Planning Department Releases Staff Report on Proposed Short Term Rentals Ordinance

The Department of City Planning has released a new staff report on the city’s proposed new home-sharing/short term rentals ordinance, along with some minor revisions to the text of the ordinance itself, as it moves on to the City Planning Commission for a new round of hearings and approvals.

In the staff report, Planning staff acknowledge the “intense interest” of stakeholders in this issue, which has resulted in several thousand public comments on the ordinance so far, from members of various groups who have a vested interest.  And the interest isn’t always clear cut – in fact, unlike a great many civic issues, for which residents divide pretty easily into “pro” or “con” camps, the subject of home-sharing seems to contain at least six different stakeholder groups, each with their own unique interests and investments.

The groups most easily identifiable are:

• The city (which is facing a very real crisis in the availability of affordable rental housing and wants to preserve as much of that precious commodity as possible).
• Resident owners or “hosts” of short-term properties, who not only appreciate, but often desperately need the income short term rentals can provide to maintain and even stay in their current homes.
• Absentee owners of vacation homes or other kinds of property, who would like to maximize the potential return on their investments in those properties.
• Neighbors of short term rental properties, who have seen changes in neighborhood character and maintenance with with proliferation of short term rentals in their areas.
• The city hotel industry, which is feeling the pressure of competition from short term rentals in a number of ways.
• Home-sharing platforms, such as AirBnB and VRBO, which have made home-sharing much easier for both hosts and renters in the last few years.
• And travelers, who sometimes prefer and would like to preserve the ability to rent cozier, more home-like accommodations when they visit the city.

In the staff report, the Planning Department acknowledges all of these groups, and its attempt to address the concerns and compliance of each of them in the revised ordinance.

In general, the ordinance would establish a framework to legalize short-term rentals in the city of Los Angeles, with provisions for who could rent property, what kinds of properties can and cannot be rented for less than 30 days, how often properties can be rented and various other provisions that aim to maximize the benefits of short-term rentals, while minimizing their negative effects on the city’s rental housing stock and neighborhood character.

The major provisions of the latest draft – and the issues they’re meant to address – include:

General Provisions

• Officially legalizes, for the first time, use of a “primary residence” for home-sharing and short-term rentals as an “accessory use” of the property. This accommodates resident owners who depend on short-term rental income to maintain their homes and lifestyles.
• To qualify as a primary residence, the owner/host must reside there for at least six months of the year. This assures that only “hosted” rentals, with responsible owners on site, will be allowed.

Registration and Eligibility

• Hosts must register their rentals and obtain a Transient Occupancy Registration Certificate from the city’s Office of Finance. This makes it easier for the city to keep track of legal rentals and to follow up on potential complaints of violations, and it makes it possible for the City to collect a Transient Occupancy Tax from registered owners.
• Renters or lessees may not engage in home-sharing without prior written approval of their landlord. This assures that hosts are not renting out properties they do not own without the owner’s permission.
• Renters and owners must also abide by rules or prohibitions of homeowners or condo associations regarding home-sharing and short-term rentals. This acknowledges the rights of those organizations to continue to govern their properties as they have traditionally done.
• Buildings used for home-sharing cannot have any open Orders to Comply or code violations, unless they are unrelated to the safety or habitability of the building. This helps to assure that short-term rentals will be safe for renters.
• No single person can apply for or obtain more than one home-sharing registration, or operate more than one home-sharing unit or guest room. This helps to control the size and nature of rental groups by assuring that owners are not renting multiple rooms, or multiple beds, in a single unit to unrelated parties.
• The registration number of each registered unit must be shown in any listing for the unit. This makes listings more trackable by the city and the rental platform, and provides a useful tool for followup on possible violations.

