L.A.’s plan to tax and regulate short-term rentals would have teeth

By Gary Walker

New city rules would rein in L.A.’s free-for-all vacation rentals market

New city rules would rein in L.A.’s free-for-all vacation rentals market

A long-awaited plan by Los Angeles city officials to deal with the proliferation of short-term vacation rentals in an already tight housing market would limit hosts to renting out a single unit for no more than 90 days a year.

Vacation rental hosts would also have to register with the city and pay the same 14% transient occupancy tax currently levied on hotels, according to a proposed city ordinance made public last week.

Online brokers such as Airbnb, meanwhile, would be responsible for reporting listings and transaction information to the city and face penalties for advertising illegal rentals.

Hosts who fail to register and pay the hotel tax would be fined the greater of $200 per day or twice the daily rent charged. For each day over the annual rental limit, hosts would have to pay $2,000.

Short-term rental brokers would face fines of $500 per day for advertising illegal listings and $1,000 per day for refusing to provide the city with addresses of unregistered listings.

Airbnb has publicly supported the idea of Los Angeles crafting clearer regulations for short-term rentals — they’re technically prohibited in many residential neighborhoods, though these rules are rarely enforced — but was quick to speak out against the proposed fines.

“While appreciating this is an important first step, the proposal has a number of specific elements that will hurt middle-class Angelenos who depend on home sharing to make ends meet, like imposing thousands of dollars in fines without first giving residents a chance to comply, which could lead to evictions and foreclosures,” Airbnb spokesman Christopher Nulty told The Argonaut.

“In addition, the proposal takes a step backward, putting consumer privacy at great risk by requiring online platforms to give the government unfettered access to confidential user data without any idea of how that information would be used,” Nulty said.

The Los Angeles Department of City Planning drafted the ordinance at the urging of Los Angeles City Councilman Mike Bonin, who represents short-term rental hot beds in Venice and Playa del Rey, and City Council President Herb Wesson.

Bonin, who says the city only wants Airbnb and its competitors to report what units are being rented and when, feels OK about the proposed fine structure but said he will “listen carefully” to hosts and brokers during public hearings prior to votes by the Planning Commission and City Council.

The ordinance would ban home-sharing in city-designated affordable housing and in units that fall under the city’s Rent Stabilization Ordinance, which limits annual rent hikes to 3%. Hotel tax proceeds from short-term rentals would go into an affordable housing trust fund.

Bonin, who believes city officials must take action to lower basic housing costs in Los Angeles, called the ban on short-term rentals in affordable and rent-controlled units “absolutely essential.”

Robert St. Genis, executive director of the Los Angeles Short Term Rental Alliance, opposes the exclusion of rent-stabilized units, in part because there are many of them.

“These properties go to market value when a tenant vacates the premises, so you are just hurting a newer resident in [one of these units] if they need the money to pay the high rents in L.A.,” he said. “And what about the person who has a once-in-a-lifetime opportunity to go and do something [for several months in another city] and lives in a rent-controlled apartment?”

Maria Reyes, a Playa del Rey homeowner who self-identifies as being in favor of short-term rentals, described the proposed ordinance as “thoughtful and well done, taking everything into consideration and balancing concerns.” But she’s unclear how the single-property rule would apply to the duplex she lives in with her sister.

Playa del Rey homeowner Lucy Han, part of a campaign against the proliferation of short-term rentals in that neighborhood, says the ordinance could be tougher on short-term rental brokers.

“I like the high fines for the hosts, but they’re too low for the platforms. Airbnb can afford to pay small fines like these,”
Han said.