BILL ANALYSIS Ó
SENATE COMMITTEE ON TRANSPORTATION AND HOUSING
Senator Jim Beall, Chair
2015 - 2016 Regular
Bill No: SB 593 Hearing Date: 4/21/2015
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|Author: |McGuire |
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|Version: |4/6/2015 |
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|Urgency: |No |Fiscal: |No |
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|Consultant|Randy Chinn |
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SUBJECT: Residential units for tourist or transient use:
hosting platforms
DIGEST: This bill 1) requires electronic "hosting platforms"
(e.g., Airbnb) to regularly report the addresses of, nights of
use at, and revenues obtained by residences that were leased
through the platform; 2) prohibits the hosting platforms from
offering properties if prohibited by law; and 3) requires the
platforms to collect and remit any applicable transient
occupancy tax if requested by the local government.
ANALYSIS:
Renting a home or room has never been easier because of the rise
of several internet platforms. VRBO and Homeaway have for years
been a source of vacation rental listings. More recently,
Airbnb has expanded the availability of rentals to include
individual rooms as well as homes, encouraging many property
owners and renters to join the rental market.
Existing law authorizes cities and counties to levy occupancy
taxes for the privilege of occupying rooms in hotels, inns,
homes or other lodging.
This bill:
Requires the hosting platforms to report quarterly to the city
or county the following:
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The address of each property that was offered and rented
during the quarter
The total number of nights the property was rented
The amounts paid for the occupancy
Prohibits the hosting platform from facilitating the rental of a
property if such rental is prohibited by the city or county.
Authorizes a city or county to establish civil fines on the
hosting platforms of up to $1,000 for a first day of violation,
$2,000 for a second day of violation, and $5,000 for subsequent
days of violation of these provisions. The platform must be
given written notice of the violation and 30 days to correct the
violation before a fine may be imposed.
Requires the hosting platform to collect the applicable
transient occupancy tax if requested by the city or county.
COMMENTS:
1.Purpose of the bill. The author believes that online vacation
rental businesses, described as hosting platforms in the bill
and exemplified by Airbnb and VRBO, force cities to bear the
costs and burdens of their operation. Increased and
undisclosed tourist traffic alters neighborhood character,
creating additional demands on public safety. The author
contends that the hosting platforms frequently ignore local
government prohibitions on the renting of residences for less
than 30 days and fail to collect and remit applicable
transient occupancy taxes. Moreover, the increase in
short-term vacation rentals reduces the availability of
already scarce affordable housing.
2.Business is taking off. Founded in 2008, Airbnb, a California
company based in San Francisco, claims to have served over 25
million guests with growth of almost three times compared to
2013, according to one estimate. (Airbnb was originally
founded as AirBed and Breakfast, giving an indication of its
roots as a bedroom-sharing service.) Homeaway, another online
vacation rental company, had over 1 million listings at the
end of 2014, 17% more than 2013. The growth in online
vacation rentals has created growing pains, particularly in
Los Angeles and San Francisco. Supporters are concerned about
unfair competition with hotels, the loss of housing, and
short-term vacation rentals arising in residential
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neighborhoods. But the benefits to vacationers and
individuals renting out their homes and apartments are
undeniable, attested to by the remarkable growth of these
businesses.
3.Level playing field. Some parties raise concerns about fair
competition in that properties rented through the online
hosting platforms often don't assess the hotel tax, which can
be 10% or more. To the extent that traditional hotel rentals
are lost to lodging rented through the hosting platforms,
cities will suffer revenue losses.
4.Loss of housing stock. Relatively new concerns have arisen
over the effect of these vacation rentals on the character of
neighborhoods and the availability of housing. The Los
Angeles Alliance for a New Economy (LAANE), a nonprofit,
asserts that Airbnb has taken more than 7,300 units out of the
rental market, turning them into vacation rentals. In Venice,
12.5% of all housing units have become Airbnb units, without
public approval.<1> Late last year San Francisco approved an
ordinance legalizing short-term rentals with restrictions
while reinforcing its prohibition against the conversion of
residential housing into full-time de facto hotels. Many
cities restrict or bar short-term rentals of less than 30
days.