Prohibitions

• No one may rent a unit for more than 120 days per year. This helps the city assure that units that could be rented for year-round use by city residents are not being removed from the rental market in favor of housing more transient stays. (Note that the original draft ordinance specified a 90-day maximum rental…but it was extended after outcry from resident hosts, and after an AirBnB study revealed that 84% of its hosts in Los Angeles rent their properties for an average of 62 nights per year.) Owners wanting to rent for a greater portion of the year would have to apply for a Conditional Use Pernit  or Bed and Breakfast permit (depending on the type of property and zoning).
• Rentals may only be for areas approved for residential use. Rentals of vehicles, storage sheds, rec rooms, trailers, garages and temporary structures (e.g. tents) are not allowed. This helps assure the safety and comfort of short term rental customers, as well as helps to preserve neighborhood character and quality of life by making sure the occupancy/density of a property does not change via short-term rentals.
• A second dwelling unit on a property may be used for short term rentals only if it is the host’s primary residence. This helps assure that a host is present in all rental units during a guest’s stay.  (Although there has been some opposition to this provision by homeowners who would like to be allowed to use a guest house on their property for short-term rentals.)
• Hosts may maintain multiple listings for a property, but only one listing may be booked at a time. This helps assure that a space is booked to only one party at a time.  Multiple listings would allow a host to simultaneously advertise both a room in a shared home and the full home…but concurrent bookings of the shared and full space would not be allowed.
• Hosts may not rent all or a portion of a home to more than one group of guests, under more than one booking at a time. See the above provision.
• Home-sharing is not allowed in units that are subject to the Rent Stabilization Ordinance (rent control), or which are income-restricted under city, state or federal law. This is intended to help preserve more affordable units for full-time rentals to city residents, and reduce the number of rental units being removed from the market in favor of short-term rentals.  (Because large swaths of the city – including our own mid-town area – include a large number of RSO properties, however,  it could effectively ban short-term rentals in some older neighborhoods…which has been another controversial point of contention with several stakeholder groups.)
• Units converted from coverage under the RSO to single family use will not be eligible for short-term rentals until five years after the conversion. Another measure aiming to preserve the city’s stock of rental housing by preventing the removal of long-term rental units from the rental market.
• Non-residential uses including sales or exchange of products, events that charge a fee, or the promotion, display or servicing of products cannot be conducted at the property. This provision aims to help prevent the use of short-term rentals as unattended “party houses,” which have irritated neighbors with noise, traffic, litter and other issues.

Host Requirements

• Hosts are responsible for all nuisance violations. This helps ensure that hosts/owners take an active interest in renters’ behavior at their properties.
• Hosts much keep and preserve all rental records for a period of three years. This helps the city track legal and illegal rental activity.
• Hosts must pay the city’s Transient Occupancy Tax on all rentals. This helps ensure that the city shares in the rewards of short-term rental activity within its boundaries.
• Hosts must provide and maintain safety items such as fire extinguishers, smoke and carbon dioxide detectors, etc. This helps ensure the safety of short-term renters.

Platform Requirements

• Platforms such as AirBnB must actively prevent, remove and cancel any illegal listings and bookings (e.g. those without registration numbers, those from hosts with multiple listings in the city, or those for units rented more than 120 days per year). This helps the city track and regulate short-term rental activity, which is a necessary element of enforcement.
• Platforms must work with the City Planning Department to identify contact information, invesigate and resolve any violations.  Another mechanism necessary for tracking and enforcement.
• Platforms must provide the city with a monthly electronic log of registration numbers, addresses of advertised properties and numbers of nights the properties were booked.  Ditto.  Although in response to the initial complaints of hosts, citing privacy concerns, this would not be considered public information.

Enforcement

• Violations by hosts will be classified as misdemeanors, and violators may be charged inspection fees. Helps to hold hosts accountable for compliance.
• Platforms violating the ordinance my be fined $500 per day for illegal listings, $1,000 per day for refusal to provide addresses of unregistered short term rentals, and $1,000 per day for refuing to submit the required monthly documents. Helps to hold platforms accountable for their compliance.
• Owners/hosts violating the ordinance may be charged a minimum $200 fine, or two ties the nightly rent, per day for a non-compliant listing, $2,000 per day for rentals beyond the 120-day limit, and various other possible administrative fines if proper permissions were not sought. Futher helps to hold hosts accountable and discourage non-compliant behavior.

Next Steps

The City Planning Commission will consider the Planning Department’s report, and will hold a new public hearing on the proposed ordinance on June 23, at 10:00 a.m. in room 340 of City Hall, 200 S. Spring St.

Meanwhile, as the ordinance makes its way toward official status, City Attorney Mike Feuer announced in a social media post on Sunday that his office is beginning prosecution of illegal short-term rentals of affordable housing properties…which his office called “especially heinous given our shortage of affordable housing stock.”  We’ll have more details on that effort as they become available.