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HomeMy WebLinkAbout2019-12-10; City Council; ; Presentation on the status of the city's short-term vacation rental programthere were 637 STVRs in the city, of which 289 units are licensed and 348 are operating without a license. The majority of STVRs, both legal and illegal, are located within the coastal zone, west of Interstate 5 between the Buena Vista and Agua Hedionda Lagoons, and are hosted within a single-family home (47%). Multi-family homes make up 37% of the STVR base with the dwelling unit type of the remaining-16% of rentals unidentified. Most STVR hosts rent out their entire home (94%) with the remainder of hosts conducting a partial home rental (6%). Airbnb is the most selected advertising platform for hosts accounting for 45% of the rental base with VRBO/HomeAway coming in second with 36% of total advertisements. There are currently 1,033 advertised listings for short-term vacation rentals in Carlsbad with many hosts choosing to advertise on multiple platforms. The median STVR nightly rent in Carlsbad for off season stays is $189 night with the median peak season nightly rents coming in at $297. Transient Occupancy Tax (TOT) collected from STVRs in FY 2018-19 totaled $1,501,665. This figure represents a 74% increase over FY 2017-18. The increase in collected TOT is primarily due to the passthrough occupancy tax collection agreement with Airbnb ($521,975 for FY 2018-19}. The city is currently in talks with VRBO/HomeAway to enter into a similar contract which, if successful, would create automated collection of TOT for almost 81% of the Carlsbad STVR market. The city's STVR Compliance Team, comprised oftwo part-time staff members and a program manager, works to encourage STVR hosts to operate their properties in compliance with city municipal code, assists with STVR business license issuance and renewal process and the shutdown of STVRs operating outside the coastal zone. The STVR team also partners with other city departments and the community at large on compliance efforts. Cooperative work includes working with the city's Finance and Police departments, the City Attorney's office, and property owners/hosts. Cooperation between these groups helps ensure that STVR hosts are to the greatest degree possible compliant with the city ordinance. The size of the Carlsbad STVR market continues to expand year after year with more individuals exploring STVR activities at their properties full or part-time. The high demand of Carlsbad as a vacation destination and the promise of financial return has contributed to property owners choosing to rent their primary residence to others for just a few weeks each year. This type of operator typically does not obtain a business license or permit, nor do they collect and remit the required transient occupancy tax. Many of these operators believe they are immune from the city STVR ordinance because of an Internal Revenue Service (IRS) tax rule. There is a special IRS tax rule regarding the rental of residential and vacation property which states that if a property owner uses a dwelling unit as a residence and rents it for fewer than 15 days per year, the rental income from the property need not be reported. The city saw the addition of over 500 new STVR units, many operating only during the peak demand summer season. Dec. 10, 2019 Item #15 Page 2 of 4 Following is an overview of FY 2018-19 STVR activity: Data element FY 2017-18 FY 2018-19 Change Licensed STVRs 257 289 +32 units Active & identified illegal STVRs (coastal zone) 34 86 + 52 units Active & identified illegal STVRs (outside coastal zone) 40 13 -27 units Total active and unidentified STVRs 174 164 -10 units STVR nuisance complaints & police response 11 STVRs / 24 STVRs / +13 STVRs/ 16 calls 44 calls +28 calls Total non-compliant STVRs 121 184 +63 units Total STVRs in Carlsbad (to date) 1,519 2,094 +575 units The STVR ordinance was updated in 2018, this update included several new operational requirements for STVR hosts including, but not limited to, parking on site to the greatest extent possible, three strikes violations for owners, neighbor notification through and Impact Response Plan and the definition of a bedroom (which is used to regulate occupancy levels at an STVR). These new requirements work together to help ensure that STVR hosts are good neighbors, however the more educated and informed STVR neighbors are about the STVR Ordinance and STVR operational requirements in general, the more they request STVR compliance audits and reviews. The STVR Compliance Team must review on-line listings to ensure that occupancy levels and advertising rules (permit number placed in all ads) are followed and TOT is paid. The increase in the number of STVR units and the need for administrative and enforcement activities goes hand in hand: For example, in FY 2017-18 there were approximately 250 enforcement notices sent to STVR hosts, for FY 2018-19 that number increased to 275 educational letters sent to STVR hosts and over 500 enforcement notices sent to illegally operating STVR properties. Because the likelihood of a STVR enforcement case going on to an Administrative Hearing or judicial review is greater than with a typical code enforcement case, STVR cases are extremely time intensive and