Here is the letter we wrote to the State Senators and Coastal Commission. Please feel free to copy/edit for yourselves!
Dear Esteemed Senators/Commissioners,
I am writing to urge you not to vote on Assembly Bill 1731 written by Ms. Boerner-Horvath of the 76th Assembly District. This bill would place severe restrictions on vacation rentals along the California coast unless the owner lives on site full time.
About US
My business partner (Miguel Gutierrez) and myself (Adriana Meza), have been active within the private accommodations (short-term rental industry) for the past 10 years. We’ve seen how short-term rental agencies should and should not operate. Our business incepted as a means to offer a transparent, relationship focused business for both our owners and the guests we host. We are considered a boutique agency (22 properties at this writing) and host hundreds of families a year.
As operators within The City of Oceanside, we consistently remit Transient Occupancy taxes on behalf of our owners. We abide by the Good Neighbor Policies and all local short-term rules and regulations; and are active within our community. More importantly, our business provides an important service for visiting travelers to our beautiful coast.
About our Property Owners
If passed, this bill will have not only have tragic financial effects on our business, but also the rights and financial interests of our property owners. It is true, that many of our owners have purchased their properties as investments. As currently written, the bill would disallow local jurisdictions to permit favorable short-term rental ordinances in residential zones by investors or, owners who do not live on-site more than 270 days out of the year. The bill casts an ominous tone to the effect, that, the majority of new development is purchased by out-of-state corporate investors. While some developments are purchased by businesses, the majority of these investors are couples or families, purchasing property for their eventual retirement or own personal use. In some cases, our owners live at their coastal property for at least 6 months out of the year.
Ms. Boerner-Horvathhas stated this bill does not infringe on homeowner rights, but this is simply not the case. It clearly disallows our property owners to use their homes within (reasonable limits) to supplement their income.
AB 1731 Fallacies
#1 Short-Terms contribute to California’s housing crisis
Ref: AB 1731 Section 1, a-d
In our opinion, the bill is poorly written, not thoroughly researched and does not provide enough oversight or enforcement of its desired changes. More so, Ms. Boerner-Horvath postures the bill as a solution to California's housing crisis in the coastal residential neighborhoods. There is not so much as a housing crisis as an affordable housing issue.
Transitioning thousands of homes into long-term rentals is not feasible to most owners. Thus, if a property owner cannot make ends meet with a long-term rental, then this inventory would return to the traditional market. It is highly unlikely that if AB 1731 passes, the homes in the San Diego Coastal zones would be considered affordable by any means as they are typically high-end inventory.
As a five-year pilot project, the bill does include practical enforcement tools of which, Ms. Boerner-Horvath herself has acknowledged. The bill also has many loopholes that are not being addressed.
An often under communicated benefit of short-term rentals is the ability for local families to stay in an affordable home while experiencing either tragedy (CA wildfires) or due to insurance needs such as home flooding etc. Short-term rentals are also a highly sought alternative for companies contracted to work in local military bases, community projects or other businesses (traveling nurse etc.).
#2 Private Accommodations are bad for business
Ref: Assembly Floor Analysis Third Reading, Page 2, “Arguments in Support”, #1
Vacation rentals are considered lodging which directly contributes to the California Tourism industry. As reported by Visit California CEO, Caroline Beteta, tourism is a staggering “economic engine powering the state’s 58 counties”:
- $140.6 Billion in travel-related spending
- $28.8 Billion of which, was spent on Accommodations
Visit Oceanside President/CEO, Leslie Gaul reports, that in 2018, tourism activity generated $14.8 million in local tax receipts, an increase of 6% from 2017. Visit Oceanside also reports that visitors spent at least 25% of the budgets on lodging.
A Phocuswright reported announced the United States private accommodations market reached $36.6B in 2018; about 23,000 vacation rental companies make up “20 percent of the vacation rental companies in the word” with an average “compound annual growth rate for this decade so far [at] 8.5 percent”. See this report for further explanation on what the sharing economy is and where it is headed.
