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HomeMy WebLinkAboutTC Agd Pkt 2015-11-18TOWN OF TIBURON Tiburon Town Hall 1505 Tiburon Boulevard Tiburon, CA 94920 Tiburon Town Council November 18, 2015 Special Closed Session Meeting - 6:15 p.m. Regular Meeting - 7:30 p.m. Special and Regular Meeting AGENDA TIBURON TOWN COUNCIL SPECIAL CLOSED SESSION MEETING - 615 p.m. CALL TO ORDER AND ROLL CALL Councilmember Fraser, Councilmember Fredericks, Councilmember O'Donnell, Vice Mayor Tollini, Mayor Doyle CLOSED SESSION 1) Public Employee Appointment (Cal. Gov. Code § 54957(b)) Title: Town Manager 2) CONFERENCE WITII LEGAL COUNSEL --ANTICIPATED LITIGATION Significant exposure to litigation pursuant to paragraph (2) or (3) of subdivision (d) of Section 54956.9: Five potential cases ANNOUNCEMENT OF ACTION TAKEN IN CLOSED SESSION, IF ANY ADJOURNMENT - to regular meeting REGULAR MEETING CALL TO ORDER AND ROLL CALL - 7:30 p.m. Councilmember Fraser, Councilmember Fredericks, Councilmember O'Donnell, Vice Mayor Tollini, Mayor Doyle ORAL COMMUNICATIONS Persons wishing to address the Town Council on subjects not on the agenda may do so at this time. Please note however, that the Town Council is not able to undertake extended discussion or action on items not on the agenda. Matters requiring action will be referred to the appropriate Commission, Board, Committee or staff for consideration or placed on a future Town Council meeting agenda. Please limit your comments to three (3) minutes. PRESENTATION • The Ranch Annual Report - Cathleen Andreucci, Executive Director CONSENT CALENDAR All items on the Consent Calendar may be approved by one motion of the Town Council unless a request is made by a member of the Town Council, public or staff to remove an item for separate discussion and consideration. If you wish to speak on a Consent Calendar item, please seek recognition by the Mayor and do so at this time. 1. Town Investment Summary - Accept report for month ending October 31, 2015 (Director of Administrative Services Bigall) PUBLIC HEARINGS 1. Seasonal Rental Units - Amendments to Chapter 16 (Zoning) of the Tiburon Municipal Code to prohibit seasonal rental units (Community Development Department) - hearing continued from September 2 TOWN COUNCIL REPORTS Couneilmember O'Donnell report on PG&E proposal to increase exit fees charged to Marin Clean Energy customers. TOWN MANAGER REPORT WEEKLY DIGESTS • Town Council Weekly Digests - November 6 & 13, 2015 ADJOURNMENT GENERAL PUBLIC INFORMATION ASSISTANCE FOR PEOPLE WITH DISABILITIES In compliance with the Americans with Disabilities Act, if you need special assistance to participate in this meeting, please contact the Town Clerk at (415) 435- 7377. Notification 48 hours prior to the meeting will enable the Town to make reasonable arrangements to ensure accessibility to this meeting. AVAILABILITY OF INFORMATION Copies of all agenda reports and supporting data are available for viewing and inspection at Town Hall and at the Belvedere -Tiburon Library located adjacent to Town Hall. Agendas and minutes are posted on the Town's website, www.ci.tiburon.ca.us. Upon request, the Town will provide written agenda materials in appropriate alternative formats, or disability -related modification or accommodation, including auxiliary aids or services, to enable individuals with disabilities to participate in public meetings. Please send a written request, including your name, mailing address, phone number and brief description of the requested materials and preferred alternative format or auxiliary aid or service at least 5 days before the meeting. Requests should be sent to the Office of the Town Clerk at the above address. PUBLIC HEARINGS Public Hearings provide the general public and interested parties an opportunity to provide testimony on these items. If you challenge any proposed action(s) in court, you may be limited to raising only those issues you or someone else raised at the Public Hearing(s) described later in this agenda, or in written correspondence delivered to the Town Council at, or prior to, the Public Hearing(s). TIMING OF ITEMS ON AGENDA While the Town Council attempts to hear all items in order as stated on the agenda, it reserves the right to take items out of order. No set times are assigned to items appearing on the Town Council agenda. TOWN OF TIBURON — 1505 Tiburon Boulevard Tiburon, CA 94920 STAI ' REPORT Town Council Meeting November 18, 2015 Agenda Item: CC- To: From: Subject: Reviewed By: Mayor and Members of the Town Council Administrative Services Department Investment Summary — October 2015 BACKGROUND Pursuant to Government Code Section 53601, staff is required to provide the Town Council with a report regarding the Town's investment activities for the period ended October 31,2 015. ANALYSIS Agency Investment October 2015 Amount Interest Rate Maturity Town of Tiburon Local Agency Fund (LAIF) $20,262,949.08 0.357% Liquid Housing note to Town Manager S 800,000.00 0.260% Based on Contract Money Market (Bank of Marin) $ 100,000.00 0.10% Liquid Total $21,162,949.08 The total funds invested at the end of the prior month were $21,570,530.30; therefore the Town's investments decreased by $407,581.22 over September 2015. FINANCIAL IMPACT No financial impact occurs by accepting this report. The Town continues to meet the priority principles of investing — safety, liquidity and yield in this respective order. RECOMMENDATION Staff recommends that the Town Council: Move to accept the Investment Summary for October 2015 Prepared By: Heidi Bigall, Director of Administrative Services TOWN OF TIBURON 1505 Tiburon Boulevard Tiburon, CA 94920 Town Council Meeting November 18, 2015 Agenda Item: 7 STAFF REPORT To: From: Mayor and Members of Town Council Community Development Department Subject: Recommendation to Consider Amendments to Chapter 16 (Zoning) of the Tiburon Municipal Code to Prohibit Short Term Rental Units; File MCA 2015-07; (Continued from September 2, 2015) Reviewed By: SUMMARY The Town has initiated amendments to the Tiburon Zoning Ordinance that would prohibit short term rental units in Tiburon. The amendments would amend Section 16-40.040 of the zoning ordinance to replace the current provisions for issuing seasonal (short term) rental unit permits with a prohibition of renting out a dwelling for a period of 30 days or less. First reading of the ordinance was held on August 19, 2015. On September 2, 2015, the Town Council appointed a subcommittee to study the issue and make further recommendations to the Council. BACKGROUND On March 4, 2015, the Town Council considered an appeal regarding the Planning Commission's review of the seasonal rental unit permit at 110 Solano Street. At that appeal, as well as at the Town Council -Staff retreat earlier in 2015, the Council raised the issue of possible modifications to the Town's regulations regarding these uses. On May 6, 2015, the Town Council revisited the issue of seasonal rental permits. Staff prepared a report (Exhibit 1) which included possible amendments to the existing regulations of Section 16- 40.040. After extended discussion, a majority of the Town Council directed staff to draft amendments to the municipal code that would prohibit short term rental units altogether and begin the public hearing process for consideration of adoption. Minutes of the May 6, 2015 Council meeting are attached as Exhibit 2. Staff subsequently prepared a draft ordinance (Exhibit 3) that would replace existing seasonal rental unit permit provisions with a ban on "vacation rentals" (a more commonly -used term for such uses), and would also add the terms "vacation rental" and "short-term rental" to the zoning ordinance, as these terms are frequently used to identify this type of use and make it easier to locate the Town's prohibition through online searches. The proposed ordinance would have replaced the current ordinance provisions (Exhibit 4). All currently approved seasonal rental unit permits are set to expire on December 31, 2015. TO\\'N OFTIM ,I ON Page 1 of COu/jCIL Xems From: Shalini Swaroop TOWN CLERK 1 e - /5 r TOWN OF TIBURON <sswaroop@mcecleanenergy. org<mailto: sswaroop, Date: November 13, 2015 at 1:10:30 PM PST To: Dawn Weisz <dweisz@mcecleanenergy.org<mailto:dweisz@mcecleanenergy.org» Cc: Darlene Jackson <djackson@mcecleanenergy.org<mailto:djackson@mcecleanenergy.org» Subject: Sample Community Letter and Resolutions Regarding 95% Increase in PCIA EvU; i i.U15 Dear MCE Board Members, As you know, PG&E has proposed to increase the PCIA exit fee to MCE customers. While the initial estimate for the PCIA increase was approximately 72%, updated numbers we received last week indicate a 95% increase to PCIA fees from 2015 to 2016. We expect yet another increase before the numbers are final on January 1, 2016. This morning, the CPUC released a Proposed Decision that indicates it will be approving PG&E's proposed PCIA increase. In the same proceeding, PG&E proposed to close its Negative PCIA Account with over $1 billion. PG&E sells off excess energy it has due to departing load. Whenever PG&E makes a profit on the sale, the proceeds are tracked in this billion dollar account. MCE asked the CPUC to apply some of the $1 billion to mitigate the impact of the 2016 PCIA increase on our customers. In the Proposed Decision released today, the Commission rejects MCE's request, directs that PG&E is not allowed to close the account, and indicates it will further examine this account next year. Attached please find a sample letter and resolution that your cities or counties may be interested in passing as a response to the proposed increase. These documents urge the CPUC to examine the fairness and reasonableness of the PCIA and to apply some of the $1 billion to offset PCIA fees our customers pay. We expect the CPUC to take a final vote on these issues at its December 17th meeting. The sample letter and resolution both address the above issues. In addition, the resolution is designed to support any future action that MCE may take on the PCIA in 2016. Please feel free to contact me with any questions. Dawn will also be discussing these documents and the proposed increase at the MCE Board Meeting on Thursday. Best, Shalini Swaroop Regulatory & Legislative Counsel Marin Clean Energy 1125 Tampalpais Ave., San Rafael, CA 94901 sswaroop@mceCleanEnergy.org<mailto:sswaroop@mcecleanenergy.org> 1 T: (415) 464-6040 Town Council Meeting November 18, 2015 On July 8, 2015, the Planning Commission held a public hearing on a proposed ordinance to prohibit short term rentals. At that meeting, several Tiburon residents opposed the prohibition and instead suggested possible amendments to strengthen the existing regulations. Other residents expressed support for the proposed ban. After extended discussion, the Planning Commission voted to recommend to the Town Council that a ban on short term rentals not be enacted, and instead offered specific suggestions for regulatory amendments to address problems and concerns raised by these uses. The Commission recommended that the Town Council remand the item to the Commission for fine-tuning of the revised regulations. On August 19, 2015, the Town Council held a public hearing, heard testimony from residents and considered the Planning Commission's recommendations. The Council then voted 3-2 to pass first reading of the ordinance prohibiting short term rental units. On September 2, 2015, the Council heard additional public testimony and deliberated further on the proposed ordinance. The Town Council voted to continue the hearing and appointed a subcommittee (Mayor Frank Doyle and Councilmember Alice Fredericks) to study the issue and make further recommendations to the Council. AD HOC SUBCOMMITTEE On October 12, 2015 the ad hoc subcommittee met with a group of invited Tiburon residents to discuss a possible regulatory framework for short term rentals. About 15 residents attended the meeting. They put forth the following ideas for consideration: • Require a minimum number of days per rental (likely 7 days) • Allow a maximum number of days per year that a dwelling could be rented as a short term rental • Establish a maximum occupancy level for each dwelling (possibly 2 guests per bedroom) • Require that the dwelling be the owner's principle place of residence • Require some form of reporting to the Town • Require that the permit number be listed on any website advertising the short term rental • Prohibit commercial use (weddings, group meetings, etc.) of short term rentals The group discussed enforcement of Town regulations, with differing opinions on the amount of penalties, allowing two or three strikes before revoking permits, or posting bonds or deposits to be used in case of problems. There was also discussion about the possibility of prohibiting short term rentals in certain areas of town or requiring minimum yard setbacks for any dwelling uses as a short term rental. Many of those in attendance urged that the Town's regulations should be as simple and straightforward as possible, as applicants would be less likely to comply with more complicated requirements that would also be more difficult to enforce. The group also encouraged the Town, if it chose to regulate rather than ban the activity, to review these requirements after a period of time (perhaps one year) to see if the regulations and enforcement were working and if other cities TOWN 0 I' TI 'RON Page 2 of Tc,wn Council Meeting November 18, 2015 or the State of California have come up with other methods of dealing with the rapidly evolving issue of short term rentals. The Town has received considerable additional information on short term rentals, including comments from Tiburon residents, news articles and information from other cities addressing this issue. This information is attached as Exhibits 8-33. GOALS To establish a framework for the discussion of the regulation of short term rentals, the ad hoc committee believes that, if a majority of the Town Council wishes to permit short term rentals, any Town regulations should be considered in light of the following goals: • Prevent homes from turning into primarily commercial uses • Preserve the character of neighborhoods as places where long-term residents live • Protect the peace and quiet enjoyment of neighborhoods • Avoid impacts on neighbors of noise, parking, trash, and so forth • Preserve security of neighborhoods where people can know and recognize who comes and goes • Minimize turnover of guests coming and going • Protect the value of residential homes that could be harmed by a preponderance of short term rentals in an area • Accommodate the desire of homeowners to rent out their homes as short term rentals for a limited period of time while on vacations (i.e. a maximum number of days per year or a minimum length of stay) • Keep the basic regulations as simple and straightforward as possible for ease of understanding by both "hosts" and neighbors of short term rentals, promoting compliance and aiding enforcement • Recognize that this is an evolving area of regulation, and be prepared to review and potentially modify the regulations periodically POSSIBLE AMENDMENTS The Planning Commission, residents and the ad hoc committee have suggested a large number of possible amendments to the Town's current regulations if the Town Council decides to continue allowing these uses in some manner. The following list includes possible modifications that the Council may wish to consider. The amendments are annotated to indicate whether each potential change was recommended by the Planning Commission (PC), by the ad hoc committee workshop participants (WS), by both (PC/WS) or was otherwise raised at some point in the discussions (OR). 