Home-sharing ordinance gets thumbs-up from LA City Council

While restrictive, law would legalize practice and reward good host
By Dennis Lynch | May 02, 2018 01:14PM

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Los Angeles took one step closer to implementing home-sharing regulations on Wednesday.

The City Council unanimously approved a draft ordinance to limit home-sharing in the city to four months a year, potentially dampening profits for platforms like Airbnb.

The ordinance, three years in the making, would cap the number of days a host can rent out their primary residence each year at 120, but it would create a process for hosts in good standing with the city to exceed that cap. It also limits home-sharing to primary residences to prevent multifamily landlords from running their rental properties as de-facto hotels.

Several other cities in the Los Angeles metro area have placed restrictions on home-sharing, such as Santa Monica and West Hollywood, but the City of Los Angeles makes up the bulk of listings in L.A.

While it places restrictions on home-sharing, the ordinance would actually legalize the practice in the city, where it is currently prohibited but almost impossible to combat. For example, one of the only ways currently available to the city to pursue illegal short-term rentals was for an undercover police officer to book a room there, Councilmember Mike Bonin said during Wednesday’s hearing.

In contrast, the ordinance creates “simple and trackable ways” to enforce its rules, he said. Still, Bonin admitted the ordinance probably wasn’t perfect.

“This is Goldilocks we’re looking for — some legislations have been too hard, some have been too soft, we’re hoping this one is just right,” Bonin said. “We’re probably going to have to go back and revisit it, fix it, and refine it, [but we can’t continue to do nothing.]”

The vote did not institute the ordinance outright. The City Planning Commission and City Attorney will now review and write the actual ordinance, which will need to pass through two more committees before getting to the full Council for final approval, according to a representative for its author, Councilmember Jose Huizar.

If the current draft is made final, hosts will need to get a permit from the city to rent out their units. The city will revoke the permit if the host records two violations with the city, including nuisance violations.

The ordinance could pose a problem for home-sharing platforms like Airbnb, which accounts for the vast majority of the home-share listings in the city. Around 39 percent of the roughly 18,300 unique listings on the site over the last year were booked for more than 120 days of the year, according to the Airbnb tracker AirDNA.

The city’s Office of Finance estimates that Airbnb will pay $46 million in Transient Occupancy Taxes for the fiscal year ending in July, and that the cap will reduce that revenue, according to Fox 11. That means Airbnb itself will take a financial hit.

Wednesday’s meeting was well-attended by both home-sharing advocates and critics, many of whom reiterated many of the common talking points that surfaced during discussions of the ordinance. Some hosts said that home-sharing is the only way they can afford their mortgages or rents in an increasingly expensive city. Others said home-sharing drives up rents and takes housing off the rental market.

Lawmakers have found themselves trying to strike a balance between the two camps. That’s a big reason why the ordinance has taken so long to go before the full City Council. Huizar first proposed it in 2015 but it sat dormant in the PLUM committee until earlier this year when the committee approved it and sent it to the Council.