More than 1,000 Westside homes have become short-term vacation rental properties, letting tourists live like locals while regulators worry about zoning and taxes
By Gary Walker and Joe Piasecki
A luxury waterfront master suite overlooking Marina del Rey harbor, $150 per night.
A cheery one-bedroom apartment near the Venice canals and ultra-hip Abbot Kinney Boulevard, $125.
A bungalow with a private garden just a block from Santa Monica beach, $89.
More than 1,000 such listings exist throughout Westside destination neighborhoods, but these aren’t hotel rooms the way hotels are traditionally defined.
These are private homes in residential neighborhoods, with owners renting rooms to tourists through mutually beneficial but largely unregulated — and in some cases technically illegal — transactions brokered online as part of a multibillion-dollar “sharing economy.”
Much like rideshare services Uber and Lyft, which have disrupted the taxi industry by using smartphones to connect drivers with spare time to those in need of a ride, short-term vacation rental websites like AirBnB and HomeAway have set up a thriving peer-to-peer economic network connecting private individuals with spare housing to consumers seeking a more personalized travel experience.
“That’s the whole concept: Living like a local,” explained Ross Chapman, a Santa Monica information technology specialist who owns three painstakingly restored 1920s Venice bungalows on Grand Boulevard that he rents for days or weeks at a time.
“It puts people in an area they’re seeking to explore … right in the middle of all the local color,” he said. “The guests adore staying here. It’s been a blast.”
Chapman’s participation in the global vacation rental network has been a socially and economically rewarding win-win-win for him, his guests and the local economy.
His formerly rundown bungalows, renovated by previous owners for use as short-term vacation properties, rent for $250 a day, $1,500 per week or $5,000 per month — with Chapman paying the city a 14% transient occupancy tax on each transaction, the same as commercial hotels pay.
Share and share alike
One big issue for local governments, however, is that many vacation rental providers aren’t nearly as honest, the Internet platforms that connect owners to renters are absent from the tax equation, and regulators are pretty much totally out of the loop.
In May, Los Angeles City Councilman Mike Bonin and Council President Herb Wesson filed a motion calling on their colleagues to form a task force charged with bringing city codes and regulatory agencies up to date — and equipped to collect revenue.
“The ‘sharing economy’ is redefining the ways that goods and services are being exchanged. Residents are now fulfilling new roles and performing new tasks that have normally been carried out by businesses. … Companies like AirBnB, recently valued at $10 billion, bring in hundreds of millions of dollars in the shared tourists trade but do not charge hotel taxes, depriving cities of millions of dollars in tax revenue,” the motion reads.
If those numbers sound staggering, they are. AirBnB currently lists more than 1,000 short-term vacation rental properties in the Venice, Santa Monica and Marina del Rey area. Home Away lists 341 in Venice, 270 in Santa Monica and 96 in Marina del Rey. VRBO (Vacation Rentals By Owner), another site, lists 355 in Venice, 295 in Santa Monica and 87 in Marina del Rey as well as six in Playa Vista and 15 each in Playa del Rey and Culver City.
Like Los Angeles, Santa Monica’s hotel tax is 14%. Unincorporated Los Angeles County communities, including Marina del Rey, charge 12%.
Some cities have pushed online vacation rental advertising networks to collect hotel tax receipts from users and deliver them to local coffers.
“We’ve launched a program to collect and remit taxes in Portland and San Francisco, and we’re working to expand this initiative,” said Nick Papas, a spokesman for AirBnB.
Whether Los Angeles would be part of that rollout, Papas wouldn’t say.
Laws are ‘behind the times’
Taxes aren’t the only issue, however. In residential neighborhoods, zoning codes don’t allow property owners to rent homes, condos and apartments as temporary accommodations rather than leasing them as permanent dwellings.
In Los Angeles, the response to the zoning conundrum has been relatively nonexistent.
Benjamin Reznik, a prominent Los Angeles land use attorney, said a big part of the problem of regulating short-term rental arrangements stems from the city’s outdated community planning guidelines.
“Our codes do not keep up with the times. Short-term vacation rentals are a new phenomenon, and our planning codes are not designed to deal with them. The Internet has taken what was underground and brought it aboveground,” Reznik said.
