City Council PLUM Committee Continues Discussion on Short-Term Rentals

Frame from live video of public testimony at Tuesday’s City Council PLUM Committee hearing on short-term rentals regulation.

At a meeting of the City Council’s Planning and Land Use Management Committee on Tuesday afternoon, the committee heard public testimony both for and against proposed regulations on short-term property rentals from more than 100 stakeholders.  In the end, however, the committee delayed a decision on the matter until more data is provided on several critical points.

The proposal under consideration was approved by the City Planning Commission last year. It would set up a registration, taxation, regulation and enforcement scheme for short-term (less than 30 days) AirBnB-style residential property rentals.

As at previous city hearings on the topic over the last couple of years, hundreds of stakeholders on both sides of the issue turned out for the meeting, and made passionate pleas both for and against the proposed regulations.  Unlike at previous hearings, however, where the ratio of speakers pro and con has always seemed about evenly matched, about 2/3 of the stakeholders in attendance Tuesday spoke in favor of rules less restrictive than the city is currently proposing, while only about 1/3 spoke in favor of the proposed, or even more restrictive, regulations.

As expected in the days before the meeting, the major point of contention was the CPC’s proposal that short-term rentals be capped at a maximum of 180 days per year for any one property.  The intended purpose of the cap is to discourage owners of properties that could be rented to long-term residential tenants from renting those units or rooms to short-term visitors instead. The intent is to preserve the city’s affordable housing stock for long-term renters, and assure that permanently settled neighborhoods don’t turn into transient hotel zones, with fewer affordable rental units for long-term residents and fewer on-site property owners and residents who have a vested interest in maintaining the community.

Principal City Planner Ken Bernstein at Tuesday’s hearing

According to Ken Bernstein, Principal City Planner, who also spoke at yesterday’s hearing, the average occupancy for individual short-term rental properties in Los Angeles is 62 days per year. 85% of all short-term rental properties are rented for fewer than 120 days per year, and 92% are rented for fewer than 180 days.  So that would indicate that a cap of 180 days per year would still allow for most of the current rental activity (with room to grow for many individual operators).  But it could also help weed out the kind of full-time short-term rental properties that seem to be most detrimental to neighborhoods and city housing stock, as well as non-resident operators who tend to be most abusive of the system.

In introducing yesterday’s hearing, PLUM committee chair Jose Huizar said the city’s goal in the regulation effort is to protect neighborhoods and the supply of rent-stabilized housing.  But he acknowledged that there are still questions about the best ways to do that…including the proposed cap on rental days, what kinds of accommodations people should be allowed to rent (full or partial units, primary residences and/or investment properties, attached and/or detached units, etc.), and how best to achieve registration and effective enforcement of whatever rules are established.

Currently, the rules proposed by the CPC include:

  • A cap of 180 rental days per year for each property
  • No difference in rules for “hosted” (owners on site) vs. “non-hosted” (owners off-site) stays
  • No short-term rentals allowed in RSO (rent-stabilized) units
  • No advertising of any unit that does not have a city registration number
  • Only one guest/party per property at any one time
  • No commercial activity (such as advertiser-sponsored parties or sales events) at short-term rental properties
  • Rental hosts would pay city taxes, be responsible for following all city health and safety regulations, and be required to obey all lease and HOA provisions when engaging in short-term rentals
  • Rental platforms such as AirBnB would assist in removing non-compliant rental listings and providing the city with contact information for property owners
  • The city would create a system of fines and other dedicated enforcement resources (e.g. 10% of the Transit Occupancy Tax paid by short-term rental owners)
  • 90% of the Transit Occupancy Tax paid on short-term rentals would go toward the city’s Affordable Housing Trust Fund

Public Testimony

During Tuesday’s public comment period, more than 60 short-term rental hosts spoke about their reasons for offering spaces in their homes for short-term rentals.  Common themes were those who have inconsistent incomes from other sources (such as artists, writers and other freelancers), those who are diligently digging themselves out of past financial troubles (due to predatory mortgages, job layoffs, divorces, etc.), those who are unable to hold full time employment (due to illness or age), those who are retired and living on fixed incomes, those who need extra income for specific financial commitments (caregivers for elderly or ill family members, children’s school or college tuition, etc.)…and those who simply would not be able to afford their current homes – or possibly, in some cases, to live in Los Angeles at all – without renting out their extra space.