have additional procedures that must be followed to ensure due process is applied. The STVR Compliance Team faces several obstacles in fully enforcing the city's ordinance as hosts are becoming more creative in their desire to maintain lucrative vacation rental businesses. To assist staff with STVR identification, notice preparation and enforcement activities, the City Council authorized staff to enter into a contract with Host Compliance in August of 2017. Since that time, Host Compliance has served as a valuable resource in enhancing the capacity of enforcement staff to identify the location of all STVRs within Carlsbad and to assist with STVR revenue tracking. Approximately 70% of Carlsbad's STVR market has both the address and ownership information identified. Approximately 30% ofthe active STVR units in town are unidentified and pop-up STVRs enter the market almost daily. With many non-compliant sites, STVR enforcement ensures that hosts comply with the city's municipal code; to help ensure a balance between enforcement demands and resources, the STVR Compliance Team established the following priority activities: Dec. 10, 2019 Item #15 Page 3 of 4 1) Licensing and TOT collection: New and Renewal 2) Enforcement: STVR cases initiated by resident complaints 3) Enforcement: Hosts outside the Coastal Zone (cease STVR activities) 4) Enforcement: Hosts inside the Coastal Zone (obtain license) 5) Enforcement: Hosts with operational issues at legal STVRs (Occupancy, Permit Posting, Impact Response Plans, etc.) The STVR Compliance Team continues to experience success with providing licensing and permit audit checks, cessation of operation of STVR properties outside the coastal zone and the increase in collected TOT amounts. The Team will continue to work with Host Compliance to identify the addresses of all STVRs in Carlsbad and ensure compliance with permit requirements and operational standards. Fiscal Analysis The annual cost to administer the contract with Host Compliance is $43,811. The TOT collected in FY 2018-19 for STVRs specifically was $1,501,665. It is anticipated that the city will continue to see an increase in the STVR TOT over time as additional STVRs are permitted and TOT is collected. The agreement with Airbnb to collect TOT on behalf of the City of Carlsbad has had a positive impact on TOT collection and the proposed contract with VRBO/HomeAway is also expected to have a positive TOT revenue impact .. Next Steps Staff will implement any new direction provided by City Council. Absent any new direction from the City Council, staff will continue to enforce the existing regulations, including shutting down those homeowners who are operating STVR properties outside the coastal zone. Efforts will continue in collecting the TOT required from STVRs, and to work with Airbnb and other online STVR platforms to assist in these efforts. Environmental Evaluation (CEQA) Pursuant to Public Resources Code section 21065, this action does not constitute a "project" within the meaning of CEQA in that it has no potential to cause either a direct physical change in the environment, or a reasonable foreseeable indirect physical change in the environment. Public Notification This item was noticed in accordance with the Ralph M. Brown Act and was available for viewing at least 72 hours prior to the scheduled meeting date. Exhibits None Dec. 10, 2019 Item #15 Page 4 of 4 Tammy Cloud-McMinn From: Sent: To: Subject: Friday, December 6, 2019 2:09 PM Council Internet Email; City Clerk December 10 Council Meeting -Item 15 Dear Members of the Carlsbad City Council; I have followed from a distance the short term rental requirements in Carlsbad. All Receive -Agenda Item #J--6 :: :_ , e -;- For the Information of the: . ; ~. 12 ;,· ,: Cf/)~OUNCIL _ ,,,- Date CA V'cc V CM _Lcoo ~CM (3) / I have a house (3322 Venado Street) on a .88 acre lot. We have off street parking that during gatherings commonly allows 8 cars to park off street (out of street view) -not including garages. We also have an approx. 250 square foot 'pool house' (permitted). I have wondered about making this available for short term rental and understand that at this time that is not allowed. We are not in the coastal zone. I understand and support the City's efforts to minimize the negative effects that short term rentals can have on neighborhoods. However, while I don't expect the world to move based on my unique circumstances, I do suggest that the City of Carlsbad consider allowing short term rental of my 'cabana' and similar spaces (outside the coastal zone) when; 1. Adequate off street parking is used -no on street parking allowed. 2. Only a portion of the property is rented. 