Comments and discussion by the League of California Cities and Counties, and the California Coastal Commissioners
Comments by Union Representatives
III. STATUS UPDATE
Short-Term Rentals (STRs)
In recent years, California’s growing housing crisis, the rising cost of overnight accommodations along the coast, and the advent of online booking sites for short term rental of private properties has caused local jurisdictions to struggle to balance the provision of overnight accommodations for coastal visitors with local housing needs. In an effort to address these housing needs and other impacts that vacation rentals sometimes have on local communities, some local governments have developed ordinances to regulate or ban the ability of homeowners to rent out their properties on a short-term basis. Generally speaking, the regulation of short-term rentals represents a change in the intensity of use and access to the shoreline, and thus constitutes “development” governed by the Coastal Act.17 Therefore, in the coastal zone, the regulation of vacation rentals must occur within the context of a local coastal program and/or be authorized pursuant to a coastal development permit.18′
Short-term rentals (STRs) are generally understood to be rentals of a portion of or of an entire housing unit for 30 days or less and can provide overnight accommodations that are often a more affordable option for many travelers, especially groups and families. STRs include a range of options, from sharing rooms in an occupied house to renting a whole apartment or house without the owner present. While STRs have been in use in coastal areas for many decades, recently, the use of online booking sites has greatly expanded their use as an alternative to commercial lodging.
Although STRs can help maximize access to the coast, in some cities and counties—and especially in jurisdictions where STRs are unregulated—vacation rentals may cause a variety of adverse impacts. Depending on their location and the way they are regulated, the Commission has recognized that STRs can cause, for example:
Alteration of community character by introducing lodging into residential neighborhoods;
Impacts on affordable and workforce housing;
Parking and transportation congestion impacts;
Overburdening of water, sewer and other public utilities and services; and,
Management issues such as numbers of occupants and overcrowding, noise, trash and special events.
In response to community concern regarding these and other issues, many local coastal governments have prohibited or regulated STRs, or are considering ordinances to do so. The Commission, recognizing the value of STRs to coastal visitors, has encouraged local jurisdictions to address these types of adverse impacts through reasonable and balanced regulations that still allow for STRs in appropriate locations. The Commission has taken the position that ordinances regulating STRs are not in effect in the coastal zone unless approved by the Coastal Commission through a coastal development permit (in areas without a certified LCP) [the Highlands has a Certified LCP] and/or through certification of a LCP Amendment.19 In its actions, the Commission has certified LCP provisions that provide for an adequate stock of STRs while minimizing impacts to coastal resources and the neighboring community.
Articles Cited by the League of California Cities and Counties
APPENDIX: SHORT TERM RENTAL STUDIES
A new Economic Policy Institute study finds that Airbnb contributes to rising home prices in cities, yet often escapes comprehensive regulation.
Short-term rental platforms such as Airbnb have grown spectacularly in recent years, and local governments around the globe have responded differently in regulating such rentals. This column analyses the effects of a policy change in several cities of Los Angeles County that restricted short-term rentals of entire homes and apartments. Airbnb has led to an increase in house prices that is particularly pronounced in popular tourist areas, and homeowners in these areas lose out from the regulation. Renters, on the other hand, benefit from the regulation.
We find that in New York City, the impacts appear to be that an increase in localized Airbnb availability is associated with an increase in property values. In our hedonic model estimates, a doubling of Airbnb listings is associated with increases of 6% to 11% in house values, ceteris paribus. Using a difference- indifference approach produces an even larger estimated impact, suggesting that properties that are subject to the Airbnb treatment increase in value by about 31%. Rough calculations based on average property values, average Airbnb rentals, and an assumption that potential income streams will be fully capitalized produces an intermediate estimate of about 17.7%.
While our results might be taken as supporting critics of Airbnb who complain that the firm’s services act to increase house prices and diminish housing affordability, we want to stress that this conclusion may be unwarranted. A service that increases house prices (such as improved police protection, making better local schools available to residents, or providing more and better public parks) need not diminish community well-being.