City Council explores short term rental regulations and potential hotel tax

The City Council of Saint Charles, IL, is exploring new regulations for short-term rentals in a bid to enhance tourism revenue and clarify zoning laws. During the Planning & Development meeting on June 9, 2025, city officials discussed potential code updates that could allow short-term rentals as a permitted use in the downtown area. This move aims to attract investors and streamline the process for establishing new rental properties.

Currently, the existing bed and breakfast definitions pose challenges for new short-term rental projects. By modifying these definitions, the city hopes to encourage more investment in the downtown sector. The council is considering various options, including regulating the locations of short-term rentals across different zoning districts, which would differentiate between older neighborhoods and newer suburban areas.

Another significant proposal discussed was the introduction of a tax similar to the hotel operators tax, which could be automatically collected by rental listing services. This tax would not only generate additional revenue but also support a registry of short-term rental properties, facilitating better communication between the city and property owners.

Additionally, the council is contemplating a licensing program for short-term rentals that would establish operational standards and allow for the revocation of licenses if necessary. This approach aims to ensure that rentals meet community standards while also addressing potential legal liabilities associated with unregulated rentals.

The council is actively seeking feedback from the community on these proposals, emphasizing the importance of public input before any recommendations are made. As discussions continue, the city aims to balance the interests of property owners, potential investors, and the broader community to foster a thriving tourism economy.