3. Owner must be present, living on-site, whenever rental is occupied. Thank you for your consideration. · David Carr 1 Mia De Marzo From: Sent: To: Subject: Council Internet Email Tuesday, December 10, 2019 3:44 PM City Clerk FW: Airbnb and Trust Innovation Update: Protecting Hosts, Guests, and Communities Around the World Not sure if this is related to STVR agenda item or not? From: John Choi <john.choi@airbnb.com> Sent: Tuesday, December 10, 2019 1:49 PM To: John Choi <john.choi@airbnb.com> Subject: Airbnb and Trust Innovation Update: Protecting Hosts, Guests, and Communities Around the World Dear Mayor: Last month Brian Chesky, Airbnb's CEO and Head of Community, announced a set of safety directives that represent the most important trust innovations in our history. Following those directives, we're announcing three steps forward in protecting our host and guest community and the communities in which we operate: Guest Standards, details about our Party House Ban policy, and a dedicated line of communication for mayors and city officials to reach Airbnb in 2020. These announcements are part of a continued commitment to develop technological and human interventions to prevent, detect, and respond to safety issues that undermine trust within our community. Between August 1, 2018 and July 31, 2019, 0.05 percent of trips on Airbnb had a safety-related issue reported by a host or guest and 0.03 percent of trips on Airbnb had a significant claim paid out under our Host Guarantee. While these events are rare, we must continue to evaluate these incidents and seek new ways to prevent future occurrences to the greatest extent possible. Airbnb is founded on trust, and for us to succeed in our vision of helping anyone belong anywhere, we must continue to build trust both among our own host-and-guest community and across the communities in which we operate. That's why we've committed to dedicating $150 million to new trust and safety innovations and why, since 2017, the rate of growth of trust and safety and customer service investments has outpaced the rate of Airbnb's revenue growth. New Guest Standards Airbnb's existing Community Standards have long required guests to follow hosts' House Rules, which often address issues such as respect for neighbors, maximum occupancy, pets and more. In recent months, we have solicited feedback from our hosts around the world who have asked us to be clearer about our expectations for our guests and more certain about the penalties for violating the trust of the hosts who welcome guests into their homes. This is precisely what we intend to do. Our new Guest Standards cover five scenarios: 1. Excessive noise 2. Unauthorized guests 3. Unauthorized parking 4. Unauthorized smoking 5. Major cleanliness concerns requiring excessive cleaning after checkout These new Guest Standards create a clear and actionable enforcement framework for these scenarios and if it is determined that a guest has violated the new standards, the first violation will result in a warning and required education on Airbnb rules. Further violations may result in account suspension or removal. Airbnb will accept information directly from hosts as well as from neighbors via our Airbnb Neighbor Tool or the forthcoming Airbnb Neighbor Hotline. Airbnb's new Guest Standards will take effect in early 2020 and will be a living set of standards that we will update over time to cover additional scenarios that occur regularly and matter deeply to our host community and the neighborhoods we call home. As always, serious misconduct by guests in violation of other existing policies, including unauthorized parties, will be reviewed and may lead to immediate suspension or removal. Party House Ban One key objective of the safety sprint Brian announced last month was to finalize a thoughtful policy to enforce a ban on party houses. We want to be clear that Airbnb is not prohibiting authorized parties and events. Many guests work with hosts to book listings for gatherings that bring people together in a manner that respects the home, the host's House Rules, and the surrounding neighborhood. This policy does not impact parties that are authorized by hosts and convened respectfully by guests. Instead, our goal with this new policy is to address the small number of guests who act irresponsibly and those rare hosts whose homes become persistent neighborhood nuisances. Moving forward, all "open-invite" parties and events are banned in Airbnb accommodations. This covers any event that the organizer opens up to anyone who wants to attend, such as gatherings advertised on social media. Hosts who attempt to circumvent this ban and allow guests to throw large parties will be subject to consequences. The only exception for this rule is for traditional hospitality listings that list with Airbnb -boutique hotels and professional event venues -that may set their own rules on open-invite parties. Even for these listings, Airbnb will monitor for any complaints and follow up with venues as necessary. Additionally, large parties and events are now banned in Airbnb listings in multi-family residences- such as apartment buildings and condos. Again, hosts who allow guests to throw open-invite parties in multi-family residences will be subject to consequences-even if the dispute arises from a closed-invite party where the organizer knows everyone who is attending. For "single family home" listings, we will continue to trust our hosts to set House Rules that are appropriate for their community. We are proud that our hosts offer unique accommodations that can range from a secluded farmhouse to a family-friendly home in a residential neighborhood. Given this range, we feel it's best to address the impact of hosting in single-family homes on a per-listing basis rather than creating a sweeping policy that would unfairly impact some hosts. While there are many nuances to these situations, our goal in all