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HomeMy WebLinkAboutSS2 - Short Term Rental - PowerPoint (Staff) CITY COUNCIL STUDY SESSION JANUARY 26, 2016 Short-Term Lodgings and Rentals January 26, 2016 Item No. SS2 Newport Beach has a long history of Vacation Rentals Balboa Island Balboa Peninsula Corona del Mar Short-term rentals: Part of the culture of certain neighborhoods for decades. Provide lodging with kitchens that accommodates families and other larger groups Provides property owner with an annual overall rental income that is higher when compared to a long-term rental Balboa Island – 1950s 2 Newport Beach Regulations In 1992 the City adopted Short-term lodging regulations (Title 5): Defined “short term” as an occupancy that is 30 consecutive days or less Required a Permit Prohibited Short-term lodgings in R-1 Single Family zones unless a permit was issued prior to June 1, 2004 and that permit has not been revoked. There are 211 “grandfathered” properties in R-1 zones: 91 have an active STLP 120 properties do not have an active STLP, but could get one. 3 Short-Term Lodging Permitted 4 How to Get an STLP Must be in correct Residential Zone Obtain a Short-term Lodging Permit (STLP) and a Business License Pay Transient Occupancy Tax (TOT) Note: Some Homeowners Associations may prohibit short-term lodgings as part of the CC&Rs; a property owner would need to consult with their association. 5 Short-Term Lodging Permits Revenue Generation 6 Short-Term rentals pay TOT similar to the city’s motels and hotels. In 2014/15 the total TOT was $2.2 million from STLPs This is 9% of total TOT ($24.4 million) from all City sources in 2014/15. Active Short-Term Lodging Permits 7 Active Short-Term Lodging Permits Concentrated Areas 8 Revenue Trends 9 FY 10/11 $1,419,986 FY 11/12 $1,478,098 FY 12/13 $1,710,373 FY 13/14 $1,954,588 FY 14/15 $2,216,158 Since Fiscal Year 10/11, TOT revenues from Short- term Lodging have increased 56%. Common Concerns with Short-term Lodgings Commercial use in a residential neighborhood Can reduce the amount of long-term rental housing available Some potential adverse impacts to neighborhoods Excessive noise, late hours, traffic, parking, increased trash Nonpayment of TOT Lack of Management 10 Professional Management Many area properties are professionally managed – that can minimize impacts to the surrounding neighbors and community. Management companies have “rules” for the guests to abide by and provide information regarding surrounding services and resources; who to call in an emergency; etc. 11 The Internet Effect Online companies such as VRBO, FlipKey, and airbnb have created a whole new facet to vacation rentals. Difficult to regulate because online businesses do not have a physical presence here. 12 Screen shot from airbnb website for Newport Beach 13 The Internet Effect- continued 14 Property owners do not obtain proper permits, or collect and remit TOT to the City. Rentals are occurring in single-family neighborhoods where they may not be allowed. Creates a large code enforcement concern; particularly if there is not a local professional management company involved. Also tenants are making their units available for STL without the knowledge or authorization of the property owner. Homesharing – What is that? Typical vacation rentals are for entire units, and the owners are not present. Homesharing means that the owner is present, who rents out a bedroom or even a couch on a short-term basis. 15 An example of “Homer-sharing” Homesharing- continued The Municipal Code does not clearly define “Homesharing” as a type of short-term lodging that requires a permit, business license, and the payment of TOT. Should the Code specifically address Homesharing? If Homesharing is clearly defined should it be limited to the areas where Short-term Lodging Permits are allowed or could it be allowed in any residential unit in the City?  16 Newport Beach is Ahead Regulations in place since 1992 Enforcement is key 2015 – 23 Administrative Citations Issued June 2015 – seasonal employee hired to assist in enforcement Over 250 non-compliant on-line listings identified Of those, 131 obtained the required permits City collected $218,700 in fees and TOT as a result of the enforcement effort Staff is in contact with airbnb regarding short-term rentals in the City which are part of their network. 17 What are Other OC Beach Cities Doing? 18 Laguna Beach issued moratorium on new permits until 10/1/2016 Dana Point revised regulations in 2013 to allow in residential and mixed-use zones Huntington Beach prohibits short-term rentals San Clemente is currently amending their regulations Next Steps? Is Council interested in: Opening up more geographical areas for vacation rentals? Adopting regulations for homesharing? Adopting standard operational guidelines for vacation rentals? Dedicating additional staff resources to enforce City regulations? Pursuing agreements with the online services to disclose rental information and submit TOT to City. Pursuing more legal options to ensure Municipal Code compliance, whether it be the property owner or larger umbrella entity, if applicable 19 Questions 20