Council Reverses Stance on Short-term Rentals

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In a surprise move and after two hours of discussion, the City Council will consider allowing short-term rentals in single-family neighborhoods. In a 4-1 vote, the council dismissed a proposed ordinance Tuesday to ban vacation rentals in all city neighborhoods.

With member Rob Zur Schmiede dissenting, the council formed a subcommittee of council member Bob Whalen and Mayor Steve Dicterow to help staff write a new ordinance regulating short-term rentals.

Council member Toni Iseman urged Whalen and Dicterow to remember painful testimony last year by long-term renters describing their eviction by property owners eager to switch to more lucrative short-term rentals. The city imposed a moratorium on issuing short-term rental permits last May.

Ann Larson, assistant director of community development, said she receives daily calls from people interested in buying Laguna property asking when the moratorium will be lifted.

Among the restrictions discussed were requiring the owner to live at the property and setting a maximum number of weeks the property or part of the property can be rented with a minimum of one week to a maximum of 12 weeks mentioned. The property owner as local resident is pertinent to the approval of the ordinance, council members stated, to discourage investor landlords capitalizing on the popularity of web-based home-sharing platforms.

The moratorium on issuing short-term lodging permits remains in effect until October. A new ordinance will be presented to the council as soon as it can be prepared, City Manager John Pietig said.

Prohibition never works, regulation is more effective, Mayor Steve Dicterow commented. “If we have total prohibitions, we’d have an even bigger problem with monitoring. People will ignore the rules because the profits are just too great. By doing something that’s more reasonable, we provide an incentive to play by the rules,” he said.

“The people who recklessly rented to guys on the weekend who are just having a party, they messed it up,” said Iseman. Complaints have diminished since the city hired a new code enforcement officer, she said.

The council took a 180-degree turn from the proposed ordinance submitted to them by the city’s planning commission, which recommended prohibiting short-term rentals in all residential zones while continuing to allow short-term rentals in commercial areas.

Zur Schmiede said he supported the planning commission’s recommended ban, maintaining that the ban would protect property values and keep family neighborhoods quiet and safe. Already-permitted short-term rentals in both commercial and residential zones, amounting to 81 units authorized under 36 permits, will continue under the same terms, according to the preliminary discussion.

The middle ground – between a ban or fully commercialized vacation rentals in neighborhoods – allows property owners to earn supplemental income while keeping neighborhoods intact under enforceable restrictions, both residents and council members said. Council member Iseman called it the “sweet spot,” even though council members conceded that enforcement will be difficult.

Meanwhile, state Sen. Mike McGuire, D-Santa Rosa, is working with home-sharing platforms, such as Airbnb and HomeAway, to pass Senate Bill 1102 requiring short-term rental companies to collect transient occupancy taxes from renters, his office confirmed Thursday. The standardized system to collect bed taxes would remit 100 percent of the tax money directly to local jurisdictions, according to a fact sheet from his office.

More than 32 people on both sides of the issue took two minutes each to speak to the council.

“From our point of view,” said Carl Kikerpill, a 31-year resident and founding member of Home Share Laguna, a newly formed group supporting short-term rentals, “you have taken one set of stakeholders’ point of view, the ones who have had bad experiences, and built all your case around supporting them. I know a lot of people who can’t afford to live in this town unless they can do some form of home-sharing.”

The council discussed defining home-sharing as applying to a home that is owner-occupied, though the owner need not be present during the rental arrangement. The subcommittee will determine if the ordinance will apply to all single-family and multifamily residential zones. Any new restrictions to short-term rentals would not apply to stays of 30 days or more, which is not considered short-term lodging, Pietig said. There are no special city regulations on rentals for more than 30 days, said Larson.

Manrique Brenes, another organizer of Home Share Laguna, said in an interview Tuesday that he’s trying to keep his house so his children can visit him in the home where they grew up. He rents part of it to ensure he can make payments and his $20,000 in annual property taxes, he said.

The Home Share Laguna group submitted a petition to the city with 267 signatures garnered in 10 days supporting short-term lodging, Brenes told the council.

Other arguments supporting limited-time rentals were that owners were renting to trusted repeat- visitors and that hotel prices were becoming too expensive for many would-be visitors.

Concerns over allowing short-term rentals included disruption to neighborhoods by allowing commercial activity and increasing already-escalating tourism.

Tourism has affected Venice to the point where the Italian city has been depicted as a theme park, said resident Ann Christoph. “It has become a city on exhibit,” she said. “We have to be so careful that this doesn’t happen to Laguna Beach.”

Zur Schmiede pointed to Newport Beach as a more local example of why he supports the planning commission’s ordinance. “I challenge you to go to the peninsula in the middle of the summer because that has been almost wholly converted to short-term rentals,” he said. “What happened up there is it got away from the city and they basically decided if they can’t beat ‘em, join ‘em. It’s a huge money-maker for the city. That is not something I’m concerned with as a council member.”

Ann Marie McKay, an administrative assistant in the city’s community development department, said short-term rentals have eliminated affordable rents. “The number of available long-term rentals will become less and less as short-term rentals are exploding in this city,” said McKay, who said she rents in town.

Social media was also singled out as a culprit to the boom in party-house rentals that get neighbors complaining. “I think this whole thing has exploded because of the internet,” said Johanna Felder, president of Village Laguna, a group that supports preservation. “It’s really unfortunate that this has happened because many people had done home-sharing and short-term rentals and never bothered anybody.”

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