1. Require a minimum number of days per rental, such as 7 days. PC/WS 2. Allow a maximum number of days per year that a dwelling could be rented as a short term rental. If rentals are permitted, the ad hoc committee recommends a maximum of 45 days per year. WS TowNlei'Tf[3[1RON Page 3o17 Town Council Meeting November 18, 2015 3. Establish a maximum occupancy level for each dwelling, possibly 2 guests per bedroom of the dwelling unit, and possibly capped at a maximum number of guests. WS 4. Require that the dwelling unit be the owner's principal place of residence. PC/WS 5. Require permittees to submit an annual reporting statement to the Town. PC/WS 6. Require that the Town's rental permit number be listed on any platform, website or other venue advertising the rental. WS 7. Change the term "seasonal rental unit" to "vacation rental" or "short term rental." PC 8. Require adequate on-site and/or off-site parking as a condition of approval of the rental permit. PC 9. Do not allow permits to be issued for properties with commingled rights (common areas, pools, access, parking, etc.) with neighboring units, unless there is unanimous consent among property owners or there are written CC&Rs in the case of a condominium or townhouse complex. PC 10. Increase fees and penalties to recover ongoing costs of enforcement. PC 11. Require courtesy notices to be sent by the Town to neighboring property owners prior to issuance of a vacation rental permit. PC 12. Prohibit commercial use (weddings, group meetings, etc.) of short term rentals. WS 13. Require rental rules and regulations to be posted inside the dwelling unit. OR 14. Require rental leases to include language giving Police Department right of entry. OR 15. Cap the number of short term rental permits that are issued. OR 16. Limit or prohibit permits in certain neighborhoods, such as Old Tiburon, or avoid geographic concentration of short term rentals. OR 17. For homes with limited or substandard building setbacks, only allow permits with neighbor support and do not renew permits if there are neighbor complaints about the rental. OR 18. Send notices to neighbors prior to permit renewals. OR 19. Require a local contact person available on short notice in case of problems with a rental. OR To N orT1at-RON Page 4 of 7 Town Council Meeting November 18, 2015 20. Prohibit permits for property owners with multiple seasonal rentals. OR 21. Allow longer renewals (i.e. 2 years) for permits with no complaints. OR 22. Allow longer permit lengths when the owner is present for all rentals (just renting one or more rooms). OR 23. Do not regulate house-to-house swaps. OR 24. Prohibit rental of secondary dwelling units as short term rentals. OR 25. Prohibit short term rental of dwelling units in duplexes when both units have the same owner. OR The Town is still evaluating possible changes to the tools and methods of enforcing violations of seasonal rental permit requirements. The Town Attorney is helping to determine which options are viable and legally enforceable. Many of the enforcement options would be available at the discretion of Town staff and would not need to be codified in a revised seasonal rental ordinance. The Town staff were contacted by Airbnb in the past few days and will make a verbal report at the Town Council meeting on November 18 regarding those conversations. A principal question at hand is whether that platform (and if them, others as well) are willing to assist the Town in the collection of transient occupancy taxes or other elements to aid enforcement of the Town's regulations should it choose to permit these rentals. OPTIONS Town staff sees three primary options available to the Town Council. These are discussed below: Option 1: Proceed with prohibition. The Planning Commission has held a public hearing, considered the draft ordinance, and made its recommendations to the Town Council. The Town Council may choose to move forward with adoption of the previously discussed ordinance prohibiting seasonal rental units. Option 2: Amend existing regulations The Town Council may discuss the potential amendments above and any other possible changes to the seasonal rental regulations and direct staff to prepare an ordinance for public hearing at a future date. If the Council chooses this option, it would be ideal if the Council provide direction on which of the above items should be incorporated into the draft ordinance. A checklist of potential seasonal rental regulation amendments is attached as Exhibit 2 for use in this discussion. Option 3: Table discussion to a future date As noted above, the regulation of seasonal rentals continues to evolve. There is legislation pending at the State of California (SB 593) which would create certain statewide regulations for Page 5 o[ 7 TO\VN car 'RON Town Council Meeting November 1B. 2015 such uses and numerous cities in California are studying this situation and attempting to come up with regulations to address many of the same concerns facing Tiburon. The Town Council may choose to wait until a decision is made on SB 593 or wait to see how other cities deal with seasonal rentals. The Town's current seasonal rental regulations would remain in place. RECOMMENDATION Staff recommends that the Town Council: 1. Hold a public hearing on the item and hear all testimony from interested persons. 2. Either: A. Move to adopt the ordinance prohibiting vacation rentals; OR B. Direct staff to prepare a draft ordinance revising the regulations for short term rentals for consideration at a future Town Council meeting; OR C. Table discussion until a date to be determined; OR D. Continue the public hearing to a date specific if additional deliberation is required. EXHIBITS 1. Town Council staff report dated May 6, 2015 2. Checklist of potential short term regulation amendments 3. Draft ordinance prohibiting seasonal rental units 4. Minutes of the May 6, 2015 Town Council meeting 5. Minutes of the August 19, 2015 Town Council meeting 6. Minutes of the September 2, 2015 Town Council meeting 7. Staff report on Regulating Short -Term Rentals to the Mill Valley City Council, dated August 3, 2015 8. Report on Short -Term Rentals to the Richmond, Virginia City Council 9. Report from LAANE titled "Airbnb, Rising Rent and the Housing Crisis in Los Angeles", dated March 2015 10. LA Weekly article dated January 22, 2015 11. Carmel Pine Cone article dated October 9, 2015 12. New York Times article dated October 9, 2015 13. Western City article dated August, 2015 14. League of California Cities article dated October 12, 2015 15. North Bay Business Journal article dated November 6, 2015 16. Information on online vacation rental legislation proposed by State Senator Mark McGuire 17. Letter from Colin Crawford, dated October 3, 2015 18. Letter from Elizabeth Selig, dated October 6, 2015 19. Letter from Terry Hennessey, dated October 7, 2015 20. Letter from Jane Gould, dated October 8, 2015 Page�f. To\\'N c�PTIGI RilN Town Council Meeting November 18, 2015 21. Letter from Colin Crawford, dated October 11, 2015 22. Letter from Barry Wilson, dated October 12, 2015 23. Letter from Colin Crawford, dated October 13, 2015 24. Letter from Bruce Powell, dated October 13, 2015 25. Letter from Danny McNamara, dated October 14, 2015 26. Letter from Bruce Powell, dated October 14, 2015 27. Letter from Alan Lefkof, dated October 14, 2015 28. Letters from Colin Crawford, dated October 14, 2015 29. Letter from Urik Binzer, dated October 14, 2015 30. Letter from Cathleen Gouveia, dated October 14, 2015 31. Letter from Colin Crawford, dated October 15, 2015 32. Letter from Matthew Le Merle, dated October 15, 2015 33. Letter from Bruce Powell, dated October 15, 2015 Prepared By: Scott Anderson, Director of Community Development Daniel M. Watrous, Planning Manager 4--ee :_r2)( 6". C�LJ4�l�� 2 TOWN OF TI Bl. Page 7 of 7 ORDINANCE NO. 562 N. S. AN ORDINANCE OF THE TOWN COUNCIL OF THE TOWN OF TIBURON REPEALING TITLE IV, CHAPTER 16, SECTION 16-40.040 (SEASONAL RENTAL UNITS) OF THE TIBURON MUNICIPAL CODE AND ADOPTING A NEW TITLE IV, CHAPTER 16, SECTION 16-40.040 THAT PROHIBITS VACATION RENTALS WHEREAS, the Town consists of just over four square miles of land on a narrow peninsula jutting into San Francisco Bay, which is home to 9,000 residents and numerous visitors from the world over on any given day of the year; and WHEREAS, Tiburon's housing goals include preserving its housing stock and preserving the quality and character of its existing single and multi -family residential neighborhoods; and WHEREAS, the Town must also preserve its unique sense of community which derives, in large part, from residents' active participation in civic affairs, including, local goverment, cultural events, and educational endeavors; and WHEREAS, Tiburon's unparalleled geography, climate, natural beauty, its charming downtown, distinct residential neighborhoods and proximity to San Francisco and other parts of the San Francisco Bay Area have drawn visitors from around the United States and around the world; and WHEREAS, the Town affords an array of visitor -serving short term rentals, including, hotels, motels, seasonal and/or vacation rentals, not all of which are currently being undertaken as authorized by local law; and WHEREAS, operations of vacation rentals, where residents typically rent out entire units Town of Tiburon Ordinance No. 562 N. S. Effective --/--/2015 EXHIBIT NO. IPage I l to visitors and are not present during the visitors' stays, are found to be detrimental to the Town's public welfare because occupants of such vacation rentals do not have any connections to the Tiburon community and to the residential neighborhoods in which they are visiting; and WHEREAS, the presence of such visitors within the Town's residential neighborhoods has on well-documented occasions disrupted the quietude and residential character of the neighborhoods and adversely impact the corrununity, resulting in noise, parking and litter complaints from adversely affected neighbors; and WHEREAS, judicial decisions have upheld local governments' authority to prohibit vacation rentals. NOW, THEREFORE, THE TOWN COUNCIL OF THE TOWN OF TIBURON DOES HEREBY ORDAIN AS FOLLOWS: SECTION 1. REPEAL. Title IV, Chapter 16, Section 16-40.040 of the Tiburon Municipal Code is hereby repealed. SECTION 2. ADOPTION OF AMENDMENTS. (A) Title IV, Chapter 16, Section 16-21.030 (Table 2-1) is amended to read as shown on attached Exhibit "A". (B) Title IV, Chapter 16, Section 16-50.020 (Table 5-1) is amended to read as shown on attached Exhibit "B". (C) Title IV, Section 16-40.040 of the Tiburon Municipal Code is hereby adopted to read as follows: Town of Tiburon Ordinance No. 562 N S. Effective --/--/2015 Page 12 t EXHIBIT NO. 1 16-40.040 VACATION RENTALS 16.40.042 Vacation Rentals Prohibited No person shall undertake, maintain, authorize, aid, facilitate or advertise a Vacation Rental, as defined herein. Any permits previously issued for such uses (also known as Seasonal Rental Units) shall not be renewed and shall expire according to the terms of those permits and become null and void on December 31, 2015. 