Short-term rental report will guide regs

06/08/2017

In the coming months, the Marin County Board of Supervisors will consider adopting regulations for short-term rentals—a response to public concern and the culmination of a series of community workshops. To inform the board’s decision, county staff will propose regulatory alternatives based, in part, on a new white paper that details effects specific to Marin, possible regulatory frameworks and relevant case studies of counties that have standards that could be adopted. 

Released in May, the white paper, written by San Luis Obispo-based Lisa Wise Consulting, breaks down key considerations for future regulation in Marin into issues of housing supply and affordability, quality of life and the enforcement of requirements. 

“It is essential that the issue of short-term rentals is investigated, looked into and figured out,” said Arianne Dar, board president of the Bolinas Community Land Trust. But, she added, “because there are so many legal issues involving property ownership, it’s a very complicated issue to regulate.”

Short-term rentals are primarily unregulated throughout the county. Some towns and cities have acted independently, such as Tiburon and Sausalito, which banned rentals fewer than 30 days in residential districts back in 2015. Yet the majority of the county generally just abides by a 10 percent transient occupancy, or T.O.T., tax, that is charged to renters for stays under 30 days, though historically it’s been difficult to enforce. 

In 2013, the county tried out an amnesty program, excusing those who had not come into compliance with the T.O.T. program if they enrolled by the year’s end. The county subsequently reported that while it issued notice to 215 short-term lodging operators that had failed to comply with the tax-collecting requirement in unincorporated Marin, only 133 responded, despite the temporary offer. The county then attempted to issue fines. 

The white paper says quantitative data on short-term rentals is particularly limited because short-term rental online hosting services such as Airbnb, Homeaway and VRBO are reluctant to provide addresses to public agencies. But, it notes: “The high concentration of vacation rentals on and around the coast leads to steep competition for available housing options and the hollowing out of year-round, sustaining coastal neighborhoods.”

In terms of housing supply and affordability, there is a key trend—though it may or may not be caused by short-term rentals. The percentage of vacant housing units—units that are vacant at least part-time because they are second homes, short-term rentals or simply sitting empty—in Marin has nearly doubled since 2000. 

The Department of Finance estimated in January that the county had a 7.8 percent vacancy rate, or a total of 8,320 vacant homes— among the highest rates for any Bay Area county. While the report says this has mainly impacted incorporated jurisdictions, unincorporated areas may be increasingly affected in the future. According to the county’s current Housing Element, 5 percent of renter housing units in the unincorporated part of the county are currently vacant.  

The likely causes include increased housing costs, a disproportionate balance between jobs and housing, an increase in the number of second homes, or just a misalignment of unit types available compared to demand.  

These numbers were echoed by Ms. Dar. “A lot of permanent residents have been displaced, making our communities unviable,” she said. For example, the Bolinas-Stinson Union School District had 150 students in 2001; this year, that number was 82. That’s a problem for everyone, she said, because “if there isn’t a healthy, full-time community, you can’t even create a vacation space for people to come to—there’s no one around to do the services.”

But what role do short-term rentals in particular play in reducing the affordability and availability of housing?

There is a clear assumption, the report states, that property owners are increasingly opting to exit the long-term rental market in favor of short-term rentals through online hosting services. Yet the report points out that this may not always be the case. It’s possible that the number of available short-term rentals might not have been part of the available housing stock to begin with. It is also possible that a significant number of the rentals currently on the short-term market could demand unaffordable rents in the long-term rental market. 

“We’re realizing that, in some cases, the houses being used for short-term rentals belong to a family who has owned a vacation home for years and can only use it occasionally,” Ms. Dar said. 

Aaron Ely, who manages around 10 rentals in Inverness and Point Reyes, said the report corroborates what he sees among his clients: the properties are often not full-time residences, but rather second homes that sat empty or were occasionally used by the homeowners themselves. 

Though short-term rentals are not necessarily the main driver reducing the housing stock, the report does say that their effect on the affordable housing market abides by basic economic principles of supply and demand. “When the rental housing stock supply decreases, the perceived scarcity of supply encourages landlords to increase rents without fear of reduced demand,” the report says. 

