Planning commission recommends Title 9 amendment to regulate extended-stay hotels, including pilot payment-in-lieu of TOT

The Atascadero City Planning Commission on March 4 voted 7-0 to recommend the City Council adopt a text amendment to Title 9 establishing “extended stay” hotels and motels as a distinct commercial use, adding standards, administrative review and a pilot payment-in-lieu of transient occupancy tax.

The amendment, introduced by staff, would define extended-occupancy hotel uses (stays longer than 30 days), require administrative use permits (AUP) or conditional use permits (CUP) in some zones, tie allowances for full kitchens to extended-stay approvals, and enable the city to require a fee agreement as a payment in lieu of TOT for long-term occupants.

City staff said the amendment responds to an industry shift toward longer hotel stays — a trend that increased during the COVID-19 pandemic and includes traveling nurses, seasonal contractors and other long-term workers. Staff noted state law currently prohibits collection of transient occupancy tax for stays longer than 30 days, creating a revenue gap for the city when rooms are used as de facto long-term housing. In the presentation staff said the proposed pilot would allow limited extended stays while requiring a fee to compensate the city for lost TOT revenue.

Staff described the amendment as…