State College residents who want to rent out their homes to short-term guests through Airbnb, Vrbo, or any other means now will need to get a permit from the borough before doing so.

Borough Council on Monday night approved a short-term rental ordinance that sets licensing requirements for residential rentals of fewer than seven consecutive days. The borough’s property maintenance code already requires a standard rental permit for seven or more consecutive days of rental occupancy.

A permit fee is expected to be presented for approval at council’s next meeting on June 21. Planning Director Ed LeClair said he expects the proposal to be $175 for the annual license, a cost based on staff hours, and a contract with third-party vendor Granicus, a national short-term rental monitoring and regulatory solutions company that works with governments throughout the country.

Council voted 6-0 to approve the ordinance, with Theresa Lafer abstaining. It will go into effect on August 1, with enforcement beginning in September.

The proposed ordinance has been discussed at five meetings dating back to April, but the borough has been evaluating the issue for several years as technology has enabled a growth in homeowners renting out their properties to visitors.

LeClair said at a previous meeting that an analysis in December found nearly 300 properties within the borough advertised for short-term rentals.

The ordinance is meant to get a handle on those properties to confirm they are in compliance with zoning and taxing requirements. It also aims to ensure sufficient parking is available, address nuisance properties and identify tourist homes — residential properties that are solely used for short-term rentals and which are not permitted in the borough’s residential zoning districts.

“Overall I support the intent and the goals of this ordinance to support neighborhood stability, and to get a handle on the extent of the short-term rentals is a good idea especially in light of the fact that we’re going to go through our community housing assessment next year,” Councilwoman Katherine Yeaple said. “This is really important to do.”

The ordinance requires that a dwelling being used for short-term rentals is a principal place of residence at least eight months a year for either the owner or a tenant with a lease and provide documentation confirming that.

Applicants must provide the number of bedrooms being made available for rent and confirm they can provide one off-street parking space per bedroom.

The name and contact information for a person in charge within 25 miles of the property is also required.

Applicants must show proof of general liability insurance that covers rental activities.

They also must confirm whether they receive the homestead exclusion on real estate taxes on the property and acknowledge that information submitted will be provided to relevant taxing authorities.

If the operator is not the property owner, the applicant must provide proof of approval from the owner.

Once a license is granted, it is good for one year and must be displayed at all times within the location. The license number also must be included in any advertisement for short-term rental.

The operator is required to keep an activity log for all short-term rentals at the property, including number of nights rented, number of people occupying the property during the rental, and number of cars parked at the property for each rental.

Short-term rentals will be subject to the borough’s existing system for nuisance complaints. The license will be suspended when 10 or more points are accumulated for nuisance and criminal violations within a 12-month period. Appeals filed within 10 days of suspension will go directly to the Rental Housing Revocations Appeals Board and a hearing will be held within 20 days of receipt of the request.

Current short-term rental operators weighed in throughout the discussions over the past two months, with many expressing concerns over what the fee might be.

Resident Dana Miller said on Monday night that she has been renting her property through Airbnb for several years and as an independent contractor who lost work over the past year it has been an important source of income.

She said there are nuisance properties that need to be addressed, but that she has been diligent about independently vetting renters and checking in throughout their stays.

A $175 annual fee may not seem like much, she said, but it is when “every little bit counts.”

“I do kind of feel like I’m being penalized,” she said.

LeClair previously said the average short-term rental rate in the borough was about $300 a night. Resident Jill Skipper said that may be inflated by larger properties and football weekend rentals. She felt the fee should be scaled and noted that her most recent renter paid $85.

“[The $175 fee] is not fair to those of us who are just doing a small rental,” she said.

Resident and attorney Jennifer Wagner said she supported a licensing program because some short-term rental properties can cause problems if not monitored. But she said there should be some flexibility for homeowners who are trying it on an occasional basis.

“We don’t see any exceptions for the occasional homeowner who’s trying to do this,” she said. “That creates a lot of problems that perhaps are not equitable and could have discriminatory impact on marginalized populations.”

Highlands neighborhood resident Mark Huncik said that regulation will weed out problem properties and help sustain short-term rental business for those who are doing it right.

“I believe we must embrace this activity, as it is occurring and will occur, and make sure it’s done in a way that will maintain safety and stability within the neighborhoods,” Huncik said. “I believe this ordinance is a big first step in doing so.”

State College isn’t the first Centre Region municipality to enact a short-term rental ordinance.

Ferguson Township adopted an ordinance in 2019 that requires a dwelling to be a principal residence at least six months a year. A $25 fee is required.

College Township’s short-term rental ordinance was adopted in 2020. It limits short-term rentals to no more than 30 nights per year and the license requires a $130 fee.