16-40.046 Enforcement (a) Any person violating any provision of this Section shall be guilty of an infraction, which shall be punishable by a fine as established by Resolution of the Town Council and amended from time to time. (b) Any person convicted of violating any provision of this Section in a criminal case or found to be in violation of this Section in a civil case brought by a law enforcement agency shall be ordered to reimburse the Town and other participating law enforcement agencies their full investigative costs, pay all back -owed transient occupancy taxes, and remit all illegally obtained rental revenue to the Town so that it may be used to return payment to the affected vacation renters. (c) Any person who violates any provision of this Section shall be subject to administrative fines and administrative penalties pursuant to Title VI, Chapter 31 of this Code and to recovery of collection costs pursuant to Title II, Chapter 1, Section 1-10 of this Code. (d) Any interested person may seek an injunction or other relief against any person who is alleged to be violating this Section in order to prevent or remedy violations of this Section. The prevailing party in such an action shall be entitled to recover reasonable costs and attorney's fees from the person determined to be in violation. Under no circumstance shall any person be Town of Tiburon Ordinance No. 562 N S. Effective --/--/2015 Page 13 EXHIBIT NO. entitled to maintain an action seeking an injunction or other relief or recover any reasonable costs and attorney's fees against the Town to enforce the provisions of this Section. (e) The remedies provided in this Section are not exclusive, and nothing in this Section shall preclude the use or application of any other remedies, penalties or procedures established by law. (B) Title IV, Chapter 16, Article X, Section 16-100.020 is amended as follows: (1) The definition of "Seasonal rental unit" in Section 16-100.020 (S) is amended to read as follows: Seasonal rental unit. See "Vacation rental". (2) The following definition is added to Section 16-100.020 (S): Short term rental. See "Vacation Rental". (3) The following definition is added to Section 16-100.020 (V): Vacation Rental. Rental of any dwelling unit, in whole or in part, within the Town of Tiburon to any person(s) for exclusive transient use of 30 consecutive calendar days or Less, in instances where the unit is only approved for permanent residential occupancy and not approved for occupancy by transients, as that term is defined in Title II, Chapter 7 of this Code. Rental of units within Town -approved hotels, motels and bed and breakfasts shall not be considered Vacation Rental, nor shall providing room and board for one guest in a single family dwelling. SECTION 3. SEVERABILITY. If any section, subsection, subdivision, paragraph, sentence, clause or phrase of this Ordinance, or its application to any person or circumstance, is for any reason held to be invalid or unenforceable, such invalidity or unenforceability shall not affect the validity or enforceability of the remaining sections, subsections, subdivisions, paragraphs, sentences, clauses or phrases of Town of Tiburon Ordinance No. 562 N. S. Effective --/--/2015 EXHIBIT NO. Pagel 4 this Ordinance, or its application to any other person or circumstance. The Town Council of the Town of Tiburon hereby declares that it would have adopted each section, subsection, subdivision, paragraph, sentence, clause or phrase hereof, irrespective of the fact that any one or more other sections, subsections, subdivisions, paragraphs, sentences, clauses or phrases hereof be declared invalid or unenforceable. SECTION 4. PUBLICATION AND EFFECTIVE DATE. This Ordinance shall be in full force and effect thirty (30) days after the date of adoption. Pursuant to the provisions of the California Government Code, a summary of this ordinance shall be prepared by the Town Attorney. At least five (5) days prior to the Town Council meeting at which adoption of the ordinance is scheduled, the Town Clerk shall (1) publish the summary in a newspaper of general circulation in the Town of Tiburon, and (2) post in the office of the Town Clerk a certified copy of this ordinance. Within fifteen (15) days after the adoption of this ordinance, the Town Clerk shall (1) publish the summary in a newspaper of general circulation in the Town of Tiburon, and (2) post in the office of the Town Clerk a certified copy of the ordinance along with the names of those Council members voting for and against the ordinance. This ordinance was read and introduced at a regular meeting of the Town Council of the Town of Tiburon, held on August 19, 2015, and was adopted at a regular meeting of the Town Council of the Town of Tiburon, held on , 2015, by the following vote: AYES: COUNCILMEMBERS: NAYS: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: Totii'n of Tiburon Ordinance No. 562 N. S. FRANK X. DOYLE, MAYOR TOWN OF TIBURON Effective --/--/2015 Page 1 5 EXHIBIT NO. ATTEST: DIANE CRANE IACOPI, TOWN CLERK Attachments: Exhibit "A" ---Revised Table 2-1 Exhibit "B" --Revised Table 5-1 Town of Tiburon Ordinance No. 56211 S. Effective --1-12015 EXHIBIT NO. Page 1 6 Checklist of Potential Short Term Rental Regulation Amendments 1. Require a minimum number of days per rental, such as 7 days. 2. Allow a maximum number of days per year that a dwelling could be rented as a short term rental. The ad hoc coirunittee recommends a maximum of 45 days per year. 3. Establish a maximum occupancy level for each dwelling, possibly 2 guests per bedroom of the dwelling unit, and possibly capped at a maximum number of guests. 4. Require that the dwelling unit be the owner's principal place of residence. 5. Require permittees to submit an annual reporting statement to the Town. 6. Require that the Town's rental permit number be listed on any website or other venue advertising the rental. 7. Change the term "seasonal rental unit" to "vacation rental" or "short term rental." 8. Require adequate on-site and/or off-site parking as a condition of approval of the rental permit. 9. Do not allow permits to be issued for properties with commingled rights (common areas, pools, access, parking, etc.) with neighboring units, unless there is unanimous consent among property owners or there are written CC&Rs in the case of a condominium or townhouse complex. 10. Increase fees and penalties to recover ongoing costs of enforcement. 11. Require courtesy notices to be sent by the Town to neighboring property owners prior to issuance of a vacation rental permit. 12. Prohibit commercial use (weddings, group meetings, etc.) of short term rentals. 13. Require rental rules and regulations to be posted inside the dwelling unit. 14. Require rental leases to include language giving Police Department right of entry. 15. Cap the number of short tern rental permits that could be issued. 16. Limit or prohibit permits in certain neighborhoods, such as Old Tiburon or avoid geographic concentration of short term rentals. 17. For homes with limited or substandard building setbacks, only allow permits with neighbor support and do not renew permits if there are neighbor complaints about the rental. 18. Send notices to neighbors prior to permit renewals. 19. Require a local contact person available on short notice in case of problems with a rental. 20. Prohibit permits for property owners with multiple seasonal rentals. 21. Allow longer renewals for permits with no complaints. 22. Allow longer permit lengths when the owner is present for all rentals. 23. Do not regulate house-to-house swaps. 24. Require deposits for possible future violations and code enforcement. 25. Prohibit rental of secondary dwelling units as short term rentals. 26. Prohibit short term rental of dwelling units in duplexes when both units have the same owner. EXHIBIT NO. Z TOWN OF TIBURON 1505 Tiburon Boulevard Tiburon, CA 94920 Town Council Meeting May 6, 2015 Agenda Item: STAFF. REPORT To: From: Subject: Reviewed By: Mayor and Members of the Town Council Community Development Department Discussion of Possible Changes to Seasonal Rental Unit Regulations PURPOSE During a recent appeal regarding a seasonal rental unit permit and at the Town Council -Staff retreat earlier this year, the Council raised the issue of possible modifications to the Town's regulations regarding these permits. This item has been scheduled to obtain Council direction on the preparation of possible amendments. BACKGROUND Regulatory History Since roughly the year 2000, short-term vacation rental of individual homes has become more common in Tiburon and elsewhere. The success of web -based vacation rental sites (such as VRSO.com and Airbnb.corn) has greatly facilitated this practice. Eventually, Town staff began to hear complaints from residents about individual homes being used for this purpose, and about the increasing occurrence of short-term rental uses. In 2009, the Town began a comprehensive update of the Tiburon Zoning Ordinance. As a part of the process, the Town and its planning consultant prepared draft regulations governing "seasonal rental units" to be considered for incorporation into the updated zoning ordinance. The draft seasonal rental unit regulations were first discussed by the Planning Commission on August 26, 2009. The draft regulations presented to the Commission at that time would have required review of all seasonal rentals by the Commission through a conditional use permit (CUP) process. The Commission discussed the issue and determined that the CUP process was too onerous for a seasonal rental unit and directed Staff to investigate more streamlined methods of regulating these uses. In response, staff prepared amended regulations that labeled seasonal rental unit as a type of Home Occupation, and that required only staff -level approval subject to the application of certain review criteria and operating standards. The following amended language was presented to the Commission on November 11, 2009: TOWN OF TIBURON EXHIBIT NO. 3 PAGE 1 OF 6 Town Council NIecring May 6. 2015 16-40.040 — Seasonal Rental Units This Section establishes standards for the seasonal rental of a dwelling unit in any residential zone. The intent of these provisions is to ensure compatibility between seasonal rental units and adjoining zones or uses. General criteria. Prior to its establishment and/or operation, a seasonal rental unit shall be required to obtain a Home Occupation Permit, tailored to seasonal rental purposes, pursuant to the requirements of Section 16-52.110, including Subsections D & F, except that the following general criteria shall be used instead of the general criteria and operating standards contained in Section 16-52.110 (B & C): 1. Signs. Signs shall be installed/maintained in cornpliance with Municipal Code Chapter 16A (Signs). 2. Parking. On-site parking shall be provided as required for a single-family dwelling unit in compliance with Section 16-32 (Parking and Loading Standards). 3. Fire safety. The seasonal rental unit shall comply with applicable Fire District regulations. 4. Outdoor space. The use of outdoor yard areas, open decks, pools and the like shall not result in the production of excessive off-site noise, odor and other external disturbances. Said determination to be based on the judgment of the Director. Approval of the seasonal rental unit may be conditioned upon the installation of screening, fencing, plantings and/or other such installations and conditions to help ensure compatibility of the seasonal rental unit with the surrounding area. 5. Limitations. In no event shall the owner of the seasonal rental unit or their agent rent an individual room in the seasonal rental unit to a person, family, or other group of persons. 6. Business license. A seasonal rental unit shall have a valid business license from the Town. A revised definition ofa seasonal rental unit was also proposed, which read as follows: A dwelling unit that is rented on a repeated basis for less than 31 consecutive days, or is advertised or marketed on a repeated basis to be rented for any period less than 31 days. The Planning Commission found the revised language to be acceptable and adopted Resolution No. 2009-09 recommending approval of the updated zoning ordinance to the Town Council. On March 17, 2010, the Council adopted Ordinance No. 519 approving the updated zoning ordinance, including the seasonal rental unit requirements as recommended by the Commission. TOWN OF Tim r.R'oN EXHIBIT NO. 3 114g of6 Towii Council Meeting May 6, 2015 Seasonal Rental Unit Permit Applications Since the adoption of the seasonal rental unit permit requirement, the Town has received eight (8) seasonal rental unit permit applications. Although five (5) of the permits were approved by staff without controversy, and have been operated without incident or complaint, three (3) other applications involved a more extensive review: 1830 Mountain View Drive: In September 2012, the Town began receiving complaints from residents in the vicinity of this residence about its apparent use as an unpermitted seasonal rental unit. The neighbors noticed a variety of vehicles, including catering and party rental trucks, coming and going from the house and objected to noise from parties on the premises, overflow parking and trash left on the street. After being contacted by staff, the owners filed an application for a seasonal rental unit permit. Based on the number and seriousness of complaints received from neighbors, staff referred the application to the Planning Commission for review. The Commission reviewed the application on November 14, 2012 and found that the proposed use was inconsistent with the intent of the seasonal rental unit regulations to allow homeowners to periodically rent out their residences in a manner that would not be disruptive to the surrounding neighborhood. The Commission also found that the size of the 6 bedroom house lent itself to seasonal rental uses by larger groups of guests that would generate noise, traffic and other impacts that would adversely affect nearby residents. The Commission adopted Resolution 2012-15 denying the seasonal rental unit permit application. 121 Sugarloaf Drive: In 2013, staff first received complaints from neighbors about the apparent unpermitted use of this 5 -bedroom single-family home as a seasonal rental unit. Staff wrote a letter to the homeowner stating that either the use must cease or be permitted as a seasonal rental unit. In 2014, several neighbors complained that the residence was again being used as a seasonal rental. Staff issued an administrative citation and the property owner subsequently applied for a seasonal rental unit permit. On November 20, 2014, staff denied the application, determining that the scale and manner in which this seasonal rental unit was operated resulted in noise, parking, trash and other impacts that were inconsistent with the quiet residential character of the surrounding neighborhood. Staff also found that the size of the 5 -bedroom house lent itself to seasonal rental uses by larger groups of guests that generated noise, traffic and other impacts that adversely affected nearby residents. On December 1, 2014, the applicant filed an appeal of this decision to the Planning Commission, but withdrew the appeal prior to the Commission meeting. 