From 2004 to 2013, the average rent in Marin increased by over 28 percent, from $1,483 to $2,066. As of 2014, 47 percent of tenants in the county used over 35 percent of their income to pay for housing. The U.S. Department of Housing and Urban Development states that affordable housing costs should be 30 percent or less of a household’s income for renters, and no more than 40 percent for homeowners.

Current Airbnb rates for a private room in Marin average $139 per night (totaling $4,170 per month if rented for 30 nights). In 2013, according to the Housing Element, the average rental unit cost $2,102 per month.

While these numbers are stacked against long-term renters, the full economic impact on a community cannot be understood without taking into account the economic benefits for homeowners. Supplemental income from short-term rentals offset costs for owners, and even makes homeownership viable for some income groups. According to the report, the additional income also may enable homeowners to spend more money in the local economy. 

Yet the report says that especially in wealthy areas, homeowners may not need the supplemental income from rentals to afford their mortgage. Marin has the smallest, but most affluent, population of any Bay Area county, with a median household income of $91,529. 

“You want people to be able to rent out part of their homes—if that means that they can stay in their homes,” Ms. Dar said. “At the same time, you don’t want people to prosper from the decimation of a community.”

As far as other impacts short-term rentals have on quality of life, the report flags parking congestion and the possibility of nuisance guests. It also says that impacts may vary greatly from neighborhood to neighborhood, emphasizing the especially high concentration of vacation rentals on and around the coast.

Ingrid Noyes is a Marshall native who has rented in the township for most of her life. Three years ago, she moved to Fort Bragg after her landlord died and his children kicked her out. “I don’t think these types of rentals are about the money,” she said. “Owners want to be able to use their house once in a while if they want to, and just don’t want a full-time person in there.”

Neighbors have told her that the property is destined for Airbnb, though the house has sat mostly empty in the years since she left. “Residences are places to live,” Ms. Noyes emphasized. 

The report offers a number of case studies of areas that have adopted regulations that may be particularly relevant to the county’s coastal zone. 

Santa Cruz County, in addition to applying the T.O.T. tax, regulates vacation rentals through permits, a requirement for signs identifying structures as a vacation rental (including the name and phone number of a local contact person responsible for responding to complaints), maximum occupancy limitations, rental rules posted inside units, limitations on the number of vehicles for on-site parking and more. A local property manager must be available 24 hours a day to respond to tenant and neighborhood questions or concerns. 

According to Santa Cruz County’s Local Coastal Program, the regulation “does not prohibit, or unduly restrict, the rental of residences to visitors in a manner that will diminish the public’s ability to access and recreate on the coast by renting a coastal residence.” 

Ms. Dar emphasized the importance of someone living on the property full-time in order to rent it out part-time: “You need a permanent resident, someone in the community, so you don’t have these vacant houses that people can throw huge parties in while residents around them are trying to sleep.”

Regulations in San Luis Obispo County mirror those in Santa Cruz, though its permit requirements are slightly more extensive, including zoning clearance and business licenses. 

Mr. Ely, who read the white paper extensively, flagged an example from South Lake Tahoe, which has faced a rapid growth in online hosting services. That city now issues a short-term permit that includes an initial $545 fee and an annual fee that ranges from $150 to $800, based on maximum unit occupancy.

“Fees like this would be one more consideration for homeowners when deciding to go short-term or long-term,” Mr. Ely said. “I try to encourage all my clients to opt for long-term over short-term rentals, because in a lot of cases, the economics are comparable and the impacts to the community so drastically different,” he said. “But in the case of a spectacular house, a beachfront, a ridge, there’s a big difference for a short-term rental.” 

Any new short-term rental regulation applicable to the coastal zone would need to be addressed in the L.C.P. and approved by the California Coastal Commission. Marin’s L.C.P. update includes general “policy and program statements” concerning the regulation of short-term rentals.

“What the county is really up against, is that they have to find something that works for all the disparate communities out here,” Mr. Ely said.