PORT ANGELES — The Port Angeles City Council took steps to cap short-term rentals and bed and breakfasts at 100 licenses and eliminate the non-conforming section from city code that could potentially shut down 185 of the city’s operators.

Following a 2½-hour public hearing Tuesday night that included comments from more than 50 people both in person and online, the council voted 4-3 to direct staff to amend the most restrictive option of three presented with exceptions for short-term rental owners who can provide evidence of economic hardship.

Mayor Kate Dexter and council members Brendan Meyer and Drew Schwab voted against the proposal.

A draft ordinance is expected to be heard at the council’s next meeting at 6 p.m. March 5 at City Hall, 321 E. Fifth St.

“I do think Option C is the best operating system to build from because it’s prioritizing housing stock for housing,” said council member Lindsey Schromen-Wawrin, who made the motion with certain amendments.

Those include one unit per short-term rental (STR) license, one license per person and one license per parcel, Schromen-Wawrin said.

Council members Amy Miller and LaTrisha Suggs and Deputy Mayor Navarra Carr joined Schromen-Wawrin in the majority.

All three of the dissenting council members preferred Option B, which would include a citywide cap of 250 STR licenses or 3 percent of the total single household dwellings or duplex units, whichever is greater.

Option C would cap the annual licenses at 100 or 1 percent of the total single household dwellings or duplex units, whichever is greater.

“I’m not very happy about this compromise, but I do think it’s a compromise,” Miller said.

A city survey last year found 234 total STR operators, 49 of whom were in compliance with location-based zoning requirements from its 2017 code update and 185 who have been operating illegally.

City staff recommended Option A, which did not have a cap and allowed existing operators a pathway to compliance based on three years of prior STR operations, restoring a blighted property or if they had previously operated as a long-term rental property in the past year.

All of the options include a new online licensing system with registration fees expected to go live July 1. Those fees have been combined and reduced by more than 60 percent since the first draft was released in December, Deputy City Manager Calvin Goings said.

Enforcement would begin Nov. 1 and include escalating civil penalties up to $3,000 for a third violation and the potential for daily fines up to $1,000 per day after the first 14 days.

Council deliberation followed hours of public testimony that was evenly split between Options B and C.

Short-term rental advocates touted the tourism industry and the lodging tax, which the city uses to support youth sports and other activities such as rebuilding the Dream Playground and the tower at City Pier.

Steven Pelayo, president of the Olympic Peninsula Lodging Alliance, cautioned against choosing Option C.

“You’re talking about closing 100 to maybe 200 short-term rentals that are funding that lodging tax that’s funding our Little League, our pump track, our Dream park, our basketball teams,” he said.

Pelayo added that there are home-building projects planned in Sequim in the next few years that could number 500 or more.

“We build less than 50 homes per year, on average, in the city limits of Port Angeles,” Pelayo said. “We’re talking 10 years of capacity could be coming in the next two to three years. We’re not going to have a supply problem.”

Other comments focused on preserving neighborhoods, returning STRs to the housing stock or turning them into long-term rentals for more workforce housing options.

“Rewarding the people who have been cheating, making scads of money while eliminating housing options for people is just not fair,” Wendy Rae Johnson said.

Marolee Smith and James Taylor, two city planning commission members who spoke in their own capacity, favored Option B.

Richie Ahuja, also a planning commission member, favored Option C.

Ahuja said the city needs sources of revenue, but STRs don’t drive the lodging tax by themselves.

“Let’s not change policies,” he said.

“Don’t write laws that you’re not going to enforce,” Taylor added, referring to the 2017 code that has largely been ineffective at keeping STRs within their location-based zones.

As the council started to deliberate, Meyer proposed Option B and to skip a second reading on March 5, but the motion died for lack of a second.

“Today we have the opportunity to correct bad policy that has scapegoated a lot of people,” Meyer said. “The real cause of the housing crisis is the lack of major development in our city in the last 15 years.”

Schwab offered to use Option B as a starting point and to drop the cap from 250 licenses to 175 in a compromise with Option C.

“It resets everything,” he said. “It’s nice. It’s clean. It does give us the ability to go back and change the caps, to change elements of it.

“We need a starting point. We need something we can build off of.”

Ultimately, Schromen-Wawrin’s more limited approach gained enough support.

“We have all, as members of the council, listened to countless hours of public comment, staff reports, conducted our own research and formed and reformed our ideas probably multiple times about this issue,” Carr said. “And I reminded myself at our last meeting that my views about short-term rentals have changed since the first time we talked about this a few years ago.”

As she campaigned for reelection last fall, Carr said she knocked on thousands of doors and asked people their opinions on the subject.

“I talked to hundreds of residents, many renters, many people who are very concerned about the character of their neighborhood, telling me first-hand in every single neighborhood in our community how horrible it has been to have short-term rentals in their neighborhood,” she said. “It has raised rents. They can’t park in front of their house anymore because of people coming and going at all hours of the night. People being loud. People who don’t feel like their children are safe.

“I think it’s incumbent on us to actually listen to our community. I believe I am representing my constituents because I have listened to them.”

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Managing Editor Brian McLean can be reached at 360-417-3531 or by email at brian.mclean@peninsuladailynews.com.