cases is simple-if the parties are negatively impacting neighbors and we receive complaints, we want to take appropriate action. We may reach out to hosts to ask them to update their House Rules to address these concerns. When changes to House Rules are insufficient or if the complaints persist, listings will be subject to suspension or removal. Any type of unauthorized party-meaning a party thrown by guests without the knowledge or consent of the host-remains prohibited in all listings, and we are continuing to strengthen our technological and human interventions to help hosts in stopping these events before they start. This policy was developed carefully and with input from external advisors, including retired police commissioner, advisor to the U.S. Conference of Mayors and Co-Chair of President Obama's Task Force on 21st Century Policing, Charles Ramsey along with retired police chief and Former Director of the U.S. Department of Justice Office of Community Oriented Policing's Services, Ronald Davis. 2 We want to emphasize that announcing these two milestones are simply our latest updates, but our work continues. We are in the process of proactively identifying listings around the world that may be in violation of our new rules-in cities like Los Angeles, Nashville, Miami Beach, London, Sydney, Montreal and more-to notify hosts that they will need to update their listings to comply with the party house ban policy. We ask any neighbors who are concerned about potential "party houses" in their neighborhoods to please contact Airbnb through airbnb.com/neighbors. Dedicated Line for City Officials As part of our ongoing commitment to work with cities around the world, we're launching a dedicated line where mayors and city officials can connect with appropriate Airbnb representatives about our new policies. Details on this new feature will be rolled out in 2020. While home sharing is a time-honored tradition in many cultures around the world, the rise of digital platforms like Airbnb has brought it within reach of more people than ever before. In turn, Airbnb has worked to collaborate with cities around the world and with our host and guest communities to ensure we are creating a framework that allows millions of people to trust one another. Trust is the real driver that has allowed Airbnb to scale in more than 7 million listings and more than half a billion guest arrivals in 191 countries and we want to deepen that trust by making sure that city officials have a dedicated way to communicate with Airbnb in the rare event that hosts' or guests' conduct are not meeting our standards. In the U.S., 51 percent of Airbnb hosts tell us they depend on the income they earn from Airbnb to make ends meet; 55 percent are women; nearly one in ten is a teacher; and seniors are amongst the fastest growing cohort of hosts, with many supplementing fixed incomes to age in place in the communities they love. Innovating on trust is crucial to ensuring our host community can continue to share their homes and that guests can continue to enjoy the places they love. We will continue to evaluate these innovations and add interventions in consultation with local policy makers, tenured Superhosts, and other stakeholders, including residents of the communities where Airbnb hosts live. Airbnb looks forward to working with you to explore how these tools may be of use in your community, while streamlining existing registration systems and supporting responsible short-term rental activity. John Choi Public Policy Los Angeles 3 Kerry A. Jezisek, Sr. Program Manager December 10, 2019 Short Term Vacation Rentals Recommended Action •Accept the Short Term Vacation Rental (STVR) Report •Provide direction to staff as appropriate Minute Motion •On March 2, 2019, on a minute motion made by City Council Member Hamilton and seconded by City Council Member Schumacher, staff was directed to bring back an agenda item to revisit the STVR Ordinance. Tonight’s Presentation •Update on the marketplace and regulations •Status of short–term vacation rentals in Carlsbad today •Enforcement report California STVR Market Trends •California –profitable place to own an STVR •More regulation of STVRs •Most expensive: Tahoe and Truckee •Cele-cations on the rise STVRs in Carlsbad Total STVRs: 637 Licensed STVRs: 289 STVRs without a license: 348 STVR listings: 1,033 STVR Licensing and Taxes Fiscal Year Licensed STVRs % increase TOT $% increase FY 2014-15 103 -$377,334 - FY 2015-16 136 32%$506,940 26% FY 2016-17 148 8%$659,982 23% FY 2017-18 257 42%$863,500 31% FY 2018-19 289 12%$1,501,665 78% Enforcement Priorities 1) Licensing and TOT collection 2) Enforcement: Cases initiated by residents 3) Enforcement: Hosts outside the Coastal Zone 4) Enforcement: Hosts inside the Coastal Zone 5) Enforcement: Operational issues Enforcement Challenges •STVR identification •Pop-up STVRs •Administrative hearings more likely •Enforcement cases are: –Time intensive, additional procedures STVR Illegal Operators 86 13 85 24 1 STVR Properties with Known Violations Operating without a license Operating outside the coastal zone Licensed STVRs over occupancy Nuisance Complaints with Police Reponse -- -- I I STVR Impact •Positive economic impact •Fewer long term rentals •Transient neighbors •Affordable lodging options Questions?