It is also important to note that, hotel conglomerates such as Marriott International, have entered the private accommodations space with their Homes & Villas business model. When asked personally in Oceanside, if the bill would also regulate platforms such as Booking.com, Priceline, Expedia, Hotels.com etc.—all of which provide vacation rentals as bookable inventory-- Ms. Boerner-Horvath’s response was “ Yes those too, all of them will be regulated by this bill”. It is difficult for us to see these platforms acquiescing to such a cut and dry regulation as AB1731 in such a large market as San Diego County.
Short-term, rentals are a significant part of the lodging and accommodations community. Hotel interest groups would have you believe that short-term rentals soak up valuable housing stock while providing little to no, positive influence on their communities and lack government oversight. When in actuality, these rentals are a viable asset to local municipalities and provide equal to if not a far greater, personalized service to our visitors.
Through personalized relationship building, short-term rental operators (i.e. managers and owners) manage key opportunities to turn tourists into long-term residents of our communities. In short, the private accommodations industry is here to stay.
#3 “Local Cities cannot effectively regulate short-term rentals”
Ref: AB 1731 Section 1, f
The biggest issue is that AB1731 allows State control over local jurisdictions. Short-term rentals provide valuable tourism revenue to each city and have more law-abiding operators than not. AB 1731 is not reflective of the current state of the private accommodations industry on a local level.
Ms. Boerner-Horvath implies that San Diego County coastal governments have been incapable of writing effective short-term ordinances. This is simply not valid. Undeniably, the issue is wrought with challenges. But many coastal cities are making significant progress:
- The City of San Diego will be revisiting the most recent overturned referendum
- The City of Solana Beach has enacted permitting, enforcement, penalties, and guidelines for tax remittance. See ordinance here
- The City of Encinitas has dictated permitting, enforcement, penalties, occupancy limits and guidelines for tax remittance. See ordinance here. Prior to representing the 76th Assembly District, Ms. Boerner-Horvath was an Encinitas councilmember.
- The City of Carlsbad has made significant strides in regulating short-term rentals to the coastal zone only. See ordinance here.
- The City of Oceanside has also made significant efforts to update the 2016 short-term rental ordinance. On June 12, 2019, a City Council workshop will be held to amend the current municipal code to include regulations on operator responsibilities, maximum occupancy, parking, complaint response time, minimum night stay, noise, and enforcement protocol. See City of Oceanside’s ordinance progress here.
Our local municipalities are working with their communities to effectively handle short-term rentals. To disallow local governments the ability to draft fair regulations, begs the question “What other issues unique to San Diego County will or can be, decided by CA legislature?”
So what are the solutions?
The first step in addressing this issue is, to begin with a balanced conversation. As elected officials, it is your duty to listen to all arguments, review the facts, and engage with those most affected.
The hospitality industry is a dynamic animal in that, we all share the same goal: provide visitors the best experience and treat them as guests in our towns. The difference is that we provide a plethora of choice in accommodations; a choice that allows for our travelers to select what best fits their needs. By disallowing choice, we are fundamentally disallowing free enterprise.
The short-term/housing crisis/NIMBY (Not In My Back Yard) arguments are indeed difficult to navigate. Here are our suggestions:
- First and foremost, allow local jurisdictions to manage ordinances that best fit their communities such as:
- Grandfather in current, law-abiding short-term rental operators
- Enact local enforcement tools
- Edit and revise as need but no less than biennial
- If the California legislature must be involved, then it is suggested to establish an Assembly Committee (a subset of Assembly Housing & Community Development or similar) specifically for short-term/private accommodations. As it is, the industry is underrepresented at the State level. This would serve as a voice and a means to discuss these issues. The committee could be tasked with:
- Establishing a ‘Code of Ethics’ if you will, for the short-term industry. It is highly encouraged to consult with a variety of established private accommodations providers – small, medium and large—to draft this document.
- Establish guidelines for evaluating the industry’s growth and how to best manage certain municipalities when assistance is sought
- Establish and maintain relationships with platforms that best meet the needs of all parties
Thank you for taking the time to read our position and for your consideration. This letter serves as one boutique property management agency’s view on the issues at hand. Our voice is one of the thousands as we (collectively) remain confident that our voices will be heard.
Sincerely,
Adriana Meza & Miguel Gutierrez, Co-Founders StayCoastalVacations.com
