Note: This guide relies exclusively on the provided Mercer Island legislative page. It does not rely on city code pages that were not provided. Where city or county procedures are not addressed in the source, that is explicitly stated and state‑level defaults are indicated.

Overview: Are STRs Allowed on Mercer Island?

• Allowed: Yes. The provided city material does not prohibit short‑term rentals. It does, however, specifically contemplate ADUs being used as short‑term rentals by stating owner‑occupancy may not be required “except when an ADU is used as a short‑term rental.” This implies STR use is a permissible use of ADUs under state law, subject to general requirements.
• Basis: State middle housing/ADU requirements for Mercer Island (HB 1110, HB 1337, SB 5258) as implemented locally; see “Legislative Requirements — ADUs,” “Legislative Requirements — HB 1110.”
• Land types eligible: ADUs are allowed on all single‑family‑eligible lots, which on Mercer Island include the R, MF, PBZ, and TC zones (HB 1337 applies where single‑family development is permitted).

How to Start a Short‑Term Rental Business on Mercer Island

• Confirm zoning eligibility:
  • If the property is in R, MF, PBZ, or TC (zones that permit single‑family homes), ADUs are allowed and may be used as STRs per HB 1337 (owner‑occupancy is not required except when an ADU is used as an STR).
• Develop the unit:
  • ADUs may be attached, detached, or conversions of existing structures (e.g., garages). Cities may not make ADU development regulations more restrictive than those for principal units.
  • Must allow at least 1,000 square feet of floor area per ADU and at least 24 feet in height for detached ADUs; detached ADUs may be sited on the rear lot line if it abuts an alley.
• Comply with building and safety codes:
  • The same health, safety, and environmental rules that apply to the principal unit apply to ADUs (e.g., building and fire codes, critical areas, shoreline program).
• Prepare operations:
  • Identify whether you will operate the ADU as an STR and, if so, be prepared to document tax and licensing obligations, if any. The provided source does not specify a city STR permit; state lodging taxes typically apply.
  • Establish cancellation, booking, guest screening, and local response procedures. The provided source does not contain a local nuisance or maximum stay rule for STRs.
• Finalize fit‑out and listing:
  • After permits and inspections, list the STR and ensure the listing discloses occupancy and use expectations consistent with the ADU permission framework.

Required Documents, Permits, Licenses, and Guidelines

Based strictly on the provided content:

• Documents/Permits:
  • ADU permit(s) for attached/detached/conversion units (must meet ADU rules; at least 1,000 sq ft floor area; at least 24 ft height if detached; rear‑lot‑line siting allowed if an alley abuts).
  • Building/fire and health/safety approvals consistent with the principal unit and applicable environmental codes.
• Business registration/tax:
  • State lodging taxes likely apply for STR operations, but the provided source does not specify Washington State Department of Revenue registration requirements, nor does it provide any city tax or registration detail.
• Local STR permit/license:
  • The provided source does not specify any Mercer Island short‑term rental permit or registration procedure.
• Unit lot subdivision and land division:
  • SB 5258 requires procedures allowing unit lot subdivisions on single‑family/ADU/middle housing projects where units are not stacked; zero‑lot‑line subdivision is also required. This enables sale of townhomes/cottages and detached/side‑by‑side forms on separate unit lots.

Specific Regulations — City, County, and State

• ADUs (HB 1337) — state law governs Mercer Island:
  • At least two ADUs per lot on all lots that permit single‑family development.
  • ADUs may be attached, detached, or conversions; 1,000 sq ft minimum floor area per ADU; at least 24 ft height for detached ADUs.
  • Development standards cannot be more restrictive than those for principal units.
  • Owner‑occupancy may not be required “except when an ADU is used as a short‑term rental.”
  • Impact fees: up to 50% of the rate applicable to the principal unit.
  • Parking: No off‑street parking required within ½ mile of a major transit stop. For lots <6,000 sq ft: max 1 space/unit; for lots ≥6,000 sq ft: max 2 spaces/unit. No public street improvement requirements for ADUs.
• Middle housing (HB 1110) — applies in Mercer Island’s residential zones (R‑8.4, R‑9.6, R‑12, R‑15):
  • Mercer Island is a Tier 2 city (≥25,000 and <75,000 residents) and must allow middle housing on residential lots (roughly 7,500 residentially zoned lots).
  • Cities must allow a set of middle housing types with administrative design review only; standards cannot be more restrictive than for single‑family homes.
  • Unit‑density: 2 units per lot minimum; 4 units per lot if the lot is within ¼ mile walking distance of light rail or if at least one unit is affordable to households at ≤60% AMI (rent) or ≤80% AMI (owner). Affordability must be maintained ≥50 years via covenant.
  • Parking: Same limits as ADUs (½ mile from major transit stop = no parking; <6,000 sq ft lots: 1 space/unit; ≥6,000 sq ft lots: 2 spaces/unit).
  • Middle housing density applies only to middle housing units; single‑family and ADUs are separate and can co‑exist on the same lot.
  • ADUs may optionally count toward HB 1110 unit density, enabling mixed scenarios (e.g., a single‑family home plus two ADUs).
• Unit lot subdivision (SB 5258):
  • Cities must allow unit lot subdivisions (zero lot line subdivisions) for non‑stacked housing types to facilitate sale of individual units (e.g., townhomes, cottages, side‑by‑side duplexes, triplexes, fourplexes). Stacked flats/courtyard apartments are not suitable for unit lot subdivision.
• City‑specific STR rules:
  • The provided source does not include Mercer Island’s short‑term rental ordinance, permit requirements, or business license information.
• County rules:
  • The provided source does not include King County short‑term rental requirements or tax procedures.

Contact Information (Local Authority in Charge of STRs)

The provided sources do not specify a short‑term rental contact. As a starting point, reach out to the city of Mercer Island and the Washington State Department of Revenue (DOR) for tax registration and reporting. The city’s legislative page contains contact prompts and social sharing features, indicating an online information channel.

• City of Mercer Island — legislative updates and ADU/middle housing policy:
  • Provided link: Legislative Requirements page under Middle Housing and ADUs (see “Links” below).
• Washington State Department of Revenue (general STR lodging tax registration and reporting; typically required for STR operators):
  • Contact via DOR’s tax information pages (not included in provided sources).

Links to Source Pages

• Legislative Requirements (Middle Housing and ADUs) — City of Mercer Island:
  • letstalk.mercergov.org/middle-housing-adus/news_feed/legislative-requirements

What remains unknown from the provided content (and therefore cannot be asserted here)

• Whether Mercer Island requires a separate STR registration/permit or business license beyond ADU approvals.
• Local occupancy, maximum stay, or nuisance standards (if any).
• Whether Mercer Island administers lodging taxes locally or requires specific disclosures.
• King County short‑term rental rules/tax procedures (county page not provided).

Investors should verify these points with the City of Mercer Island and the Washington State Department of Revenue before listing.