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  1. STR costs Monterey County workers over $78 million per year;

  2. uses most, possibly all of the water now that might be available for growth in the future;

  3. increases traffic;

  4. fails to pay 70% of its taxes;

  5. employers have trouble recruiting and retaining employees because they know they will never be able to afford a decent place to live or buy a house anywhere near their place of employment;

  6. and many STRs in environmentally sensitive places do not have the septic system capacity or do the maintenance on their rentals required of commercial hotels, even though they have much more use than an average home.

  7. over 90% of STR in the unincorporated County are illegal despite a clear path to getting permits, and operate openly despite its illegality;

  8. increases the threat of wildfire;

  9. damages Pt. Lobos and other national jewels;

  10. increases air pollution;

  11. Both the status quo and the draft ordinance violate and/or contradict:

The California Coastal Act, Monterey County Coastal Implementation Plan – Title 20 Zoning Ordinance, Monterey County Title 21 – Inland Zoning Ordinance, Carmel Valley Master Plan, Carmel Valley Planning Area of the Monterey County Community General Plan, Carmel Area Land Use Plan – Local Coastal Program, Carmel Area Coastal Implementation Program, Big Sur Land Use Plan, Big Sur Coast Land Use Plan, Highway 1 Big Sur Coast Highway Management Plan, Carmel Highlands and Carmel Riviera Master Plan, Monterey County General Plan, Very High Wildfire Severity Zone (CALFIRE), ESHA, National Marine Reserve, Environmentally Sensitive Habitat Areas (ESHA) including: The Monterey National Marine Sanctuary, The California Sea Otter Game Refuge, Carmel Bay State Marine Conservation Area, Pt. Lobos State Marine Reserve, Pt. Lobos Marine Conservation Area, Monterey Peninsula Water Supply Project, Carmel Area State Park Plan, and Carmel Riviera Mutual Water Company.

Hedge Funds get the profit, we foot the bill.

A coalition lead by Carmel Valley Association has achieved a Consensus Position on Short-Term Rentals and Home Stays.  The Planning Commission Staff also has an Ordinance which has similarities and differences.  The Consensus Position and the current Planning Commission Staff positions are compared here.

 In summary:

The only allowable form of Short-Term Rental will be a “Home Stay”  (except in Big Sur), and only to the extent of the number of “Visitor Serving Units” allowed in the Land Use Plans.  Innovative Enforcement that relieves the burden on neighbors and Home Stay operators alike.

 

 

Here Comes the 2nd Wave of Big Money in the “Buy-to-Rent” Scheme | Wolf Street

 

 

Summary October 2018

 

DRAFT 

 

 

It feels to many of us like we’ve been invaded by Short-Term Rentals.  The Air BnB’s and VRBO’s have become a huge problem – and this happened just by the County failing to enforce the existing bans on short-term rentals and Home Stays.

 

Monterey County right now has more than 4,000 additional rooms for visitors they are already using over 80% of the available water supply allocated for future growth in Monterey County, and currently cost workers somewhere between $70 million and $200 million per year, while causing over 20,000 tons of greenhouse gases – all having been done with no planning process or environmental review.  A 100 room hotel gets deep, serious review and is limited by the Master Plans and Land Use Plans.  Short-term rentals – nothing.

 

THE CONSENSUS POSITION

 

In response to this mess Carmel Valley took the lead and assembled groups and individuals from Carmel Valley, Carmel Highlands, and Big Sur – the hardest hit places – and worked out a plan.  Actually, Carmel Valley Association worked out a plan that the Carmel Highlands group liked and it mushroomed from there.

 

We looked at places that had similar problems – because there are thousands of communities around the world having these problems now – who’ve enacted various rules and were able to “Put the Genie Back in the Bottle.”  It seems an impossible task, but it’s not. It’s been done in Carmel-by-the-Sea and the City of Monterey, among many others.  So we know the Genie can be put back in the bottle and some kind of rational compromise worked out.  We studied compromises we could live with, and ones we felt would keep things bad, or even make them worse.  And what we came up with is this:

 

First – if you want to rent your house or apartment for car week, or the AT&T, or the U.S. Open – you can still do that.  Nothing prevents anyone from renting their house once a month.  There was a poll in Carmel Highlands and about half the people wanted to be able to rent for these special events, and the Consensus Position allows that. It’s pretty much always been that way, and that continues.

 

Second, if you are a person and live here full-time and want to rent out a room in your home, while you live there, you can do that.  BUT, only if there is room in the Master Plan for more hotel rooms and somebody else didn’t get their first.