110 Solana Street: In March 2013, the Town received complaints from the owners of the property at 120 Solano Street about the apparent use of a two-family dwelling at 110 Solano Street as an unpermitted seasonal rental unit. On May 6, 2013, staff conditionally approved an application for a seasonal rental unit permit for the upper dwelling unit only. The adjacent property owners appealed this decision to the Planning Cormnission. TOWN of Ttrr =RoN EXHIBIT NO. 3 Paw 3of6 Town Council N4ceting 'May 6, 2015 The Planning Commission reviewed the appeal on June 26, 2013 and concluded that the primary issues raised related to noise from the swimming pool shared by both property owners and shared off-street parking spaces. On July 24, 2013, the Commission adopted Resolution No. 2013-07 partially granting the appeal and adding conditions of approval to the permit prohibiting seasonal renters from using the private driveway and swimming pool shared by the two property owners, and requiring a review of the permit after one year. The Planning Commission conducted the one year review of the permit on August 27, 2014. As part of that process, the Commission reviewed numerous e-mails sent to Town staff by the applicants and the appellants alleging or refuting potential violations of the permit requirements and conditions. The Commission acknowledged that it was difficult for the Town to determine the veracity of complaints regarding the seasonal rental unit, but noted that suspicion of non-compliance was not proof of non-compliance. The Commission voted to find that the applicants were operating in substantial compliance with the requirements and conditions of their seasonal rental unit permit. On September 8, 2014, the appellants filed a timely appeal of this decision. The Town Council heard the appeal on March 4, 2015 and on March 18, 2015 adopted Resolution 10-2015 denying the appeal. At that time, the Town Council directed that the seasonal rental unit regulations be placed on a future agenda for review. POTENTIAL REGULATORY AMENDMENTS There are a range of options available to the Town in regulating these uses. Some communities do not allow them to lawfully operate, while others choose not to regulate them on a land use basis but simply as a revenue source, collecting both a business license fee and transient occupancy taxes. All the regulatory frameworks have their pros and cons, with effective enforcement being a universal problem. Previously, the Town has chosen a middle course of regulation that attempts to provide for reasonable protection for neighbors while allowing seasonal rental uses subject to payment of fees and transient occupancy taxes. Based on earlier Town Council comments and staff's own experience with the implementation of the current seasonal rental unit regulations, staff suggests that the Town Council consider the following changes to the Town's existing regulations: 1. Change the term "seasonal rental unit" to "vacation rental". This change would reflect the terminology now more corrunonly used to describe and advertise such uses, and which more accurately reflects the nature of these uses. 2. Do not allow vacation rental permits for units with more than 3 bedrooms. Larger homes often have a greater potential to be advertised and used on a short-term basis for parties, retreats, corporate get-togethers and family reunions, often advertising space for 2 or 3 guests per bedroom. More guests usually results in more cars parking on or near the site, generates more trash and more noise, and results in spillover effects on neighboring residents, such as those experienced around 1830 Mountain View Drive and 121 Sugarloaf Drive. Smaller homes with TOWN OFTIM 'RO EXHIBIT NO. 3 rage 4 of o Town Council Meeting May 6. 2015 fewer bedrooms would be more likely to be used by a single family, rather than by larger groups or extended families, and result in fewer impacts on neighbors. 3. Require adequate on-site and/or off-site parking. Neighborhoods with limited on - street parking often feel the strain of overflow parking from vacation rentals. Making sure that 2 to 4 parking spaces are provided on-site and not approving rentals in situations where on-site parking is inadequate and/or on -street parking is limited (for example, Corinthian Island or parts of Old Tiburon), would lessen the occurrence of off-site parking impacts. 4. Limit the number of days that units can be rented. Placing a cap on the number of days a unit can be rented during any month or year would limit how often nearby residents could expect short-term guests in their neighborhood and further reinforce the expectations that homes are primarily intended to be occupied by longer-term residents, whether owners or leaseholders. Enforcement of such limits could be problematic, although staff envisions that most permit holders would comply with such limits. 5. Do not allow permits for properties with commingled rights (common areas, pools, access. parking, etc.} with neighboring units. The situation of the homes at 110 & 120 Solano Street illustrates the difficulties that can be caused if short-term renters use shared improvements unbeknownst to the residents of adjacent dwellings. Larger condominium and townhouse complexes do not necessarily raise the same issues and usually have homeowners' associations and recorded restrictions that can or do address use issues between units within a complex. 6. Require permittees to submit an annual reporting statement to the Town. Such a report could include a calendar showing which dates the property was rented as a vacation rental and an accounting of the transient occupancy tax paid to the Town. 7. Require notices to be sent to neighboring property owners prior to a vacation rental. The appellants for the permit at 110 Solano Street asked that a condition of approval be added requiring the permittee to send notices in advance of any new short-term rental. Many seasonal rentals are not booked in a mariner that would allow timely notification of neighbors. This would also require permit -holders to find and maintain correct contact information for property owners in the vicinity, which can be difficult even with access to Town and County records. Staff sees limited benefit to this requirement in nearly all instances. 8. Increase fees to recover costs of enforcement. Enforcement of the current seasonal rental unit ordinance is often problematic and time-consuming, as it is difficult to accumulate definitive evidence of such rentals. Most vacation rental websites do not include addresses for listings and staff has only been able to identify listing locations from website photos. In addition, Planning Division staff has limited time to pursue code enforcement and generally conducts such actions based on complaints. Increased fees alone will not remedy this situation. roW\ OFTrrl ;RON Page 5 of 6 EXHIBIT NO. Town Council'vlcer.ing May 6. 2. 015 9. Only allow permits for homes that are the primary dwelling for the property owner. This relatively extreme measure would go well beyond Item #4 above and prohibit absentee Landlords from renting out their properties repeatedly on a short- term basis. On one hand, it would reinforce the intent of the ordinance to allow people to rent out their own home while they are out of town, rather than encouraging people to use homes as short-term rental investment properties more akin to a commercial business. It would also stress the primary intent of homes in Tiburon as dwellings for longer-term residents, whether owners or leaseholders, and be more in the spirit of traditional "seasonal" rentals. On the other hand, it would greatly reduce the number of units in Tiburon eligible for vacation rental status, probably leading to increased skirting of the law, and would likely be extremely difficult to enforce. Determining what constitutes a primary dwelling for a particular property owner is difficult at best, and such circumstances change from time to time. Most of the above regulatory revisions could best be accomplished by amending the existing seasonal rental unit provisions in the Zoning Ordinance, while others could be implemented as direction to staff that could be adopted as departmental policy in reviewing future permit applications. Staff also encourages the Town Council and public to suggest any other possible changes to the seasonal rental unit process and regulations at this time. RECOMMENDATION Staff recommends that the Town Council take any public testimony, discuss the issue, and provide direction to staff on possible changes to be made to the seasonal rental unit regulations. Any resulting Zoning Ordinance amendments would be scheduled for a public hearing in front of the Planning Commission, and subsequently for a Town Council hearing at a later date. Prepared By: Daniel M. Watrous, Planning Manager -row\ (F J-{gi?I EXHIBIT NO. 3 Rig 6 ,r6 Councilmember O'Donnell made a correction to page 9 of the February 4, 2015 minutes (Item No. 1). Allan Bortel, resident of Ned's Way, suggested that the Council remove Item No. 5 from the Consent Calendar to allow for input from the residents of Ned's Way. Council removed Item No. 5 from the Consent Calendar and continued it without hearing until the next regular meeting. MOTION: To adopt Consent Calendar Item No. 1, as amended, and Nos. 2, 3, 4, 6, 7, and 8, as written. Moved: O'Donnell, seconded by Fraser Vote: Unanimous ACTION ITEMS 1. Seasonal Rental Units — Discussion of possible changes to Town Code related to seasonal rentals and direction to staff (Planning Manager Watrous) Planning Manager Watrous gave the report. He said that during a recent appeal regarding a seasonal rental unit permit, and at the Town Council -Staff retreat earlier this year, the Council raised the issue of possible modifications to the Town's regulations regarding these permits. He said that staff had agendized the item to obtain Council direction on the preparation of possible amendments. Watrous said that since roughly the year 2000, short -tern vacation rental of individual homes has become more common in Tiburon and elsewhere. He said the success of web -based vacation rental sites (such as VRBO.com and Airbnb.com) has greatly facilitated this practice. The Planning Manager said that in 2010 the Town had instituted regulations on this use under the auspices of a Horne Occupation Permit (business license) when the Town Council adopted a new section in the Zoning Ordinance to define and address the use. Nevertheless, Watrous said Town staff began to hear complaints from residents about individual homes being used for seasonal rentals, and also heard about the increasing occurrence of short- term rental uses. Since the adoption of the seasonal rental unit permit requirement, Watrous said the Town had received eight (8) seasonal rental unit permit applications. Although five (5) of the permits were approved by staff without controversy, and have been operated without incident or complaint, three (3) other applications involved a more extensive review: One on Mt. View Drive, one at 121 Sugarloaf, and the most recent one, 110 Solano, which was addressed by the Planning Town Council Minutes #10-2015 1t9ay 6, 2015 Page 6 EXHIBIT NO. q Commission but appealed to the Town Council. He summarized the complaints relating to noise, traffic, garbage and other adverse impacts that had caused disruption of the neighborhoods. Since the Town Council/Staff retreat, Watrous said that Council had expressed a desire to "rethink" solutions to the issues expressed. Watrous enumerated some possible solutions, as more fully described in the staff report: 1. Change the term "seasonal rental unit" to "vacation rental". 2. Do not allow vacation rental permits for units with more than 3 bedrooms. 3. Require adequate on-site and/or off-site parking. 4. Limit the number of days that units can be rented. 5. Do not allow permits for properties with commingled rights (common areas, pools, access, parking, etc.) with neighboring units. 6. Require permittees to submit an annual reporting statement to the Town. 7. Require notices to be sent to neighboring property owners prior to a vacation rental. 8. Increase fees to recover costs of enforcement. 9. Only allow permits for homes that are the primary dwelling of the property owner. Watrous said that most of the above regulatory revisions could be accomplished by amending the existing seasonal rental unit provisions in the Zoning Ordinance, while others could be implemented as direction to staff that could be adopted as departmental policy in reviewing future permit applications. He said that staff also encourages the Town Council and public to suggest any other possible changes to the seasonal rental unit process and regulations, as well. Council questions: Council asked how other cities addressed these issues or whether they banned the use outright. Watrous described the difficulties of "proving" a rental and the process of surfing the internet to find out whether a home was listed. He did note that the City of San Francisco was working with Airbnb to enter into an agreement whereby the company would pay a transient occupancy tax to the city as part of its regulatory process. Mayor Doyle opened the hearing to public comment. Jerry Riessen, Vistazo West, said that he had been part of a homeowner's association that ended up adopting regulations to ban the use due to complaints, and to fine those property owners quite heavily who did not comply with the rules. He said that eventually the "problem" rental property in his development had been sold to new owners. Director of Community Development Anderson said that other options were to re -name seasonal rentals as "vacation rentals", or possibly "short-term rentals". He said that some cities prohibited using second units as seasonal rentals and/or considered setting a maximum to the number of guests in these rentals. Councilmember Fredericks said there was legislation sponsored by Senator Mark McGuire that Town Council Minutes #10-2015 May 6, 2015 Page 7 EXHIBIT NO. �� would make the hosting platforms responsible for record-keeping, collection of fees, and adherence to local ordinances. Councilmember O'Donnell said it sounded like a good bill. O'Donnell went on to say that he lived in the Mountain View Drive neighborhood where a seasonal rental had been a problem. He said that it was obvious to the neighbors that this was a "party house" and that if the primary concern of residents and the Town was protection of neighborhood character then our homes should not be turned into commercial establishments. O'Donnell said he would be in favor of a ban on short-term rentals of less than 30 days in Tiburon to address this issue. Planning Manager Watrous said that other cities are also going in that direction. Vice Mayor Tollini asked to play the devil's advocate. She said that many people who rented out their homes a couple times a year, for a couple of weeks at a time, were responsible and that these rentals did not cause any disruption to the neighborhood. In her opinion, Tollini said the problems were two -fold: The "churn" of high turnovers, and enforcement. Councilmember Fraser agreed with Councilmember O'Donnell that Tiburon is primarily a residential, rather than an urban area, and its residential character was important to preserve. He said that regulating the rentals could be a nightmare; he thought that perhaps a 30 -day limit was a good threshold, or possibly outright prohibition. Councilmember Fredericks said that if the aforementioned legislation passed, it would take some of the regulatory burden off of Town staff. But she noted that "limiting is harder