Vacation rental regulatory news for the week of July 29, 2018

San Diego

City Council Passes Final Approval for Regulations on Short-Term Vacation Rentals

From the Article: “Under the plan, proposed by Mayor Kevin Faulconer and amended with proposals by Council members Barbara Bry and Lorie Zapf, residents may be issued a license to operate a short-term rental for their primary residence and one additional license for a dwelling unit on the same parcel as the host's primary residence. 

This would end the practice of out-of-town property owners using the short-term rental industry to profit from homes in San Diego.”

Takeaway: San Diego’s city attorney has previously ruled that all short-term rentals were illegal because they were not specifically defined in the city code. Mayor Faulconer proposed a plan that would have legalized homesharing and allowed a very limited number of non-owner occupied units throughout most of the city. It exempted the Mission Bay neighborhood from the limits. The Council rallied support to ban all non-owner occupied units throughout the city.

San Diego City Council truly misses the mark on this issue. There are a handful of bad operators in the city, most who are not professionally managed properties, who have caused this backlash. The San Diego short-term rental industry is estimated to have a $482 million economic impact, generating 3,100 jobs and $19 million in occupancy taxes. The city will face a loss of taxes and economic impact that will need to be made up elsewhere. However, this fight is far from over. Share San Diego, a pro-short term rental advocacy group has filed Brown Act violations and are assessing the next steps.



Airbnb bill is now uncertain in Mass. after Baker’s changes

From the Article: “The measure, which would require short-term rental operators to register with the state, carry $1 million in liability insurance, and pay taxes equivalent to those paid by hotels, passed both the House and Senate with veto-proof majorities in the waning hours of the formal legislative session on Monday. That short clock left Baker the ability to propose changes after the session ended — meaning that any vote to accept or reject his changes would have to be unanimous.”

Takeaway: Massachusetts is one of the last remaining states that does not require an occupancy tax to be charged to guests for renting a vacation home. The Massachusetts legislature, in conference committee, passed a new taxation bill that would tax short-term rentals, potentially at a higher rate than hotels and other lodging. It would also tax vacation homes at a higher rate if the property owner has more than one property in the same community. Governor Baker amended the bill, sending it back to the legislature during an informal session. This action may kill the tax bill this year.

Due to Massachusetts large budget deficit, it is becoming clear that occupancy taxes on vacation homes is coming soon. If the bill dies, the state should utilize the time to craft rules that level the playing field between all forms of short-term rental and the hotel industry as well.

Honolulu, Hawaii

Honolulu mayor proposes bill to regulate short-term rentals

From the Article: “The bill seeks to ban transient vacation units from residential zones except through a permit system in apartment, business, resort and mixed-use zones. Only 4,000 transient vacation units would be allowed island-wide”

Takeaway: Honolulu stopped issuing transient vacation unit permits in 1989. In those 29 years, the city has turned a blind eye to the development of vacation homes within the island.

This new proposal will eliminate nearly 60% of the islands short-term rental properties (both traditional vacation homes and homesharing units). The impact on the tourism economy is very clear. In 2017, the Hawaii Tourism Authority’s own study stated that “It’s noteworthy that 15 percent of visitors said they would not travel to Hawaii if alternative accommodations were not available. Spending by these visitors generated an estimated $1.87 billion for Hawaii’s economy in 2016.”

This overreaching regulation proposal would definitely cost the island economically if passed.

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My city is considering a new law. Now what?