 

In other words, anybody can rent once a month, but no more free-for-alls.  Businesses, even home businesses that rent rooms to tourists can only grow so much.  And you’ve got to have the water and septic system for the business.  No contributing to affordable housing shortages.  No taking our water.  No oozing in to the neighbors yard or into the ocean.

 

Third, really serious enforcement, or no rentals allowed. We’re in this mess because the County has not enforced the law, and the County has to step up.  We have unfortunately, thousands of examples right here of what people will do with their homes when there is no meaningful enforcement.

 

That’s the summary. We have a handout with a copy of our detailed submittal and a link to a website with supporting information.

 

 

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As I mentioned, short-term rentals cost Monterey County workers over $78 million per year; uses most, possibly all of the water now that might be available for growth in the future; and that increases traffic as employees have to commute farther, and more visitors stay – causing thousands of tons of greenhouse gas emissions.

 

But short-term rentals also fail to pay more than 70% of their taxes; over 90% of short-term rentals in the unincorporated County are illegal, and operate openly despite its illegality because the County can’t or won’t enforce the law; employers have trouble recruiting and retaining employees because they know they will never be able to afford a decent place to live or buy a house anywhere near their place of employment; we have to worry even more about wildfire; and short-term rentals violate numerous County and State General and Local Plans including the Carmel Valley Master Plan, The Carmel Area and Big Sur Area Land Use Plans.

 

And as we will explain later, Hedge Funds get the profit, we foot the bill.  Only a small percentage of short-term rentals are somebody renting a spare bedroom anymore.  The vast majority are investment companies buying homes, and planning to kick out the long-term tenants so they can rent short-term.

 

Our plan – the Carmel Valley Association’s Consensus Position, promotes measured, balanced growth, while still allowing people to rent out their homes for events like car week and the AT&T.

 

 

  1. [Housing]STR costs Monterey County working families over $78 million per year, and it could be as high as $235 million.That’s working families that pay higher rents because short-term rentals and Home Stays take thousands of apartments and homes and turn them in to mini-hotels with rents that are way out of reach for working families.  As a result, all rents have increased.  Studies have shown that between 9% and 35% of the $1,000 per month average increase in rents in Monterey is due to Air BnB-type rentals.

 

And some families at the bottom of the income scale are getting squeezed out of housing completely.  They’re homeless now.

 

We understand the attraction of renting a home for $500 to $600 a night instead of the $2,000 per month landlords were getting for family homes and apartments rented to a teacher, or a nurse, or an electrician – and their families.  – But there are almost 4,478 rooms for rent right now, growing at more than 30% per year, and rents are skyrocketing while wages remain close to the same.

 

We need to accommodate, share our natural wonders in a balance with as many people from all over the world as we can, but free-for-all wild growth is not the way to do it.  And that’s where we are right now.

 

  1. [Water]Short-term rentals use most, possibly all of the water now, nowthat might be available for growth in the future;

 

4,478 rooms being rented, with an average over 2 people per room, uses a lot more water than the 3 people per home that live full-time in average for homes and apartments in Monterey.

 

Some water is used at a home no matter how many people live there or where they came from.  Watering the garden, for example. But how much for baths, and cooking, and washing clothes and all the other stuff that people do?

 

Monterey people have gotten very good at conserving. Took some practice, didn’t it?  But we got good at it, using half the national average.  But visitors don’t have that same experience, and on average they use over 40 gallons per day for personal use.  And when houses are used as party houses, the amount is higher still.

 

For example, there’s one house often rented to students on spring break, and they have been seen spraying each other with water hoses.  Another family home was being rented to host weddings with 200 to 400 people.  That’s a whole bunch of water.

 

As many of you know, we are going to be forced to stop pumping so much from the Carmel River in a little over 2 years.  When that happens hopefully one of the supply options has been completed and is ready to take over.  But none of the options – whether you like Cal-Am or the public takeover that’s on the ballot –none of them have allocations for 4,000 short-term rentals, let alone 4,000 more hotel rooms of any kind.

 

Short-term rentals right now use most of the potential future water supply reserved for all future growth for Monterey.

 

To be specific:  There are 2.42 people per room in short-term rentals and Home Stays.  They use 41 gallons per day for personal use (not gardening).  That’s 12.68 rooms per acre-foot.  Or put another way that’s 1,268 rooms for every 100 acre feet of water.  To use all of the water allocated for all future growth if all water supply projects are completed would require 6,340 rooms.  We are at around 4,478 now and growing at 30% per year.  We will reach 6,340 in less than two years – before the water supply projects are even completed

 

Want to expand your business?  Sorry, short-term rentals have used the water you need. Want to build a new school, or Church?  Sorry, no water. Want to add a few rooms to your hotel?  Sorry, no water. Been waiting decades to put in another bathroom, or build a home on property where you’ve been waiting for water credits?  Sorry, short-term rentals got their first.