These speakers generally opposed the idea of the proposed 180-day cap on their rental activity, with many claiming it would severely compromise their ability to maintain their homes and/or other commitments.  And most of them also said that capping the number of short-term rental days allowed would not, as city officials hope, make them more likely to offer the spaces to long-term tenants instead, because they also want and/or need to keep the spaces open for occasional use by family and friends (such as college-age children home during school breaks), which they would not be able to do with full-time renters.

Those speaking in favor of the 180-day cap (or even more restrictive 60, 90 or 120-day caps) included three general groups:  1. people who live in neighborhoods (such as Venice or Hollywood) where large numbers of formerly long-term rental units have been converted to short-term, transient use, which has been a nuisance to full-time neighbors and detrimental to the overall community…2. hotel managers and unionized staff members, who fear the impact of unfettered short-term rentals on one of the city’s largest industries and employers…and 3. housing and jobs advocates, whose clients increasingly find themselves squeezed out of already scarce affordable housing and the jobs they need to pay for it.

These speakers asked that the 180-day cap on short term rentals be kept, or even reduced, in any new short-term rental regulations, to help protect existing rent-stabilized neighborhoods, as well as jobs and affordable housing for those who need them most.  “AirBnB didn’t create the housing shortage,” said one advocate, “but it is exacerbating it.”  And a Venice resident added, “These are our neighborhoods, not a backdrop for a short-term rental bonanza.”

And both sides made their cases well.  In fact, as one speaker noted, “It’s almost like there are two AirBnBs here”…one that helps individuals maintain their homes and lifestyles in a responsible manner, and one that displaces current residents, reduces affordable housing and destroys livable neighborhoods.

PLUM Committee members seemed to agree.  Speaking after the testimony, several of them said they are mindful of the need to act carefully on this issue, because missteps by the city could have harmful effects on hosts, neighbors, neighborhoods, and the city as a whole.

Committee Member Discussion

After listening to the public comments, Committee Member Mitch Englander said he found it “fascinating” how the “sharing economy” (home-sharing, ride-sharing, etc.) is changing the way we live, and how a single technology – such as AirBnB’s home-sharing platform – can create such different views, experiences and lifestyles for different people at the same time.  He also noted, though, that the city needs to base its decisions on facts, not opinions…which is going to be difficult because “the facts are going to change overnight; it’s still evolving.”

Committee Member Marqueece Harris-Dawson agreed on the need for facts to guide the regulatory process, and said the committee should take a “scientific approach” rather than relying solely on anecdotal testimony.  He asked the Planning Department representatives to gather and report back on data about how many housing units have actually been removed from the long-term rental market for conversion into short-term rentals…and how many tenants have been pressured to vacate their units for such conversions.  He noted though, that even if the overall number is something like 20,000 units, it may not seem like a lot in the total housing picture, but it could still make a difference, especially in areas such as Venice and Hollywood, where it’s been reported that one in every 12-15 properties is now a short-term rental.

Harris-Dawson also asked the planning staff to try to gather information on the number of nuisance complaints that have been filed by neighbors of short-term rental properties, acknowledging that these kinds of complaints haven’t been specifically tracked so far because short-term rentals are not currently among the city’s officially legal property uses.

Finally, Harris-Dawson also asked for clarification on why the rules as currently proposed would not allow a resident to rent out an unattached structure on his or her property, such as a garage or guest house…or why they wouldn’t be allowed to occupy their garage or guest house while renting out the main house, or vice versa.  City Planner Matthew Glesne answered that this could be allowed if the city defines “residence” as the whole property and not just the main house.  He noted, however, than any space involved as either residence or accessory space occupied by a resident or short-term guest would have to be officially “habitable,” according to Department of Building and Safety guidelines.

