Vacation Rentals Roil Beach Neighbors – Issue to Be Taken Up by City Council

Councilwoman Zapf to Hold Hearings in April

Neighbors of some housing units that are used as vacation rentals in the beach areas are upset. And the new city councilwoman for the district is getting an earful from residents in Pacific Beach and Mission Beach. Her office has received multiple complaints from constituents about beach homeowners who have made their homes into full-time rentals and their unruly visitors.

Not coincidentally, PB and Mission Beach are the 2 neighborhoods with the highest concentrations of Airbnb rentals.  Zapf told the Voice of San Diego that she heard the concerns of residents at a recent PB town council meeting almost “near tears” in accounts of the “constant rotation of people coming and going”.

Zapf’s land use subcommittee will probably discuss the issue and Councilman Chris Cate’s proposal at its April meeting.  She has announced her subcommittee would hold an April hearing to discuss updating the city’s outdated vacation rental laws. Her staff has been researching how other cities enforce vacation rentals, especially in areas near the coast, and is likely to bring proposals of their own to the subcommittee that she chairs. PB residents will be taking up the issue again at a meeting on March 3rd.

The issue has bubbled up recently because of the skyrocketing activities of such online hosting businesses as Airbnb. And there is a lot of confusion among homeowners, city politicos and bureaucrats. And it’s not limited to San Diego.  Los Angeles is also grappling with the problem right now.

Just because tourism is a big part of the economy here in San Diego doesn’t mean the city is dealing with changes in how people from other parts of the country and world schedule their visits here. The city just really doesn’t have 21st century rules for Airbnb and other such website hosts. Airbnb hosts more than 3,100 rentals in San Diego. Yet, only 1,776 short-term rental operators are currently registered with the city.

So, there’s multiple problems.

Some believe that the city should be collecting taxes and fees on all these short-term rentals. And meanwhile, San Diego homeowners who rent out rooms using these type of websites are not certain just what taxes they are required to pay, KPBS  has learned.

The City is dealing with the issue from various points. The City Treasurer has recently issued a Memo that is supposed to clarify the regulations for those who use website hosts to rent out rooms on a short term basis. Along with this memo is a “crackdown” by the City on Airbnb and other hosts. It just sent out 252 letters stating they owe taxes on the rooms they rent. City Treasurer Gail Granewich wrote:

“As a result of our efforts, we have seen an increase in applications and payments.”

Granewich stated, as reported to KPBS :

since Feb. 10, 1,776 short-term rental operators were registered with the city, an increase of 187 since Oct. 1, she wrote. She said that uptick in registration means the city has collected more than $105,000 in taxes “and related penalties” from 95 of the 187 newly registered hosts. Those penalties can include back taxes and late fees. Granewich wrote the city saw an increase of almost 400 percent in taxes and fees from the same time period last year.

Back on the City Council, Chris Cate plans to propose new city rules that will supposedly clarify that San Diegans can rent out their homes or individual rooms for up to 30 days, rules that are accompanied by new requirements. Under these proposals, vacation rental hosts must post contact info for a local person who is responsible and who can respond to the complaints of neighbors’ complaints, plus they must list city tax certificate number on those websites where their property is advertised.

As the VOSD reported:

Cate’s proposal would also allow the city to reach an agreement with Airbnb or other vacation rental platforms to have those companies collect and pay taxes, an option he said the city’s current rules don’t allow.

Cate’s measure also aims to give the city more room to police hosts who allow more than a dozen guests to stay in a single apartment or home, a practice that angers homeowners in some beach communities.

… The city has been mailing letters to dozens of hosts, informing them they’ll need to charge hotel bed taxes, and in some cases, owe back taxes on past stays. … The city’s actions left hosts even more confused, especially since Airbnb doesn’t allow them to collect taxes directly. Airbnb … collects payments from guests and doesn’t currently give hosts a straightforward way to collect the city’s required 11 percent tax.

That’s not the case in cities such as San Francisco, which last week collected tens of millions of dollars in back taxes from Airbnb rather than hosts. The website has also started paying hotel bed taxes in San Francisco and a couple other cities.

Currently, those property owners who do rent out rooms on a short term basis have to pay three kinds of taxes, as KPBS outlined:

• The Rental Unit Business Tax, which property owners must self report and pay each year.

• The Transient Occupancy Tax, a 10.5 percent tax imposed on any rentals of less than a month.

• The Tourism Marketing District assessment, a 0.55 percent tax on rentals in buildings with less than 30 units.

Hopefully this issue that has all the different sides either upset or confused can be resolved equitably. There’s other sides to this as well. For instance, how can there be a “community” when it’s made up of vacation rentals and time shares? Beach communities such as OB have always had to juggle the demands of the short term visitor and tourist with the needs of the resident and propertyowner. This is another new side to it, inspired by the technology that envelopes us.

News sources:

VOSD    KPBS