Keeping up with the times is also important in the long run, he said, to prevent large-scale building owners from taking rental units out of the permanent housing stock to chase more lucrative short-term contracts.
“They have to find a way to regulate their density in order to keep [short term rentals] from becoming full-scale hotels in residential areas. And as cities begin to grapple with regulations, certain homeowner groups, large hotels and unions that represent hotel employees may soon pressure city leaders on how these regulations are designed,” Reznik continued.
In Santa Monica, the law is much less muddy — short-term vacation rentals are against the law in residential neighborhoods — but enforcement has been more reactive than proactive.
Despite the hundreds of Santa Monica vacation rentals available online, the city has prosecuted just two related cases in the past four years.
In 2010, the city prosecuted the owner of a single-family home on Navy Street that was used for short-term rentals and, through a plea agreement, ordered him to pay thousands of dollars in fines, said Santa Monica City Atty. Yibin Chen.
City officials moved after receiving numerous noise, traffic and safety concern complaints from neighbors who said the residence had essentially evolved into a commercial hotel.
“Short-term rental operations are essentially the operation of a hotel. In order to operate a hotel, you need a permit,” Chen said. “Engaging in short-term vacation rentals is no different than any other business.”
The new ‘Range Wars’
Some who live near short-term rental properties and others concerned that having new neighbors each week erodes the character of neighborhoods have sought an outright ban on the practice.
William Ballough, a resident of Playa del Rey for 20 years, owns two duplexes adjacent to a property used for short-term rentals. He and his long-term tenants now deal with a constantly changing cast of neighbors who bring with them noise, traffic and other disruptions.
“You never know who’s walking by your residence or down your street, and you don’t know what they’re up to,” Ballough said.
Carl Lambert, who owns the Venice Breeze Hotel, is supportive of city efforts to collect hotel tax revenue from short-term rental operators and would like to see more operational guidelines as well.
“They should also verify that housing is safe, and it’s important to ensure that the neighbors living near these rentals are respected,” Lambert said. “It’s also incumbent that there be responsible people available who are able to respond to neighborhood complaints.”
An effort to ban short-term rentals in Los Angeles arose last year in Silver Lake, a hip and artsy neighborhood with similar demographics to Venice where the phenomenon has also taken off.
A land use committee of the Silver Lake Neighborhood Council put forth a resolution calling for a ban that was, however, ultimately defeated after a group formed in support of sharing economy commerce organized against it.
A town hall meeting held to discuss the resolution was dominated by members of Peers, an organization that supports short-term rentals and ridesharing, said Silver Lake Neighborhood Council member Anne Marie Johnson, chair of that committee.
“People are concerned about the use of single-family homes as businesses,” said Johnson, who took the position that short-term vacation rentals are illegal. “Peers infiltrated our town hall and several people left the room because of them. They are not a community group. To me, they are a lobbying group.”
The resolution went down in defeat in December. Johnson, an actress who starred in TV’s “In the Heat of the Night,” said Peers also mounted a challenge to her reelection in April.
Late last year, the Venice Neighborhood Council also considered but ultimately defeated a resolution that would have asked the City Council to investigate the proliferation of short-term vacation rentals in Venice and to draft a city ordinance that would regulate the practice.
That resolution, also heavily opposed by Peers, lost on a vote of seven to three, with two members abstaining.
Venice Neighborhood Council Vice President Marc Saltzberg, who drafted the resolution, fears that the ultimate conclusion of the sharing economy is its exploitation by big business.
“This could become the equivalent of the range wars of the 1870s,” he said, referring to territorial skirmishes over water and grazing rights in the days of the Old West.
“I’m sorry that our board did not pass our motion, but in terms of what the city is planning to do, I’m 100% behind it,” Saltzberg said. “My hope is that the task force will define areas of economic activity that they want to examine, including Uber and participants from both sides of short-term vacation rentals.”
Regulation does not necessarily mean contraction, however.
The Bonin-Wesson motion also contemplates how the city might reduce barriers to broader public participation in sharing economy activities while also building in public protections, following a similar recommendation issued last summer by the U.S. Conference of Mayors.
The city “should also explore the feasibility of expanding its sharing infrastructure, promoting existing sharing enterprises, incubating sharing economy startups, utilizing idle public resources and what are the advantages in doing so,” the motion reads.