5.A hotel in every neighborhood. While the increasingly
widespread availability of short-term rentals has given
vacationers more choices, it can burden neighborhoods with
unwanted guests. Cities can control where hotels are placed,
and neighbors can have input when a residential usage is
changed to a commercial usage, but short-term vacation rentals
can pop up anywhere without oversight or regulation. Public
safety officials may have more difficulty finding a
responsible party to deal with a problem tenant in a
short-term rental than a tenant in traditional lodging.
6.The hub of the wheel. This bill recognizes the hosting
platform as the center of the vacation rental universe,
connecting renters with properties. From the perspective of a
local government that wishes to collect its hotel taxes and
regulate which properties are available for short-term
rentals, it is certainly convenient to do so as the hosting
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<1> Airbnb, Rising Rent, and the Housing Crisis in Los Angeles,
March 2015. Roy Samaan for LAANE.
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platform has complete knowledge of which properties are
rented, when they're rented and how much they're rented for.
Denying a property access to the platform literally takes the
property off the market, a very effective compliance tool.
7.Opponents' concerns. Airbnb objects to being used to enforce
legal obligations on the individuals making properties
available on their site, known as hosts. It believes it is an
invasion of privacy to reveal information about its hosts,
particularly with no limitation on how that information is
used. There may be alternative ways to accomplish the goals
of this bill which reduce the obligations on the hosting
platforms:
Who is offering? An alternative to making the hosting
platform provide the rental information is for the local
governments to go onto the hosting platform and search for
properties in their jurisdiction. This should be a
relatively simple search.
How much are they making? The best way to ensure
accurate information about how much and how many days a
property was rented for would seem to be by getting it from
the hosting platform. Such information could be obtained
directly from the host, but there are obvious incentives
for fudging the numbers.
Enforcing local restrictions. Cities impose varying
restrictions on short-term rentals, from prohibition to no
restriction at all. When a city prohibits short-term
rentals, it is easy to identify violators on the hosting
platform. The most effective way to enforce the
prohibition would be for the platform to bar the listing.
When a city allows a specific number of rental days, it is
harder to know when there is a violation, because a
property could be made available on multiple hosting
platforms and through more traditional rental mechanisms.
But the city could aggregate the information obtained from
the platforms. At that point the city could identify
violators and enforce its rules through the platforms to
bar the listing. There is precedent for using an
intermediary to enforce the law: The California Public
Utilities Commission can require telephone companies to
disconnect service from moving companies who violate their
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regulations.
Collecting the hotel tax. Airbnb has negotiated
agreements with several cities, including San Francisco,
San Jose, and Malibu, to collect and remit hotel taxes.
Other negotiations are in progress. Airbnb is concerned
that the bill language may impose a tax liability upon it.
1.The sharing economy. New internet-based business models are
challenging and disrupting traditional businesses. These new
models are often ill-fitted to existing laws and regulations.
The impacts and consequences of these new business models are
not yet fully realized. This bill attempts to reconcile the
benefits from one of these new business models with the
effects on competitors and community values.
2.Double referral. If this bill is successful, it should be
referred to the Rules Committee where a referral to the
Governance and Finance Committee will be considered.
Related Legislation:
SB 761 (Hall) - Requires the hosting platform to provide notice
to renters subleasing their property that they may be in
violation of their lease.
FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local:
No
POSITIONS: (Communicated to the committee before noon on
Wednesday,
April 15, 2015.)
SUPPORT:
California Association of Boutique and Breakfast Inns
California Association of Code Enforcement Officers
California Hotel and Lodging Association
California Police Chiefs Association
California Professional Firefighters
California State Association of Counties
California Teamsters Public Affairs Council
Neighbors for Overnight Oversight
Rural County Representatives of California
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Santa Cruz county Conference and Visitors Council
UNITE-HERE, AFL-CIO
OPPOSITION:
Airbnb
Internet Association
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