Amendments would give hotels and motels the option to be defined as extended-stay establishments

ATASCADERO — The Atascadero City Council, in its regular meeting on Tuesday, April 8, approved proposed amendments in the city’s zoning for commercial hotels and motels to give them options to allow for extended-stay customers amid changing lodging trends.

In the only public hearing of the meeting, Community Development Director Phil Dunsmore proposed a change in the city’s Title 9 Planning and Zoning ordinance to add extended hotel/motel as an additional use category and provide standards for that use if a hotel or motel chooses to be classified under that use.

“Zoning is something that’s ever-evolving, and these changes are reacting to the way the market’s changing,” Dunsmore said as he began his presentation. “What we’ve seen is a change in the hotel market, and it’s meant an larger quantity of longer stays in the community.”

Dunsmore pointed out that the city’s hotels and motels are zoned in commercial districts requiring all stays to be less than 30 days, which keeps the revenue subject to the Transient Occupany Tax (TOT). Stays for 30 days or more would not be eligible for the TOT.

However, according to Dunsmore, in order to compete with the Airbnb market, hotels are increasing the number of units that provide kitchens, not usually included in shorter-stay establishments. Additionally, hotels and motels rely on renting a portion of their rooms to long-term stays to help balance occupancy during slower seasons. Traveling nurses and seasonal contractors are the most prevalent examples of extended-stay customers.

“We need to come up with a policy that creates new land use and alternatives that allow this to happen,” Dunsmore said. “The hoteliers need this to happen to help them make ends meet.”

Dunsmore proposed that the city add a new definition for extended stay hotels and motels and create standards for the approval of hotels that want to be under that definition, as well as an “action plan” if there are violations of a policy and a refinement of the limit to how many rooms can have a kitchen. As part of the agreement for the Administrative Use Permit that would allow the hotels to operate in the category, a 3% fee would be charged per room, much less than a TOT, and a revenue cap of 20% annually on extended stays.

During council questions, Councilmember Seth Peek asked about the hotel owners’ reaction to the proposal, and Dunsmore answered that staff had met with several of the owners and that they seemed to support it, although none attended Tuesday’s meeting to speak.

Mayor Pro Tem Mark Dariz asked how they would be able to tell if a hotel owner wasn’t in compliance, and Dunsmore said that they would find out with code audits and pointed out that was how the city first realized that the extended-stay issue would need to be dealt with.

City Manager Jim Lewis complimented the city on its actions after the findings of those audits.

“This is a show of the city being business-friendly and creative with solutions,” he said. “Someone came in with the code discrepancies and chose to work with the hotel owners instead of punishing them.”

A question came up in public comment about the new land-use category allowing stays of over 30 days, but not setting a maximum number of day for the stays. Lewis said that would be something the hotels would take care of.

“The economics of hotels will solve that,” he said. “Hotels won’t want people staying past the 20% threshold.”

Councilmember Susan Funk moved to approve the zoning changes, calling them “a constructive move forward,” and after Councilmember Heather Newsom seconded, the items passed 5-0.

In other business, Recreation Supervisor Larisse Lopez announced the swim program schedule for this summer, starting on June 16 and running through Aug. 8. Lopez said the program would run Monday through Friday each week during that time, offering sessions for Open Rec Swim, Lap Swim, Parent & Me Swim Class, and Swim Lessons. All activities will be at Atascadero High School’s new pool that was christened last summer.

“We always had a popular swim program, but it was interrupted by the COVID pandemic,” Lopez said. “Then the pool at AHS had to be rebuilt, so we moved our aquatics to Kennedy Club fitness but then they stopped having classes, so we had no swim program for a couple years. I’m excited to get it started again, thankful to the high school, and thankful to the community.”

The next City Council meeting will be Tuesday, April 22, at 6 p.m.