Executive Summary
Why the Controller’s Office Conducted this Review
The Office of the City Controller (Controller’s Office) conducted a review of Philadelphia’s (City) short-term rental (STR) laws and regulations to assess compliance among STR hosts and identify opportunities to strengthen oversight and enforcement. This review outlines the process of acquiring and maintaining STR licenses, distinguishes the types of licenses and zoning designations required, and identifies issues preventing effective regulation and enforcement.
What the Controller’s Office Found
The Controller’s Office has determined how the City’s STR framework operates and where regulatory oversight and enforcement could be improved. Some of the most significant findings include:
- Licensing Non-Compliance: An analysis of 3,734 licenses associated with STR rental bookings found that 1,327 licenses were inactive, expired, or ineligible license types.
- Complex Licensing Requirements: Operating a short-term rental in the City requires multiple permits, licenses, property inspections, and tax accounts administered by different City departments, creating a complicated compliance process for hosts.
- Limited Verification and Enforcement: The Department of Licenses and Inspections’ (L&I) oversight of short-term rentals relies primarily on booking platform reporting and complaint-driven enforcement managed by a small staff, limiting the City’s ability to timely identify potentially non-compliant listings.
What the Controller’s Office Recommends
The Controller’s Office developed the following recommendations to address the findings:
- Simplify and consolidate the licensing process by creating a centralized application and renewal system within eCLIPSE and provide clear, plain-language guidance on zoning, licensing, operational, and annual renewal requirements.
- Improve verification and enforcement of licensing requirements by routinely validating license information submitted by booking platforms against City licensing records and implementing a structured enforcement process that includes timely notification of violations and escalating enforcement actions for repeat or continued non-compliance.
- Evaluate the effectiveness of existing penalties by assessing whether current penalties adequately deter non-compliance and whether additional enforcement tools are needed to address repeat or chronic violations.
- Expand proactive monitoring efforts by evaluating technology-assisted monitoring tools that can identify potentially non-compliant listings across multiple booking platforms, verify licensing information, and support proactive enforcement efforts.
- Improve coordination and data sharing across city departments by establishing a formal process for sharing relevant data to strengthen oversight and identify potential compliance issues.
- Strengthen verification of tax compliance by evaluating whether existing processes provide adequate procedures for the collection, remittance, and verification of taxes associated with STR activity and identifying opportunities to improve oversight.