 

(NOTE – there is some allocation for infill, but if  STR’s continue to expand at 30% per year they will eat in to that supply. And since STR’s have few, if any permitting challenges, and if the PC continues with a policy of no enforcement, we will be uncharted territory with a legal allocation for infill, an illegal allocation for STR, no way to build new supply, infill may well be unable to actually get the water allocated to them)

 

 

 

 

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  1. [Employment Problems]Employers have trouble recruiting and retaining employees because they know they will never be able to afford a decent place to live or buy a house anywhere near their place of employment.

 

How much do we pay for that?  I don’t know, but it’s sad.  We want good people to teach our children and care for us when we are sick.  We want excellent tradespeople, government workers, hospitality workers and all the other stuff we do here in Monterey.  But it’s a struggle because just renting is so expensive, and affordable rentals, let alone homes to start building ownership in, are so far away you’re looking at commute times and such where you may as well be in San Francisco or LA. Adding an hour or two of commute to a parents work day is a big deal.  And short-term rentals are a big part of that problem.

 

  1. [Septic wastewater]Many short-term rentals in environmentally sensitive places do not have the septic system capacity or do the maintenance on their rentals required of commercial hotels, even though they have much more use than average homes.

 

A lot of short-term rentals are being opened right near the ocean, the Carmel River and other beautiful places.  A lot of those places don’t have sewers – they use septic tanks and leach fields, or on-site water treatment.  Or maybe a short-term rental above you on a hill has a leaking septic tank.

 

But at a minimum, a commercial use of a property should have commercial grade septic system, and maintain it like a hotel would.  Get it pumped out and maintained right for having a lot of tourists.  The over 4,000 rooms already in use, do not.  Over 4,000 rooms, right now, do not.

 

That home renting out for 200 person weddings? The neighbors never saw a pump truck come through and maintain their system.  Never.

 

 

 

  1. [Rampant Illegality] Over 90% of short-term rentals in the unincorporated County are illegal despite a clear path to getting permits, and operate openly despite its illegality. And in city after city – they continue to operate illegally even after ordinances are passed to legalize them if enforcement is weak, and the ordinance not simple and clear.  With a clear ordinance and serious enforcement, reductions in illegal rentals of over 90% are common.  Both the City of Monterey and Carmel-by-the-Sea have enforced their bans on short-term rentals using 3 people, and achieved more than 90% reductions.  And the salaries of those people were more than paid for by back unpaid tax collections and fines.

 

  1. [Wildfire] The giant Soberanes fire was started by an illegal campfire. The Big Sur Volunteer Fire Department has recently found several more illegal smoldering fires.  In Carmel Highlands tourists are starting illegal fires on the beaches with a major threat of wildfire all around them. While this is not all due to short-term rentals, uncontrolled growth increases the risk uncontrollably.

 

  1. [Greenhouse gases] All the additional commuting by workers forced in to longer commutes emits enough greenhouse gases to run a fair-sized powerplant.

 

  1. [Violation of Master and Land Use Plans] All this is in direct violation of pretty much every Master Plan, Land Use Plan, Local Coastal Plan, Highway 1 Plans, and water plans.

 

  1. [Hedge Funds get the profit, we foot the bill]

 

According to Bloomberg and other sources:

 

Amherst Holding operates 20,000 rental homes and is raising $1 billion to buy more;  Cerberus operates 11,000 home rentals with plans to increase that to 40,000; Front Yard, Pretium and Tricon another 40,000 or so.  Air BnB is worth over $30 billion and is the largest hotel company on the world.

 

According to the Wolf Report “This second wave is different. PE firms are paying prices at the peak of the market, amid ceaseless complaints that there isn’t enough inventory of homes for sale, for folks who actually want to live in the homes they buy.   And these are just the biggest players. There are thousands of smaller players. And all but mom- and-pop investors pay cash and then fund the purchases with leverage at the institutional level.”

 

 

In conclusion: THE CONSENSUS POSITION

 

We need to get this situation under control – “Put the Genie Back in the Bottle” so to speak.  It’s been done, we can do it.

 

So, in conclusion, this is what we propose:

 

First – if you want to rent your house or apartment for car week, or the AT&T, or the U.S. Open – you can still do that.

 

Second, if you are a person and live here full-time and want to rent out a room in your home, while you live there, you can, but only up to the limit of hotel rooms allowed in the Master Plans.

 

And Third, really serious enforcement, or no rentals allowed. No businesses, just people we know and are part of the community.  We’re in this mess because the County has not enforced the law, and the County has to step up.

 

 

Thank you.