Enforcement – Practical and Administrative Issues

 

SUMMARY

Local problems with STR’s often happen at night.  Enforcement personnel would need to be available and they would have to be paid overtime.

RMA estimates they would have over 1000 enforcement cases to handle.  We think the number is much more – depending on whether the next Draft Ordinance reflects the Consensus Position or the Planning Commission’s prior drafts.

RMA also estimates it will take about 4 hours per enforcment action.  That’s a minimum of 4,000 hours of staff time and growing because there is no staff to tackle the backlog, let alone new cases.

The RMA had significant funding and staff cuts during an economic recession.  They just have barely enough personnel to handle the Priority I cases that really do threaten the safety and health of children and families.

All of us agree the children must be protected.  If they need additional resources for this role, RMA should get them

Additional resources and creative approaches are needed to govern the STR situation.

Neighbors need a place to call that can take effective, timely action.

Neighbors do not want to be saddled with enforcement responsibility.  Although there are probably provisions for “Citizen’s Attorney General” or similar approaches for reimbursement of legal fees, few neighbors would be willing to undertake the legal and financial headaches this entails.

There is no reason to belive that people operating illegal whole-house rentals will stop.  Therre is just too much money to be paid, and huge, sophisticated international investors, investment banks, hedge funds and others committing large sums of money to buy houses and rent them short term.  The bigger the better.

Hotels, STRs going at a premium during Classic Car Week

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

As L.A. vowed to stop apartments from becoming hotels, this company made it a business

Malibu_s Summer Rental Market Booms – Cost per night

“Of particular concern to officials are the Airbnb hosts who lease multiple apartments, renting them out year-round and distorting their market value in a climate of scarce affordable housing. One Airbnb user who spoke with the Times provided a glimpse into how lucrative the scheme could be. Josh, who agreed to describe his business on the condition that his last name not be used because he was fearful of legal penalties, said he rents out five apartments in Manhattan. Each one earns about $100,000 a year, he said, totaling about half a million dollars annually before fees. Only one of the leases is in his name, he said. The other four are held by people he has recruited to sign the leases in exchange for a percentage of the rental income.The arrangement is illegal. The New York State Multiple Dwelling Law prohibits apartment rentals of less than 30 days unless a permanent occupant is there. Yet Josh said that he personally knew several others engaged in the scheme in New York City. 124 hosts, all of whom had a minimum of 10 listings on the site and were earning an average of $500,000 a year.” (“Hotels in Disguise”, New York Times, December 3, 2015)

 

“. . . the agent’s relationship with Airbnb soon shifted from desperation to opportunism. Realizing the potential to exploit the difference between long- and short-term rental prices, he signed a lease on a second Manhattan apartment this summer. He now uses it solely for Airbnb, generating up to $6,000 a month in profit. Last month, he added a third rental — this one under his wife’s account. He plans to add more, he said, possibly even under phony accounts to avoid legal scrutiny. . . Another New Yorker, a 49-year-old entrepreneur (who also insisted on anonymity), got his start on the site after shareholders pushed him out of the information technology company he had founded, leaving him without a source of income. . . But after renting out his apartment on Craigslist and through word of mouth, he signed up for Airbnb in early 2011, with a plan to make short-term rentals his full-time job. He signed leases on former factory spaces in Lower Manhattan, renovating them and listing them on Airbnb. At his peak, he said, he managed 12 listings and hired a team of cleaners, greeters and handymen to keep his scatter-site hotel operating. His relationship with Airbnb, however, turned sour when Schneiderman sought data from the company about operators like him. . . .And who would want to stop a man with 12 apartments from making ends meet?“ (“The Business Tycoons of Airbnb”, New York Times, November 25, 2014)

Personnel will be needed to issue permits.  There are over 700 STRs now, at least 500 would require Use permits under the Draft Ordinance, where will the personnel come for that process.  Most will be contested.  How many County people will that require?  A lot that aren’t on staff now.  This suggests these owners will continue to operate illegally.

 

Home Stay enforcement depnds on the definition of Home Stay.  If the owner is a natural person who lives at the site full-time, is present during rentals, and documetns their presence in some unobtrusive way, finding and prosecuting illegal home stay is relatively easy.  Easy, that is, compared to a Home Stay where the owner can be an LLC or other anonymous form, has no connection to the community, doesn’t need to be  there during stays, and depends on the neighbors or RMA personnel to find them out and prove their noncompliance.  Given the current 98% cheating rate, whatever is done will require RMA personnel to be involved in enforcement, and County Counsel to prosecute those who don’t settle or comply.

For example, if ownership is an an LLC that is a subsidiary of another LLC, how many County personnel will it take, and how much time will it take them to forensically account for the responsible party?  It would take any law firm, accounting firm, or County department massive amounts of time, success is by no means certain, and even if found litigation costs could be very high and collection in the event of victory difficult.

 

EVIDENTIARY ISSUES

Noise: Will you have officers available to measure noise levels after 10 pm  5 or 6 days a week which is when the violations occur?

What sort of decibel readings are admissible in Court

Will you have officers watching the coming and going of guests to count whether there are too many?

What do you expect the neighbors to do?

What types of proofs will satisfy you, and can neighbors legally obtain them?