than prohibiting" O'Donnell said that the 30 -day limit would protect our citizens from abuses. Fredericks asked whether anyone wanted to consider another suggestion by the Vice Mayor, that is, to negotiate contracts with the hosting platforms. Tollini said she agreed with the statement about limits being used as parameters, but she still expressed concern about enforcement. Mayor Doyle agreed that it would not make sense to have Town staff spending lots of time tracking down seasonal rentals for the purpose of enforcement. Fraser suggested the Town might consider adopting a trial period of 30 -day rental limitations, and widely publicize it through the Town newsletter and other means. In any event, Fraser said that it was important to address the seasonal rental issue because if nothing is done, it will only grow into a bigger problem down the road. Director Anderson pointed out that 30 -day rentals did not need regulation, as that was the historic standard rental agreement (i.e., month-to-month). He said that it might be cleaner to ban short- term rentals outright. Town Council Minutes #10-2015 Map 6, 2015 Page 8 EXHIBIT NO. LI Watrous concurred that that the 30 -day standard would lessen the "churn" in neighborhoods. But he noted that the demand for the majority of rentals on the host sites were for less than 30 days in duration. Vice Mayor Tollini said that her concern in limiting the number of days is that such a limitation (or ban) would penalize the responsible citizens and also, enforcement would continue to be an issue. She gave the example of the appeal where a renter had said he was the owner's Cousin Bob and did not need a permit because he was given permission to be there. Mayor Doyle wondered if there was a way a homeowner could get some sort of permit or register with the police department so that their neighbors knew what was going on. Councilmember Fraser said that Tiburon is really just a small part of a large, international rental market. And Councilmember Fredericks noted that there are many non-resident homeowners here. But she said that the Town would not be giving up a current source of income (if it banned the rentals), and agreed that regulating short-term rentals is difficult to enforce. O'Donnell asked if a lien could be attached to a property in violation. Anderson said that the Municipal Code allows staff to issue a citation, which is an infraction. It is followed by a hearing, abatement and judicial enforcement. O'Donnell, Fredericks and Fraser said they would favor an outright ban at this juncture. But Fredericks also said that if SB 593 passed, it could have an impact on the Town's regulations. Vice Mayor Tollini said that if the bill contained a means for enforcement, she would be in favor of allowing short-term rentals for small numbers of people and was against blanket prohibition. Fredericks asked which communities had banned the rentals outright. Anderson said that if a community had taken no action to allow short-term seasonal rentals, they were effectively not a permitted use. He said the City of Belvedere fell into this category. Director Anderson said that another issue was that the Town had a handful of seasonal rental permits had been approved by the Town, and that, if a ban was instituted, the Planning Commission might need to revoke or amortize these [existing] permits, depending on how they are structured. Town Manager Curran said that staff could obtain legal advice on how to best deal with existing permits. MOTION: To direct staff to create an ordinance banning seasonal rentals of under 30 days in duration and to develop an enforcement mechanism for violators; to send to the Planning Commission for its review and hearing prior to returning to Council. Town Council Minutes #10-2015 May 6, 2015 Page 9 EXHIBIT NO. q Moved: Fraser, seconded by Fredericks Vote: AYES: Fraser, Fredericks, O'Donnell NOES: Doyle, Tollini 2. Blackies Pasture Improvements — Discussion of proposed improvements to a portion of Blackie's Pasture and direction to staff regarding design of project (Director of Public Works Barnes) Director of Public Works Barnes said that at the Council Retreat this year, a plan was presented by Mayor Doyle for improvements to a portion of Blackie's Pasture. At that tune, he said staff was directed to proceed with a design of the project. Barnes said that staff met with the Mayor and a landscape architect to develop ideas and flush out the design concept and further define the costs of the improvements. He said the project will be reflected in the proposed CIP for construction in the next fiscal year, which begins July 1, 2015, and that Council will consider the budget on June 3, 2015. Barnes said the estimated cost for construction, based on the conceptual design, is about $155,000. He said that final project costs will not be known until bids are received. Funding would come from The Town's General Fund Parks and Measure A, according to the Director. Director Barnes reviewed the conceptual drawing attached to the report. As expressed in the drawing, the area would include a relocated path, picnic tables and native grasses. Improvements would include leveling the current mound, moving existing bike paths to open up space, adding three picnic tables, and sowing native grasses. Trees, shrubs and benches would be provided around the decomposed granite areas at each table to provide privacy, a sense of place and, in the future, some shade. A fence is provided at the south side of the area to prevent cyclists from cutting thorough the area off the path. Barnes said the fence would be a split -rail, cedar fence. Councilmember Fredericks asked about the placement of trees to provide shade throughout the day, and what impact the State drought regulations might have on the project. Director Barnes said that any trees and shrubs selected for the project would be drought tolerant. Fredericks requested that any plantings be deferred until drought rationing is resolved. She also recommended that this and other future bayside projects should take note of whether sea level rise would impact the project. Vice Mayor Tollini expressed her support of the project, noting that the improvements to the area would be a welcome addition to Tiburon's parks and family -friendly spaces. She asked if barbeques were part of the project; Barnes said they were included in the plans. During public comment, Jeny Riessen asked whether the Town might use reclaimed water for the landscaping. The Mayor noted that the Town had approached the Sanitary District and discovered that there were no additional allotments available. Toii'rz Council Minutes #10-2015 May 6, 2015 Page 10 EXHIBIT NO._ O'Malley said the Planning Commission held a public hearing on this application at its July 8, 2015 meeting. She said the Commission supported the proposed request and found it was in conformance with the overall intent of Tiburon Shores Precise Plan and the Tiburon General Plan. She said the Commission voted 4-0 to recommend the application for approval. Planner O'Malley said there was no public comment on the application at the meeting, and as of the date of this report, no letters have been received regarding the subject application. She said that staff had preliminarily determined that the subject application is categorically exempt from the requirements of CEQA per Section 15303 of the CEQA Guidelines, and she recommended that the Council hold a public hearing, and adopt the draft resolution conditionally approving the application. Mayor Doyle opened the public hearing. Mohamad Sadrieh, architect representing the applicants, spoke briefly and described the project in more detail. He said the new building envelope would allow them to spread out the upper level of the house, out of the view of the neighbors, while allowing the lower level to step down per the Town's Hillside Design Guidelines. He also described a more logical placement of the garage which could be dug into the hillside and reduce the need for a [fire] turnaround and retaining walls. He said that the envelope still remained the smallest in the vicinity. There was no further public comment. Council concurred with the Planning Commission's recommendation. Vice Mayor Tollini said the design set the home tastefully into the hillside. MOTION: To adopt the resolution approving the amendment to the Precise Development Plan, as written. Moved: Fredericks, seconded by O'Donnell Vote: AYES: Unanimous 2. Seasonal Rental Units — Consider amendments to Chapter 16 (Zoning) of the Tiburon Municipal Code to prohibit seasonal rental units (Community Development Department) — Introduction and first reading of ordinance In his staff report, Planning Manager Watrous said the Town had initiated amendments to the Tiburon Zoning Ordinance that would prohibit seasonal rental units in Tiburon. The amendments would amend Section 16-40.040 of the zoning ordinance to replace the current provisions for issuing seasonal rental unit permits with a prohibition of such uses. Watrous said that the ordinance was considered by the Planning Commission on July 8, 2015. At that meeting, he said that several Tiburon residents opposed prohibiting seasonal rentals and instead suggested possible amendments to the existing ordinance. He said other residents Town Council Minutes ##16-2015 August 19, 2015 Page 5 EXHIBIT NO. 5 expressed support for the proposed ban. Watrous said the Planning Commission, after extended discussion, voted to recommend to the Town Council that a ban on seasonal rentals not be enacted, and instead offered specific suggestions for regulatory amendments to address problems and concerns raised by these uses. He said the Commission recommended that the Town Council remand the item to the Commission for fine-tuning of the revised regulations. Watrous listed the specific regulatory provisions suggested by the Commission to be considered: 1. Change the term "seasonal rental unit" to "vacation rental." 2. Require adequate on-site and/or off-site parking as a condition of approval. 3. Require a 7 -day minimum for any vacation rental. 4. Do not allow permits to be issued for properties with commingled rights (common areas, pools, access, parking, etc.) with neighboring units, unless there is unanimous consent among property owners or there are written CC&Rs in the case of a condominium or townhouse complex. 5. Require permittees to submit an annual reporting statement to the Town. 6. Require courtesy notices to be sent by the Town to neighboring property owners prior to issuance of a vacation rental permit. 7. Increase fees and penalties to recover ongoing costs of enforcement. 8. Allow permits only for homes that are the "primary residence" of the property owner. Watrous said that staff sees two primary options available to the Town Council: 1) proceed with prohibition, or 2) remand the ordinance to the Planning Commission for further study and wordsmithing. In order to get a better understanding of the current extent of local seasonal rentals, Watrous described how staff had reviewed the AirBnB and VRBO websites in July for listings in Tiburon (summarized in an exhibit to the staff report). He said a total of 38 listings were found on AirBnB and 18 listings on VRBO, although some properties appeared to be listed on both sites. Analysis of the listings revealed that: • Most of the homes were available for short stays, with only 7 of the 56 listings requiring a 7 night minimum stay; Town Council Minutes #16-2015 August 19, 2015 Page 6 7T TT EXHIBIT NO. • Few of the homes were very large, with only 8 of the 56 listings showing more than 3 bedrooms; • Similarly, most listings did not allow large groups, with only 10 of the 56 listings allowing more than 6 guests at a time. Based on these listings, Watrous said it appears that a 7 -night minimum requirement for rentals would either eliminate the vast majority of these listings or force them to rent only for longer stays. The previously suggested limitation that would not allow rentals for units with more than 3 bedrooms would only affect a minority of these listings, according to Watrous. The Planning Manager also said that code enforcement was an issue. He noted that an article about enforcement that had been prepared by the League of California Cities and distributed to the Council by the Town Attorney (public copies were also made available at the meeting). Watrous said the Planning Commission recommended more enforcement while acknowledging. that adding regulations could potentially add to staff's enforcement burden and the difficulties in monitoring compliance with the Town's regulations. Watrous said it is unclear whether prohibition would require substantially more staff enforcement time than creating additional regulations. Additional regulations would create more details to review for compliance for each rental. Although prohibition is a more definitive regulation that is easier to interpret, such an action would likely drive rentals underground, providing fewer property details on website listings or other deceptive actions to avoid enforcement. In either case, he said the Town's Limited staff availability would continue to be an impediment to thorough enforcement of these rentals. The City of San Francisco, which has adopted new vacation rental regulations in consultation with AirBnB, has had to create a new staff division just to handle permitting and enforcement of these regulations, according to the Planning Manager. And although the scale of this issue is much smaller in Tiburon, he said the ability of Town's small staff to actively enforce this ordinance will continue to be a limiting factor in effectively policing vacation rentals. Watrous said that comments from Tiburon residents have been effectively split between those who support a prohibition of vacation rentals and those who would like them to be regulated but allowed. He noted the letters on the subject attached to the staff report. Watrous said staff recommended that the Town Council: 1) hold a public hearing on the item and hear all testimony from interested persons; and 2) either move to read the ordinance by title only, waiving any additional reading, and pass the motion by a roll call vote, or b) remand the item to the Planning Commission for its further review and recommendations, providing any desired direction to assist the Commission with its future deliberations. Town Council Minutes #16-2015 August 19, 2015 Page 7 EXHIBIT