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
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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permit has not been revoked.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.
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Short-Term Lodging Permitted
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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.
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Short-Term Lodging Permits Revenue Generation
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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
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Active Short-Term Lodging Permits
Concentrated Areas
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Revenue Trends
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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
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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.
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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.
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Screen shot from
airbnb website for
Newport Beach
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The Internet Effect- continued
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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.
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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?
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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.
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What are Other OC Beach Cities Doing?
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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
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Questions
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