 

RMA Position

Board Report by Planning Commission, June 19, 2018

The RMA code compliance unit has struggled for many years to meet its demanding volume of complaints with limited staff and resources. Staffing cuts during the economic downturn and slow economic recovery from 2007-2014 resulted in an accumulation of a large backlog of unresolved code compliance cases.

In approximately 2010 the RMA began tracking its backlog of unresolved code compliance cases. Through refining its management practices and staffing resources, the unit has been able to reduce the backlog to a more manageable level by closing more cases each year than are opened. RMA currently has 1,616 open Code Compliance cases; 488 Priority One, 706 Priority Two and 422 Priority Three cases. (Figure 1)

Of the current Priority Three cases, 76 are STRs, constituting roughly 5% of the total current caseload. STR complaints would be considered Priority One only if there were additional violations (unpermitted or unsafe structures, inadequate sewage facilities, etc) that may threaten life, health and safety. Some of the more common issues with STRs include nuisances such as noise and parking (private roads).

 

Staff has been engaged in developing an ordinance to address STRs for about three years. The process has been slow due to extensive engagement with the communities. Until a new ordinance is adopted, RMA code compliance must research the designated, allowable uses in the General Plan, Land Use Plans and Zoning Ordinance to determine if a violation has occurred with regard to complaints received about suspected STRs. If the STR is operating in violation, it is classified as Priority Three and sent a courtesy letter advising of the violation and the remedy.

 

RMA permit records show only twenty permitted STRs in the unincorporated area of the County.

 

The Treasurer-Tax Collector has provided the RMA with information on the property owners registered to pay Transient Occupancy Tax (TOT) that includes approximately 400 potential STRs. In addition, the Treasurer-Tax Collector has contracted with a third party, Host Compliance, and have received a list of 644 additional properties in unincorporated Monterey County advertising STR properties that are not registered to pay the TOT. (Figure 2)

 

Addressing the unpermitted STRs would increase RMA code compliance caseload by over 1,000 new cases. At present, the RMA code compliance unit consists of one RMA Services Manager and four (4), Code Compliance Inspectors (CCI) who are responsible for the enforcement of Monterey County building and land use codes for the entire County. One of the four CCI positions is funded  with cannabis tax revenues to support the cannabis program. Staff finds that establishing business licenses/permits for all STRs (similar to cannabis) will aid in enforcement against any operation without a license.

 

OTHER AGENCY INVOLVEMENT:

RMA coordinates with Monterey County Treasurer-Tax Collector on enforcement matters with STRs.

RMA consults County Counsel on code enforcement cases. Therefore, increases in Code Compliance for STR would directly impact County Counsel.

 

 

FINANCING:

If the Board directs the RMA to expand its operations by adding additional staff, fully-burdened labor costs would be as follows:

Sr Code Compliance  = $ 131,155

Inspector Code Compliance Inspector = $ 129,757

Office Assistant    = $ 78,827
Deputy County Counsel II = $ 156,734

Whether there is an increase now or after ordinances are adopted, RMA would recommend assigning revenue from the taxes received (TOT) to support the STR code compliance program (similar to the cannabis program). The adopted budget for FY 2017-18 and recommended budget for FY 2018-19 include the allocation of all TOT revenues. Assigning revenue from TOT to expand code compliance for STRs would require redirecting existing allocations of discretionary funding.

 

Board Report by Planning Commission July 17, 2018

“Additionally, staff researched the cost of dispatching a response in real time to STR nuisance complaints, including contracting with a private security firm, dispatching Code Compliance Inspectors in an “on-call” capacity, and connecting complainants with the non-emergency number for law enforcement. Staff also researched certain implementation hurdles for the BOS to consider.

The cost estimates assume that responding to a STR nuisance complaint would take an average of two hours, followed by an additional two hours of in-office processing time to finish the case. The in-office processing time estimates are based on the fully burdened labor rate for Code Compliance Inspectors II ($75.87/hr), however, this classification is being used for financial estimation purposes only. Should any of these options be pursued further, additional analysis would be required to determine the most appropriate classification of Code Compliance Inspector for the job.

Private Security Firm: Staff estimates that this policy option would cost roughly $245.23 per response, excluding the administrative costs of contract management. This estimate is based on an average alarm response rate of $46.75/hour, calculated across the four private vendors contracted with the County. It also includes two hours of the fully burdened labor rate for Code Compliance Inspectors II at $75.87/hr.

RMA Code Compliance Inspector: Staff estimates that this policy option would cost roughly $303.46 per response (four hours at $75.87/hr), plus the annual cost of providing on-call pay for nights, weekends and holidays, which is estimated to be approximately $16,641.30.

Sherriff’s Deputy: Staff estimates that this policy option would cost roughly $356.97 per response. This estimate is based on two hours of Sheriff’s Deputy fully burdened labor rate ($102.62) plus two hours of Code Compliance Inspector time ($75.87), however, additional time, and staff costs, may also be incurred by Sheriff’s Deputies for report writing and court appearances. It is important to note that in discussing this option with Sheriff’s Office staff, it was observed that the Sherriff’s Office is experiencing a staff shortage and thus more pressing criminal matters may need to be prioritized.”