Restricting limited lodging to only a “natural person” was a decision made by Philadelphia city council in an effort to circumvent complex corporate ownership structures and hold individuals accountable for any nuisances which may arise as a result of the nature of short-term rental. In other words, it seems like the amended law eliminates the ability of corporate entities or investors to use real estate in Philadelphia for what has been termed as limited lodging.
Chapter 9-3900 of The Philadelphia Code, titled “Property Licenses and Owner Accountability” has also been amended to create what is now known as a limited lodging operator license.
Prior to the passing of this bill, only short-term rental operators that rented dwelling units for more than 90 days a year were required to obtain a governmental permit.
Under the new law, short-term rental operators must now obtain this limited lodging operator license.
Furthermore, only the property’s so-called primary resident may operate the property as limited lodging and obtain such a license, provided that, in the Tenth Councilmanic District, only a primary resident who is the owner of the property may operate limited lodging and obtain such a license and an otherwise eligible renter may not do so.
Pursuant to Chapter 9-3900 of the administrative code, the annual license fee for a limited lodging operator license is $150.
To obtain a license, the applicant must have a valid commercial activity license and no outstanding violation notices issued under Title 4 of the Philadelphia Code associated with the property for which the application is made unless the property owner has filed an appeal of the violation which is pending at the time of the governmental application.
Furthermore, if the property owner is not a natural person or a publicly-traded company, the application must identify, in addition to the name of the property owner, the name and preferred mailing address of each natural person who has an equity interest in such property owner that exceeds one or more of the following, regardless of whether the natural person has a direct equity interest or such natural person’s equity interest is held through one or more tiers of a corporate structure, such as parent-subsidiary structure: 49% of the value of the property or 49% of the value of the property owner. However, if no natural person has such an interest, the application must identify the name and preferred mailing address of the 2 natural persons who have the largest equity interest in the property.
Under the new law, all short-term rental operators are required to use a registered booking agent.
In an effort to drive out third-party short-term rentals listed independently on unregulated websites, such as Craigslist, a booking agent is defined as “a person or entity that facilitates reservations for the direct or indirect receipt of a fee for, or collects payment for, accommodations on behalf of a person offering to the public a residential dwelling as limited lodging or as a hotel or similar short-term rental.”
Under the new law, “merely publishing an advertisement for accommodations does not make the publisher a booking agent.” Furthermore, the new law provides that “a booking agent does not include a person or entity that facilitates reservations or collects payment for accommodations if the accommodations are offered by a person operating under the same trademark, trade name or service mark used by the person or entity facilitating reservations or collecting payment, provided that such person or entity maintains a publicly available telephone contact number through which such person or entity receives and processes complaints concerning activities at such accommodations.”
A booking agent must have a limited lodging and hotels booking agent license.
The initial license fee for a limited lodging and hotels booking agent license is $7,000 and the annual license renewal fee is $5,000, according to the new law.
A booking agent will also be subject to the hotel room rental tax, tourism and marketing tax, and the hospitality promotion tax under the new law.
New penalties have been imposed for failure to comply with these new provisions of the law.
Neighborhood Conservation Overlay District (/NCO)
On July 15, Kenney signed into law Bill No. 210361 that amends Section 14-504 of the zoning code titled /NCO, Neighborhood Conservation Overlay District.
The /NCO, Neighborhood Conservation Overlay district covers various sections of the city and is intended to promote the public welfare of the city by encouraging conservation and preservation through the revitalization of the physical environment that is unique to a specific neighborhood.
Section 14-504(6) covers The Overbrook Farms /NCO district, which is within the Neighborhood Conservation Overlay District.
The Overbrook Farms /NCO district was established to preserve and protect the Overbrook Farms National Historic District, which is a unique, mixed-use, neighborhood-oriented retail district containing residential uses and retail uses interspersed at street level with residential uses on upper floors.
The new law does not permit multi-family use in any single-family zoning classification in the Overbrook Farms /NCO district.
It is unclear how this bill differs from the use requirements of the Philadelphia Zoning Code; however, it seems that the bill will restrict the ability of property owners or tenants to apply for a variance of the Philadelphia Zoning Code.
Far Northeast Overlay District (/FNE)
On June 23, Kenney signed into law Bill No. 210425 that amends Section 14-500 of the Zoning Code titled Overlay Zoning Districts.
Section 14-514 covers /FNE, Far Northeast Overlay District which applies to the 56th Ward, 58th Ward, 63rd Ward, and 66th Ward.
The new law states that any use within the Philadelphia Zoning Code that qualifies for a special exception will instead require a variance within the /FNE, Far Northeast Overlay District.
— Clementa Amazan, an associate at Nochumson P.C., is the co-author of this article.
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