Englander, who noted that he was raised by a single mother who often slept on the couch or floor to make room for others in her apartment, said Angelenos now need to earn about $72,000 a year to afford a 1-bedroom apartment in a fairly low-income census tract…so we do need to protect our affordable housing units.  But he said he is also concerned about overall effects, and the reality that if we solve one problem for one group of stakeholders in the short-term rental issue, it could easily cause other problems for others.

Englander said one very important issue in overall success, if the city allows short-term rentals only within a host’s “primary residence,” as currently outlined, will be the definition of primary vs. secondary residences.  How will we define and verify what is or isn’t a person’s “primary” residence?

Also, he asked, if a person is renting space just in their primary residence, would a cap on the number of allowed rental days really be necessary, since the host would likely be in residence, closer to and more likely to provide better supervision of the rental activity?

Englander suggested that the Planning Department look at best practices from other cities, especially on the issue of enforcement, and consider things like a daily usage fee of $1-$4 for guests, which could be used to fund affordable housing.  He also urged the planners to consider solutions more directly tailored to address current problems – like restricting the number of short-term rental units per neighborhood instead of the number of rental days per property, which might be more effective in preserving neighborhoods and housing units than a cap on the number of rental days per property.

Huizar and committee member Curren Price also asked about alternatives to the cap on rental days, and asked if other cities have tried going without such caps…or requiring only hosted stays (in which the host is always on site during rentals) instead of a cap on rental days.  Glesne said that other cities have found rental-day caps easier to enforce than things like whether or not a host is on-site, because it’s too hard to tell who’s staying at a property at any given time. He also said many cities that didn’t originally have a cap on the number of days a property could be rented are now revising their short-term rental ordinances to include one.  Finally, he noted that the CPC’s current proposal makes no mention of hosted vs. non-hosted stays, specifically because of the enforcement problem.

Several committee members commented that registration procedures, and establishing an owner’s primary residency, will be key to any effective regulation, and asked what kinds of verification methods would be used.  Glesne said the specific registration procedures and validation requirements have not been set yet, but will probably include things like a photo ID showing the person’s residential address, tax statements and utility bills.

Committee member Gil Cedillo said he was particularly compelled by the public testimony about how hosting short-term rentals allows many older residents to age in place (remain in their homes longer as they get older), which is an official goal of the city.  He said it was also interesting to note how the sharing economy has risen out of crises – both the national 2008 financial meltdown and various personal crises – especially among those people who lack pensions and other forms of stable income.  At the same time, however, Cedillo said he shares the concerns of others about the loss of any affordable units from the city’s long-term housing market, and asked for more data on the effects of short-term rental activity on overall housing affordability in the city.  He said the problems seem to come mostly from owners who violate regulations like the Ellis Act and Costa-Hawkins Act, not most individual owners who rent spare rooms in their homes.  As an alternative to the current day-cap proposal, he suggested looking at the 8% of properties that are currently rented for more than 180 days per year, and then crafting regulatory solutions targeted more specifically to those high-activity operators.

In the end, Huizar asked the Planning Department representatives to do some more research and return to the committee with the specific data requested by the committee members. He said another hearing on the subject will be scheduled for late July or early August.

 

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About Elizabeth Fuller

Elizabeth Fuller was born and raised in Minneapolis, MN but has lived in LA since 1991 - first in the Sycamore Square neighborhood, and since 2012 in West Adams Heights/Sugar Hill. She was long-time board member of the Sycamore Square Neighborhood Association, currently serves on the board of the West Adams Heights/Sugar Hill Neighborhood Association, spent 10 years with the Greater Wilshire Neighborhood Council, volunteers at Wilshire Crest Elementary School, and is the co-owner/publisher of the Buzz.

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