NO. S Mayor Doyle opened the matter to Council questions. Councilmember Fredericks asked why the name was changed from "seasonal rentals" to "vacation rentals" in the proposed ordinance. Watrous said the latter was a more common term which appeared to be more understandable to the public. Fredericks asked whether it would preclude uses other than vacation rentals. Watrous said it would not. Councilmember O'Donnell asked how the Town's [administrative] citations were enforced; he said that some had suggested penalties for non-compliance. Also, he asked how the fines would be collected. Town Attorney Stock said that the citation process unfolded as follows: levy, hearing, and collection of fees. He said that penalties could be considered but that they were separate from the citation process. He said the citation process was also different from the civil action process. In the former, once an action had been reduced to a judgment, a lien could be placed on the property. He said in the civil process, a citation can create an administrative lien, but that it would take many steps to effectuate. This was followed by a discussion about the judicial process to enforce a lien. To put the discussion into perspective, Mayor Doyle noted that the amounts being discussed were in the range of hundreds of dollars. Director of Community Development concurred, saying that at $158 per day, the amount would not begin to cover the cost of enforcement; he said the fines would have to be raised substantially to cover these costs. Councilmember Fredericks said that she would rather see compliance than revenue. Vice Mayor Tollini said that a lien is the recourse for contractors, for instance. But she said that most responsible homeowners would not want a lien on their property. Councilmember O'Donnell asked what kind of enforcement could actually be enacted, for instance, when the police came to a home in response to a noise or loud party complaint. He asked if the police would be allowed to ask for a rental agreement, or the like. Planning Manager Watrous said that the police could knock on the door and ask the occupants for a copy of a rental agreement; he said staff could then follow up by mailing a letter to the property owner and wait for a response. He said the Town would have to decide how to proceed thereafter. Chief of Police Cronin added that the occupants also would have the option to close the door and not talk to the police. He said the police could not enter the house because they would not have probable cause. But he noted that the police could enforce a civil code section if the noise was "loud and unreasonable". Town Council Minutes #16-2015 August 19, 2015 Page 8 EXHIBIT NO. Councilmember Fraser asked how many vacation rental permits were currently on file with the Town. Watrous said that there had been nine applications, and seven permits had been issued. Councilmember O'Donnell noted there certainly is a market, and an underground economy, if there are 58 listings on AirBnB and VRBO. Councilmember Fredericks asked about "house swaps" for vacation use and how they would be tracked if not through permits. Watrous said that staff had not looked at any of these websites, nor had they received any complaints. Mayor Doyle opened the matter to public comment. 1. Rachel Justis, who said that she and her husband both worked for non -profits, said that this was the only way she and her family could afford to travel and to keep their home; she said that they had applied for a permit and had not heard from the Town, but that they had received all "A's" from a Fire Department inspection; that they limited the number of guests and cars; she said the majority of these rentals were not "party homes" and that there should be a way to regulate these and not put the burden on people like us; 2. Courtney Anderson, applauded the Council for their work on this subject; distributed a chart that showed the amounts spent in town by short-term renters which he said averaged $150 per day; said this could result in several million dollars in revenue for local businesses; said he had surveyed local business owners who said they supported vacation rentals and that he was worried that there would be an adverse impact on the town's downtown area if these rentals were banned; 3. Kim Fox -Yoder, said she grew up in Tiburon and would like to be able to rent out her mother's home now that she had moved into assisted living; she said that she would like to spend time here, too, along with her mother, on holidays and the like and that VRBO is a way to allow her to do this; said she had a successful business renting condos in Maui and that she would not allow "trashy" renters here, either; 4. Ulrik Binzer asked the Council to keep the VRBOs legal in Tiburon because it was an important part of the housing stock; said that he had been doing it for 2 years and it allowed him to travel; said that he rented to people who perhaps could not afford a hotel and wanted to take part in local activities, such as regattas and the like; said it was a great way for a family to see the world and that they should not be penalized because of "party houses"; suggested that the Council consider limiting the number of guests, cars, and the like but to not get "hung up" and simply address the core issues of noise and parking, etc. 5. Joe Haraburda, noted a section of the staff report that referenced enforcement through CC&Rs but said that some consideration should be given to properties with shared easements who could not use this tool; told the Council that he would support the Toitm Council Minutes #16-2015 August 19, 2015 Page 9 EXHIBIT NO. 5- exclusion of residences with co -mingled resources, such as pools and driveways, if they allowed seasonal rentals; gave an example of six people leaving his property yesterday and eight more arriving today, and the disruption it caused; said that 7 -day rentals might also help eliminate the weekend banter; that he would prefer the 31 -day rentals but preferred that his type of property should be excluded from vacation rentals; 6. Bryan Chong, said that he had met a good number of short-term renters near his home and that he himself had benefitted from short-term rentals in other areas of the world; said that after discovering this, he and his family had also opened their home and would hate to see the short-term rentals banned; 7. Bruce Powell, sympathized with Mr. Haraburda and said his suggestion sounded reasonable; agreed that enforcement should be through an HOA unless there wasn't one; said he held a permit and had been renting out since 2009 without a single complaint; said their neighbors supported them in this and that 99% of the renters were families with children, both small and grown; said he did not allow parties and put that in the rental agreement; said he would hate to see the Town punish all renters for one or two "bad apples"; went on to say that banks would not give loans to people who want to simply buy houses to rent out; that a 7 -day stipulation would serve no purpose; that weekend or week doesn't matter because people simply want to come here to "check out" Tiburon; 8. Fran Wilson, said she was in favor of prohibiting short-term rentals of under 30 days as a way to keep our neighborhoods family -friendly and safe, free of extra traffic and litter, and the like; said that if the rentals could be regulated then maybe there would be fewer repercussions; that enforcement costs should be generated through application fees and fines; she also noted that in order to keep bees in Tiburon, one has to obtain the signatures of non -objection from owners of contiguous properties; said that short-term rentals were a problem that would grow and get worse but that the primary focus should be on the preservation of safe and friendly neighborhoods; 9. Magdalena Yesil, said that in Old Tiburon, there was only 10-20 feet between neighbors and that they shared water rather than fences which limited privacy; said she had experienced the problems with short -tern rentals first-hand when her neighbors moved away and rented out their house; said that people's behavior change when they are "anonymous" and not long-term residents or renters, and that socially, we behave differently if we have to face our neighbors in the morning; suggested that short-term rentals, such as 4 days, not be allowed and that the problems with the neighboring property had been resolved when the owners went back to longer-term rentals; 10. Galena Powell, 20 -year resident, said that her husband had died a couple of years ago, and that this type of rental would allow her to return to Europe a couple of tunes a year, and would be a support for homeowners like her. Town Council Minutes 416-2015 August 19, 2015 Page 10 TTT (_` EXHIBIT NO. S Council deliberation. Vice Mayor Tollini said that she had been approached by young families who favored these types of rentals because it was easier to travel with kids and not have to eat out, and the like. She said it was also a way to offset the expense of travel. Tollini said that she also understood the arguments against because of unfortunate instances which had created "churn" in some neighborhoods. She suggested that it there was a citation process and penalties in place, the cost of enforcement could be offset. She said that she was against an outright ban and that a "Next Door" poll in her neighborhood showed a 75% vote in favor of allowing short-term vacation rentals. Councihnember Fredericks said that she, too, understood the benefits of short-term rentals. However, she said that this is not the only place to find rentals in Marin. But she also noted that two other cities in Southern Marin had already voted to disallow them (the cities of Sausalito and Belvedere). Fredericks said she was not optimistic about the ability of the Town to enforce an ordinance allowing such rentals; that the system could be "gamed" quite easily. But she said that greater question was, why do we have a permit process? And she said the answer was to protect our neighborhood character; to keep thein safe and free of strangers. With regard to enforcement, Fredericks said that enforcement on a complaint basis could actually be easier than other forms of regulation. She said that under the proposed ordinance, house swaps would continue to be allowed. She said that there might be a way to gain compliance from a hosting platform but that one could not always tell where a rental was located. She said that a proposed law in the State Legislature would require hosting platforms to send information to local jurisdictions. She also noted that the disadvantage of prohibiting rentals versus permitting them was that the business would go underground. Fredericks said that the advantages of permitting would be: to create a stream of revenue for compliance and enforcement, creating regulations to avoid rentals that are obvious problems (such as those with shared easements), limiting numbers of guests or days, enforcement of quiet hours, exclusion of neighborhoods or a collection of homes that objected to such rentals, requirements that information be shared with neighbors and towns, requirements that landlords address complaints, etc. But the Councilmember said that such an intense package of regulations would be unenforceable, did not give the Town what it wants, and does not justify allowing short-term rentals. Councilmember Fraser said that he had no argument with anything he had heard from the public speakers. He said this was a great community with a long history; a community of residents and approximately 4,000 residences. He said that 58 of these advertised online and only seven had Town Council Minuses #16-2015 August 19, 2015 Page 11 TTT EXHIBIT NO. permits; he said this represented less than 2% of the housing stock, and he asked whether this represented the tail wagging the dog. Fraser described his own neighborhood and the sense of security and safety that existed when people know each other, wave to each other, know where their cars are parked, and the like. He said this kind of familiarity created a sense of neighborhood. He said that neighbors let each other know when they were going to have a party, and that they looked out for each other. He said that this was not a commercialized, urbanized area; that the Town already had good hotels and indeed, wanted its visitors. What we don't want, according to Fraser, is the "churn" in the neighborhoods. Councilmember Fraser said that the business model for VRBO was great. He said that in San Francisco, it was estimated that AirBnB had grown by 14% with 4400 units in 2014 to 5800 in 2015, online. But he said that only 700 were registered with the city. He acknowledged that this was something the Town would have to get its arms around but he said that he couldn't fmd a reason to turn our community into overnight rentals. Fraser said that in the big picture, this would not be a good use of the taxpayers' dollars or staff time. Fraser said that while he respects an owner's desire to rent out their home [for short-term rentals, including one in his neighborhood], he does not think it's the right thing to do in our community. Councilmember O'Donnell also agreed that there were valid reasons stated by the speakers. But he said he agreed with Councilmember Fredericks that neighborhood homes should not be turned into commercial establishments --thus, he said, would change the neighborhoods. O'Donnell said it was now known to the Town where the major complaints were coming from — Solano Street, Sugarloaf Drive, Mountain View Drive, Mar East Street, and Vistazo East and West. Streets. He said he had concluded that there was no valid reason to support short-term rentals, and that other landlords might not be as conscientious as some of those who spoke. He asked where our sense of community would be if all of us turned our homes into rentals. He said it created an obtrusive intrusion into residential areas. He said problems associated with this had been well documented in the communities of Carmel and Santa Monica, and that the Town needed to get a handle on it. O'Donnell said that the proposed ordinance was crafted to prohibit short-term rentals and to allow rentals of 30 days or more. Mayor Doyle said his position was more closely aligned with the Vice Mayor and in support of a younger demographic of families with kids who are coming here for the schools, etc. He said that in this