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The ‘Republic’ of Santa Monica Regulates Airbnb: Is LA Listening?

EASTSIDER-I know it must seem like I beat up on the City of Santa Monica. I have to admit, though, it’s just so easy to do. But hey, it’s only fair to commend them when they get one right -- in this case, their recent June 2015 Home Sharing Ordinance

 

The biggest thing is what the Ordinance flat out prohibits -- you cannot rent out a home or apartment for 30 days or less, period, when the primary occupant of the home or apartment is not present. Rejoice, Venice Beach! The effect of this Ordinance in Santa Monica has been to reduce listings from around 1700 pre-Ordinance down to only 300. 

Airbnb freaked out. Here’s how they described this on their own website: 

“In deciding whether to become an Airbnb host, it's important for you to understand the laws in your city. As a platform and marketplace we do not provide legal advice, but we want to give you some useful links that may help you better understand laws and regulations in Santa Monica.” 

Of course, this is Airbnb, and they can’t resist a pushback: 

“We're committed to working with local officials to help them understand how Airbnb benefits our community. Where needed, we will continue to advocate for changes that will allow regular people to rent out their own homes.

Last updated: October 6, 2015” 

The reason they’re freaking out, as we have pointed out before, is that the bulk of the profits for Airbnb and their progeny come from a relatively small handful of big time professional landlords (read corporations). As CurbedLA noted a short time ago, this is not because Airbnb is a “nice” dot.com company. No…it’s because they want to go forth and IPO (Initial Public Offering), so that the Bay Area boffins who own it can become billionaires and buy up the rest of Sebastopol..hopefully before San Francisco sinks back into the ocean under the weight of all that Building Boom and Tech. 

The other cool thing about Santa Monica’s approach to regulating short term rentals (they call the ok rentals “Home-sharing”, and the bad rentals “Vacation Rentals”), is that they require the essential disclosure elements I’ve urged before: 

- Hotel Tax (14% in Santa Monica)

- Who the Hosts Are

- Exactly where they are Hosting

- How much they are charging 

This is exactly the kind of data that LA City will need to track and enforce their own Short Term Rental Ordinance. And this is the reason why, last year, Airbnb scrubbed their website in New York of some 1500 listings before they had to publicly release data to regulators. Gee, do you suppose it was the big operator listings that disappeared? You bet. 

We now know for a fact the negative impact these short term rental brokers have in Los Angeles. Hat tip to Jack Humphreville, a recent article at the Harvard Law Review  concluded that Airbnb “increases rents, incentives hotelization, and reduces the affordable housing stock” in Los Angeles. 

Whither goest Los Angeles? 

Officially, no one knows what is going on inside the machinery of Los Angeles City Hall or when there will be a draft of an Ordinance for us to weigh in on. Unofficially, I hear that the bureaucracy has been giving Santa Monica’s Ordinance a hard look, and if true, that would be great. 

I even have a couple of references for them (and us) to evaluate. First, KPCC recently took a look at Santa Monica’s experience since the law went into effect, and found three very interesting things. 

First is their emphasis on how important it is to take commercial vacation rentals off the market and return them to true residential housing. That should resonate with folks who have had their affordable housing ripped out from underneath them by the forces of evil. 

Second, on the enforcement end the City had budgeted some $410,000; they have actually spent less than half of that amount. So, bean counters in LA City take note. 

And finally, just in case anyone actually believes that Airbnb is taking any of this lying down, here is their quote to KPPC on the matter: 

"Santa Monica's clumsily-written law punishes hosts who depend on home sharing to make ends meet or travelers looking for low-cost accommodations along the coast. While we've responded to the city's notices, we continue exploring all options and remain hopeful that the city will revisit these misguided rules that harm middle-income Californians." 

Remember, as PublicCEO noted recently, the billionaire boys have their fortunes at stake if Santa Monica becomes a model. With revenues plummeting, they are afraid of anything that stands to reduce their IPO value. 

And so, the lines are drawn. I hope the Los Angeles draft Ordinance is close to that of Santa Monica. The flat prohibition on vacation rentals makes it pretty straightforward to prosecute violations – there’s not much wiggle room for the well-heeled corporate attorneys. 

At the same time, we have to remember the conflicted position of LA City Attorney Mike Feuer who is actually drafting the Ordinance. On the one hand, he represents the City as he drafts the Ordinance language; but on the other hand, he is also an independent prosecutor. In my world, prosecutors do not take a case to court unless they have at least a 90 percent chance of winning. Welcome to the world of electoral politics. I won’t call it a statutory conflict, but it will be interesting to see how the roles all play out.

Personally, I can hardly wait for the Draft Ordinance.

 

(Tony Butka is an Eastside community activist, who has served on a neighborhood council, has a background in government and is a contributor to CityWatch.) Edited for CityWatch by Linda Abrams.