Property owners who want to offer their homes to tourists for short stays will have to have land use approval, a business license and a fire inspection, plus be registered to pay the city's 9 percent hotel tax.
The Ashland City Council approved the new law on Tuesday night.
In Ashland, vacation home rentals are legal in business and multi-family zones under certain conditions, but illegal in single-family zones, which are generally characterized by neighborhoods of stand-alone houses.
Councilors kept the ban on vacation rentals in single-family zones intact.
In the future, they do plan to examine an Ashland law that requires vacation rentals in multi-family zones be within 200 feet of a major street.
About 600 more housing units could be available as vacation rentals if councilors ended that requirement.
That would increase the supply of vacation rentals, but could cut into the supply of homes available to regular, long-term renters who live in Ashland.
The Ashland Lodging Association — which represents nearly 50 hotels, motels, bed and breakfast inns and legal vacation rentals — supported the council's decision to require land use approval, business licenses, fire inspections and hotel tax registration for vacation rentals.
"The City Council has come to the right decision for the city of Ashland," said Ashland Lodging Association President Abi Maghamfar.
He said the association would educate its members about the new requirements.
The Rogue Valley Association of Realtors expressed concern about the requirements intruding on the property rights of homeowners.
People looking to buy property in Ashland sometimes inquire about the income-producing potential of homes. Property owners who rent out homes to tourists often make twice as much money as those who rent homes to long-term renters.
The income from tourists can help homeowners make their mortgage payments, maintain their properties and meet living expenses, according to supporters of vacation rentals.
— Vickie Aldous
Read more in Thursday's paper.