After months of discussion and deliberation, the West Hollywood City Council on Monday will consider allowing residents to rent out spare rooms or couches to visitors so long as they remain on the property as hosts.
In July the Council asked City Hall to present an amendment to the current city law, which bans all rentals of housing units for fewer than 31 days. The city had banned short term rentals to prevent owners of apartments and houses from taking them off the regular rental market, much of which is regulated by rent stabilization rules. The amendment to be presented on Monday has already been reviewed by the city’s Planning, Rent Stabilization and Business Licensing commissions.
While an earlier version of the proposal limited to 90 the total number of days someone could rent out part of his home, the latest version suggests the Council increase or eliminate that cap. At previous discussions of the proposal, such as that at the Planning Commission, some residents said they could not afford their apartments without being able to share them with travelers. Some also said the 90-day limit was too restrictive.
The proposal also would also require those who want to rent out space in their homes to get a city license. It notes that a fee of $175 per license would cover the cost of managing the licensing program. But the proposal suggests charging only $50 to make it more likely that residents would comply with the license requirement.
The proposal would put in place a tax on revenue from short-term rentals of owner-occupied dwellings, which City Hall estimates would generate revenue of $70,000 a year for the City of West Hollywood. Currently the city’s hotels pay a room tax of 12.5%, the money from which is the city’s largest single source of general fund revenue.
However, it notes issues that the City Council should consider, given the number of illegal short-term rentals in West Hollywood. “… With the rise in popularity of short-term rental websites like AirBnB, Flipkey and VRBO, the city has seen a proliferation of illegal short term rentals,” the proposal notes. “As of March 2017, there were over 1,000 short term rental ads for units in West Hollywood. This equates to over 500 per square mile.”
One issue is the impact on existing hotels if the city implemented the occupancy tax on licensed short-term rentals but didn’t pursue illegal listings to make them pay it, thus allowing them to undercut the room prices at hotels.
Collecting from all short-renters, licensed or not, would generate much more revenue. “According to information provided to staff by AirBnB, between August 2016 and August 2017, $17 million dollars of revenue was generated by AirBnB listings,” the proposal says. “If taxes were collected for all of these listings, the city would have collected over $2 million in TOTs (transit occupancy taxes). This does not include any taxes paid for listings from other platforms.” However, if the city did pursue illegal renters to collect taxes, some might argue that the revenue would give the city an incentive not to crack down on those who rent without a license so long as they were paid.
The proposal also raises the question of whether the city should require those doing short-term rentals to pay for liability insurance (which Airbnb offers its customers).
Those who want to rent out a portion of their homes to short-term guests must have the permission of their apartment building owner or of the condo’s homeowners association. The number of occupants permitted, including the permanent residents, is two times the number of bedroom plus two. In other words, a studio apartment can house two people and a one bedroom can house up to four. Occupants of inclusionary housing or owners of buildings whose tenants have been evicted under the Ellis Act during the previous seven years may not allow short-term rentals of their property.
The City Council will consider the proposal at its meeting at 6:30 p.m. on Monday at the West Hollywood City Council Chambers, 625 N. San Vicente Blvd. south of Santa Monica. Parking is free in the five-story structure behind the chambers with the parking ticket validated at the Council meeting.