demographic, a mortgage is the biggest financial hit, and that it is, in general, a struggle to live here. He said these families are not moving here to rent out their homes; that they want to live here, and that this provides a little extra income. Town Council Minutes 416-2015 August 19, 2015 Page 12 EXHIBIT NO. 5 The Mayor said he did not want to force people to break the law; he suggested that the Town monitor the situation for a while, allow permits and pull them if there are complaints. He said the Planning Commission model allows some wiggle room in permitting and regulation; he said the less staff needs to get involved, the better. But he asked his colleagues not to shut the rentals down altogether. The Mayor said he was not in favor of creating laws for the lowest common denominator, thereby punishing everyone for bad behavior. Councilmember Fraser said that we have to think about neighborhoods; that we had no idea how far this would go, and that the "churn" was unacceptable. Vice Mayor Tollini said that everyone agreed that the "churn" is unacceptable but that there were distinctions to be made. Also, she said that 75% of the people polled supported short-term rentals. She said that people would be open to enforcement to allow them to do this responsibly. Councilmember Fredericks said that there were over 3,000 residents in Old Tiburon and only 143 had responded to the Next Door poll. Tollini also noted that there had not been a lot of complaints. Councilmember O'Donnell added that the Council may simply not know about them. The Vice Mayor said that increasing the fines would help. She said that having the permittees pay transient occupancy tax would also create a budget for enforcement and regulation. Councilmember O'Donnell said that increasing fines also sometimes drives people underground. In addition, he surmised that many people would not want to open up their homes to Town or Fire inspectors, and may not want to obtain a permit because of this. Vice Mayor Tollini countered that the people who would be penalized (by the ban) are the ones who want to follow the rules. Councilmember O'Donnell conceded that a ban would not necessarily stop the rentals; however, he said this ordinance would help the Town address the other issues, and complaints. Councilmember Fraser said that it was "early in the game" but that it was timely for the Town to adopt its ordinance. He noted that the City of Belvedere had also banned rentals of less than 30 days; he said he did not know that the City of Sausalito had also adopted a ban. Mayor Doyle said that even if the Town adopted a ban, he surmised that people would continue to rent. Councilmember O'Donnell said that there were people who own property in town who rent all the time; four houses alone, on his street. Town Council Minutes 416-2015 August 19, 2015 Page 13 EXHIBIT NO. 5 Mayor Doyle asked about enforcing a regulation requiring "primary residency". O'Donnell asked how this would be enforced. Councilmember Fredericks said that she would like to make a motion. MOTION: To read the ordinance by title only. Moved: Fredericks, seconded by Fraser Vote: AYES: Fraser, Fredericks, O'Donnell NAYES: Doyle, Tollini Mayor Doyle read, "An ordinance of the Town Council of the Town of Tiburon repealing Title IV, Chapter 16, Section 16-40.040 (Seasonal Rental Units) of the Tiburon Municipal Code and adopting a new Title IV, Chapter 16, Section 16.40.040 that prohibits Vacation Rentals". MOTION: To pass first reading of the ordinance, waive second reading, and adopt on Consent Calendar at the next regular meeting. Moved: Fredericks, seconded by O'Donnell Vote: AYES: Fraser, Fredericks, O'Donnell NAYES: Doyle, Tollini 3. Zoning Text Amendments — Consider amendments to Chapter 16 (Zoning) of the Tiburon Municipal Code that would modify provisions regarding interpretation of Zone Boundaries vis a vis Public Streets and Highways; clarify the separation of fences for purposes of height measurement and modify certain provisions with respect to processing of permits for Wireless Communications Facilities: Town -initiated amendments (Community Development Department) — Introduction and first reading of ordinance Director of Community Development Anderson said that the amendments pertained to three sections of the Zoning Ordinance, and were non -controversial. Mayor Doyle opened the public hearing. Julie Shumelda asked what the term, "read by title only" referred to. Director Anderson said that it was the method whereby the Council could introduce and pass first reading of an ordinance, "reading by title only"; otherwise, he said the ordinance would have to be read in its entirety. Mayor Doyle closed the public hearing. MOTION: To read the ordinance by title only. Moved: Fraser, seconded by O'Donnell Vote: AYES: Unanimous Town Council Minutes #16-2015 August 19, 2015 Page 14 EXHIBIT NO. 5 ACTION ITEMS 1. Seasonal Rental Units — Adoption of ordinance amending Chapter 16 (Zoning) of the Tiburon Municipal Code to prohibit seasonal rental units (Community Development Department) In his staff report, Director of Community Development Anderson said the Town Council passed first reading of the ordinance prohibiting seasonal rental units at its August 19 meeting, and waived additional readings. He said the ordinance now comes to the Town Council for adoption but because the first reading carried on a 3-2 vote, consideration was being presented as an Action Item so that individual votes on the ordinance could be tallied by roll call. Anderson recommended that the Town Council hear any testimony from interested persons, and consider adoption of the ordinance. Mayor Doyle opened the hearing to public comment. The following people spoke: 1. Andrew Thompson, Southridge East, asked the Council to remove adoption of the ordinance from the agenda and seek further comment; said the ordinance was too restrictive, noting that communities, such as Carmel, that had adopted 30 -day minimums had widespread "cheating" going on; said that while he was not in favor of turning homes into hotels, that there were better models to use for the Town's ordinance, like setting a total number of rental days per year; said visitors spent money here and allowing rentals would help the downtown business community and improve the local economy for residents, as well; 2. Mo Newman, resident since the 1970s, said she opposed government intrusion into our lives and property; said that laws could be enacted to fine people for problem rentals or violations; that a ban might not be constitutional; 3. Matthew LeMerle, 20 -year resident, agreed that more time was needed to craft an ordinance for our community; said that problems existed in dense neighborhoods with unruly guests, and that the owners of those properties should be taken to task and that other neighborhoods and properties (like his own) did not suffer such complaints; agreed that there might be a legal problem with the ordinance and said the Town should not be exposed to litigation; asked the Council to consider forming a subcommittee to study the issue further and volunteered to serve on such a committee; 4. Bonnie Ross, who said things had gotten nasty on Next Door, said a lot of people like her thought the prohibition was a good idea and wanted to see our neighborhoods remain residential; said these voices were not being heard; she also questioned how much money renters were actually spending, since many probably cooked in the homes they were staying in; said parking was a problem in many neighborhoods and that she was uncomfortable with the idea of confrontation and disharmony, and having to call the police to report violations; Town Council Minutes #17 -2015 September 2, 2015 Page 6 EXHIBIT NO. 6) 5. Russ Shelton talked about how turning homes into short-term rentals meant that 25-40% of the rental housing stock was being removed from the market; said that short-term rentals changed the complexion of neighborhood communities; said that these multi- dimensional issues should be considered; 6. Joe Haraburda, Solano Avenue, said he supported the ban and the 30 -day minimum, as well as exclusion of shared easement common area properties; reiterated that his neighborhood experienced countless problems from short-term rentals; he asked the Council to help retain the quiet nature, safety of children, and residential quality of our neighborhoods; said that we know who are neighbors are and that vacationers think differently; 7. Elizabeth Gleason, 38 -year resident, asked the Council to prohibit short -terms rentals to protect our sense of neighborhood and community; said that "community" was hard to construct and easy to destroy; gave an example of how the people on her street care about each other, share parking, and the like; now, with the presence of a short-term rental on the street, she said people come into the neighborhood and "we don't know who they are"; said she came here because of the sense of community and its safety; said it's now being eroded; 8. Daniel Amir said he understood the concerns but asked the Council to reconsider the ban; said that the reality is that the community and the economy is changing; that the "sharing economy" and short-term rentals were a fantastic opportunity for young families to rent their homes once or twice and year and allowed flexibility, not so much financial gain; said that people refer renters and they were not strangers; said possible solutions might be to limit the number of days per year or set a minimum rental of seven days; said the ban was a little extreme; 9. Mike O'Donnell, 36+year resident, said he rented out his home and noted the minutes of the previous meeting said that since 2009 there had been 4000 rentals but only eight complaints; questioned the need for a ban on this basis; also noted that even though Sausalito had banned short-term rentals there were currently 80 rental sites listed on the interne; said there were legal questions, as well, and that judges had agreed with the Planning Commission's recommendations; said it would be easier for the Town to tighten its regulations and make some money on this phenomenon; 10. Magdalena Yesil, who referenced her testimony at the last meeting, said that even though her neighbor had asked for their permission and let her and her husband know about each short-term rental, he could not be present for the aftermath; said the responsibility therefore was bound to fall on the Town and its infrastructure; said that in her mind zoning means that residential means residential and commercial, commercial; that the 30 - day limit is not an interference with property rights and that a residential neighborhood had to remain so in spirit, as well as law; said a change to this would cause an adverse effect on property values, noting that these values were significant in Tiburon; asked the Council not to trade the residential nature of the community for short-term gain; 11. Linda Emberson asked the Council to think about this issue more and not adopt the ordinance at this time; said the amount of interest shown behooves us to take a step back; 12. Jane Gould, Mar East, agreed that short-term rentals [such as the one on Tower Point Lane] had caused problems, especially with parking in the neighborhood; said that the Town Council Minutes #17 -2015 September 2, 2015 Page 7 EXHIBIT NO. (c-" polling on Next Door was biased, and gave examples of how the questions in the survey were worded which could skew results; 13. Danny McNamara, Paradise Drive, said he had [short-term] rentals in Tahoe and used a "three strikes" policy (and loss of deposit) as a way to ensure that his neighbors remained happy; said this was a common sense approach; he asked the Council not to hurt everyone by enacting a ban; added that in Tahoe, you have to have a permit number, pay taxes, etc. but it works; 14. Cleveland Justis expressed concern at the speed of the decision [ban] and said more information was needed; said this issue could be solved creatively and urged the Council to do so to avoid a lawsuit or ballot initiative; said everyone wanted their property values to increase but that much of the testimony was fear -based; suggested putting together a task force for more study; said there was benefit to the community when other people come into it; 15. Charles Arnold, MD, who said he "grew up in cattle" dubbed the ban "anti -capitalist"; said that he had never been in the homes of some of his neighbors (on Sugarloaf Drive) but said there were children everywhere; said the "fear factor" and NIMBYism were the cause of the reaction (leading to the ban); noted that he had done one -weeks rentals himself; said that what was needed was fewer regulations, but that as a good capitalist, he would recommend adding a little tax to the deal (in order for the Town) to make some cash and not just say "no" to short-term rentals; 16. Wesley Poole, Tiburon Boulevard, asked whether Airbnb had a section for feedback [reviews] and whether bad ratings could be posted about bad renters; said his family had lived here for 90 years; agreed there seemed to "fear factor" in play, and said that if people felt unsafe, they could get a gun; 17. Shannon Puget, 45 -year resident, said they had rented out her parents' house (so that they could travel, too) and had not had any problems; said these types of rentals were used a lot by locals for entertaining out-of-town guests; said she herself travelled using Airbnb and VRBO and supported what others had said about these venues; 18. William Rothman, Belvedere, calling himself a "guest" of Tiburon, said that only four Belvedere units were listed [on the internet]; commented that in the on-line survey, everyone had different ideas as to "appropriate regulations", noting some wanted limits on number of transient renters, the number of cars, requiring owners to be present, requiring an okay for neighbors; also, some wanted less than 30 days, some wanted seven days, some wanted an off-street parking requirements, no rentals of condo's with common use areas; some wanted hotel fire standards, and some wanted the owners to carry liability insurance; he said that some people had genuine concerns and some just wanted to be free to rent; said that if the Town could craft the perfect regulations....but that because it could not, he reconunended upholding the ban [for less than 30 days] and adoption of the ordinance, and said that the ordinance could be changed if lawsuit ensued; also