City Council Meeting - FINAL

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Meeting Date: 09/15/2020  
From: Jack Fitchett, Management Analyst

Consideration and Approval of Contract:  LodgingRev short-term rental software contracts to monitor and collect data related to short term rentals operating in Flagstaff.
  1. Approve LodgingRev contract to obtain short-term rental software two year contract totaling $73,960; and 
  2. Authorize the City Manager to execute the necessary documents. 
Executive Summary:
Council gave staff direction during the 2020 budget retreat, to monitor short-term rentals (STRs) in our  community and gather associated data.  This data collection and tracking of STRs is imperative to learn how many STRs are operating within Flagstaff and what their impacts are to our community. This software will also be integral when the City starts to monitor and enforce compliance in relation to these properties, as outlined in State law. This software will also assist our Code Compliance staff monitor and enforce regulations associated with these properties.
Financial Impact:
The fiscal year 2020-2021 budget has $50,000 allocated to achieve this objective within the General Fund. The first year of this contract will cost the City $39,520. The second year of the contract will cost approximately $34,500. Staff plans to carry over the remaining $10,540 from this year's budget allocation and is expected to gain additional revenue by ensuring that those operating an STR have the appropriate Transaction Privilege Tax license. The City has the right to terminate this contract if it does not meet our needs and we no longer wish to pursue a second year with this entity.
Policy Impact:
This software will be integral for when the City starts to monitor and enforce compliance in relation to these properties, as outlined in State law. Staff will look to bring forward our own ordinance to come into compliance with state law related to STRs in
the next several weeks.
Connection to PBB Key Community Priorities/Objectives & Regional Plan:
Priority Based Budget Key Community Priorities and Objectives
Safe & Healthy Community: Ensure the built environment is safe through use of consistent standards, rules and regulations, and land use practices. 
Livable Community: Achieve a well maintained community through comprehensive and equitable code compliance. 
Has There Been Previous Council Decision on This:
Yes. Council gave direction during the April budget retreat (2020), to purchase technology that would allow the City to collect data and monitor STRs in our community. 
Expanded Financial Considerations:
In 2019, the City began recognized revenue increases in our Transaction Privilege Tax licensing fees.  This was the first year the State furthered the requirement that each short-term rental must have a license to operate the business regardless of whether or not they utilize on online platform such as AirBnB, VRBO and Craigslist to name a few.  The fee is $20 for each calendar year.  Below is a three-year history of our Transaction Privilege Tax license fees. 

FY 2017-18     $ 127,726
FY 2018-19     $ 256,726
FY 2019-20     $ 213,109


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