posed the question about disclosure and whether surrounding properties for sale would be made aware of properties used as short-term rentals. Mayor Doyle closed the hearing to public comment. Town Council Minutes #17 -2015 September 2, 2015 Page 8 EXHIBIT NO. Councilmember Fredericks asked the Town Attorney whether there were any precedents for the ban of short-term rentals. Town Attorney Stock said yes, that Carmel -by -the -Sea had adopted such a ban which had been upheld by the courts. He said that to date, no court has overturned a ban, and the courts have endorsed the Carmel ban. He noted that some of the cases mentioned by speakers were outside of California, such as the Sedona case, which was subject to an Arizona statute. Councilmember O'Donnell said that good arguments had been presented, pro and con. He said the arguments favoring family visits, use of property when parents move away, additional income and the like, were all valid. However, on the side of "property rights" he said that there are also the rights of your neighbor to consider, and the rights of the community. He said there were no universal "property rights" in this context. O'Donnell said that is why zoning laws and standards were crafted, so that a community of people would not infringe on each other's rights. O'Donnell said he recognized emerging technology and [the sharing] economy. But he noted that there was a ballot initiative in San Francisco (to address the issue of short -teen rentals); he said that Tiburon was not San Francisco; that it is a residential community and people expect to live in a residential community here and not a commercial one. O'Donnell said Mrs. Gleason had expressed eloquently what it meant to live in a residential community. He said it was clear that there were people who were put upon by short-term rentals in their neighborhood and that he had voted to ban them for this reason. He said the longer term (30 -days or more) renters become part of the community. He said he did not "buy" the argument that short-term rentals were a boon for downtown revitalization. Councilmember Fredericks said that the problem is that this issue has the potential to escalate, and that it is driven by the potential for a real stream of revenue. She said she recognized some value in short-term rentals, for the purpose of financing vacations, etc. but that there were more compelling reasons not to allow them. She said the Town's Zoning Ordinance protects the livability of our community; she added that the tern "quiet enjoyment" also applied to the intimacy and safety experienced in our neighborhoods. That being said, Fredericks she that not all short-term rentals were pernicious, but that parking problems and late night noise were all problems which had occurred. She said [the ban] was not so much an issue of "property rights" but to ensure the "quiet enjoyment" that had led to her support it. If allowed, Fredericks talked about the cost of enforcement of conditions on short term rentals; about how to obtain a pernit and how to condition a permit; about how to monetize the loss of neighborhood character, which would ultimately affect the ability of the Town to provide services. She wondered if these costs could be borne by those who profit from short-term rentals. She said there was a bill in the California Legislature that would require hosting platforms to provide rental information to local jurisdictions. But for now, Fredericks said that she would vote to uphold the ban on short-term rentals. Vice Mayor Tollini thanked everyone who had come to the meeting to express their views. She said that it showed how much our residents care about the community. The Vice Mayor said that Town Council Minutes #17 -2015 September 2, 2015 Page 9 EXHIBIT NO. while there were valid concerns about short-term rentals, she said she thought the Planning Comrnission "got it right" and that there were ways to address the concerns and issues, such as collection of transient occupancy tax (TOT), permit fees, and fines which would aid enforcement, and a "3 strikes" policy for non-compliance. Tollini suggested that the ordinance be sent back to the Planning Commission for consideration of the needs of some neighborhoods. She said she also thought the rentals were a benefit for the downtown. She encouraged everyone to have a little bit of trust in their neighbors; that we all want to be good neighbors, and the Town should give this a chance. Councilmember Fraser said that he had voted for a 30 -day minimum rental; that the ordinance was not, in fact, a ban. But since then, he said there had been a lot of feedback to the Council. He commented that the community was in the midst of change; that lots of new, younger families were moving here and brought a new vibrancy. He said he was proud of the initiative to reduce traffic and the support of the school bus ridership program. He said that we should applaud ourselves in the ways we "come together". Fraser posited that maybe there is a way to come together around this issue; but he said that the Planning Commission needed direction because he did not think they "got it right". Fraser said he thinks there is a way to bring the community aspect into the discussion. Councilmember Fraser said that Airbnb, VRBO, and other start-ups were not going away. He said the Town owed it to itself to go back and look at the ordinance again, with an eye to frequency, how neighbors might be notified, enforcement, and the like. He said there should be a TOT — that Bed & Breakfasts are hotels; that different neighborhoods should be looked at (per the Vice Mayor's suggestion) and how to manage the issues in neighborhoods. He suggested that the Council put a "pause" on its consideration of the ordinance and also place a moratorium on the issuance of permits for short-term rentals. Councilmember Fredericks asked what the process for reconsideration would be; to convene a Council committee; include volunteers, or the like. Mayor Doyle said that he was leaning towards agreement with his colleagues Fraser and Tollini, but he said he was sensitive to the issues stated by the others. One the one hand, he said that 30 - day rentals forced you to move out of your house while shorter term rentals (one to two weeks) meant you did not have to. He said it would be nice to be able to do this sometimes. But he said also said he agreed there were problems with homes that had shared common areas, for instance. The Mayor said it would be beneficial to pause, get people more involved in the process, to receive more feedback, and to evaluate individual neighborhoods. Councilmember O'Donnell asked what would happen to existing permits if there was a "pause". He said that he, too, realized that the economy was changing, but O'Donnell said that Tiburon was neither Maui nor Tahoe, and he would not like to see it turn into these locales. Town Council Minutes/#.17 -2015 September 2, 2015 Page 10 EXHIBIT NO. CU O'Donnell agreed that there are differences between neighborhoods, but suggested that most of the rentals would probably be in neighborhoods in Old Tiburon because that area had qualities sought by travelers, such as views, proximity to downtown, etc. But he said this area also had problems with parking and had a close proximity of homes. He also said the Town would wind up with a gamed system if it changed the ordinance to a seven-day minimum, for instance. He said he continued to favor a prohibition on short-term rentals, like Carmel, Santa Monica, and other communities. Councilmember Fredericks said that she sensed there had not been enough "process" in consideration of the issues so she, too, would also favor a pause. She suggested forming a committee consisting of one proponent of short-term rentals, one not so much in favor, and perhaps come back to Council with a report and recommendation. Councilmember Fraser agreed that it would not hurt to pause. Town Manager Curran said the procedure would be for the Council to continue the hearing to a date certain. Councilmember Fredericks asked what would happen after that. Town Attorney Stock said that the Council could amend the ordinance, if it chose to do so, and hold a first and second reading. Councilmember Fredericks volunteered to serve on the committee, as did Mayor Doyle. Town Manager Curran suggested holding a meeting with the two Council representatives to discuss the process of forming a committee and how to obtain balanced input. Council concurred with this approach. MOTION: To continue the hearing to the October 21, 2015 regular meeting; to appoint Councilmember Fredericks and Mayor Doyle to a subcommittee to study the issue and make further recommendations to the Council. Moved: Tollini, seconded by O'Donnell Vote: AYES: Unanimous 2. Kayak Put -In — Discussion of possible kayak and paddleboard put -in along Shoreline Park and direction to staff (Town Manager Curran/ Director of Public Works/ Town Engineer Barnes) Director of Public Works Barnes said the idea for a kayak put -in was brought up at the Town Council Retreat in March. Barnes said that a few locations were discussed, with the Shoreline Park area near the Donahue Building being the most preferred. He said there was general support for the kayak put -in concept but additional information on the scope and approach was needed. Director Barnes said the project would be sized for very small watercraft, such as kayaks, canoes, sail boards and paddle boards. It would not be designed to accommodate motorized watercraft. Town Council Minutes #17 -2015 September 2, 2015 Page 11 EXHIBIT NO. b STAFF REPORT TO: Mayor and City Council FROM: Danielle Staude, Senior Planner.. Lisa Newman, Senior Planner VIA: Vin Smith, Director of Planning and Building SUBJECT: Procedures for Regulating "Short -Term" Rentals DATE: August 3, 2015 Approved for Forwarding: -14" 6; s C. McCann, City Manager 1 2 RECOMMENDATION: 3 Receive the staff presentation and comment on proposed procedures. 4 5 BACKGROUND: 6 At the July 6, 2015 hearing, Council held a public hearing and provided direction to staff .7 regarding a limited approach to regulating short-term rentals. The staff report can be 8 accessed on the City's website (see "online resources" below). 9 10 In summary, the Council's preferred approach was to create a low-key, simple 11 registration process that would be low-cost and straightforward in order to encourage the 12 estimated hundreds of short-term rental hosts to register with the Planning Department, 13 obtain a Business License and remit Transient Occupancy Tax (TOT). Staff will monitor 14 this initial approach for a period of time and report back to Council on.whether any 15 regulatory changes should be considered. 16 17 Staff has developed a Registration Form that includes a fee, terms of agreement and 18 provides information for short-term rental hosts about City ordinances and expectations 19 for "good neighbor" behavior (Attachment 1). 20 21 The community continues to express interest in the subject of short-term. rentals. See 22 Attachment 2 for public comments received since July 6, 2015. 23 1 EXHIBIT NO. .7 ITEM 6 August 3, 2015 City Council Staff Report Procedures for Regulating Short-term Rentals 24 DISCUSSION: 25 As noted in the previous staff report, currently the City's Municipal Code is silent in 26 terms of a definition of "short-term" rentals and whether such a use is allowed, permitted 27 or prohibited in Single -Family Residential Districts. Staff has reviewed the Code and 28 considered the option to make changes to the Code (Sections 5.08, 5.28 and 20.16) to 29 define short-term rentals and clarify they are permitted uses within Single-family 30 Residential zones. However, as an initial approach and similar to many other Marin and 31 Bay Area jurisdictions, it seems appropriate to proceed with a simple registration process, 32. monitor the progress made with this approach and determine over time whether there is a 33 need to make adjustments to the Zoning Ordinance. 34 35 At present, staff does not have data to identify the range of housing types that are rented 36 on a short-term (less than 30 day) basis. It appears from vacation rental websites that the 37 full range of spaces are currently rented (i.e., bedrooms, accessory structures, apartments 38 and entire houses). Presumably, these short -terra rentals include multi -family as well as 39 single-family zoned properties. As discussed in the July 6, 2015 Staff Report, recent 40 policy discussions have indicated a concern about short-term. rentals in multi -family 41 zones. Over time through the registration process, staff will collect information and have 42. better insight into how short -terns rentals are or are not affecting long-term housing 43 opportunities in Mill Valley. 44 45 In coordination with Finance, staff has outlined a procedure to allow the Planning 46 Department to incorporate the Registration Form as part of the Business License approval 47 process. A new webpage has also been created under "Business Licenses" to allow 48 applicants/hosts to access the Registration Form and share information with their guests, 49 including relevant City regulations and additional visitor information, such as local 50 traffic, news and events. See ww^w.citvofmillvallev.org!rentals for more information. 51 52 Short-term Rental Registration Form (Attachment 1). The Registration Form has been 53 drafted that allows an applicant to select the type of short term rental, such as single - 54 family home, second unit, room and/or multi -family unit. (This form will be updated, 55 should regulations change in the Multi -Family Zoning District prohibiting short-term 56 rentals). Hotels, Motels and Inns are not required to complete the Registration Form 57 because such uses are managed through the Conditional Use Permit review and approval 58 process. 59 60 The Registration Form includes the following components: 61 • Registration Fee. With Council direction to minimize cost in order to invite•short- 62 term rental hosts to participate, a fee of $50 is recommended. 63 • Required Conditions. Short-term rentals must be legally permitted and for 64 hosts/owners of a single-family residence with a second unit, one unit must be 65 occupied by the owner. 66 • Terns of Agreement (including Good Neighbor Policies/Practices). The Form 67 requires annual renewal of Business License, Registration Form, payment of a 68 Registration Fee and TOT. In addition, the form requests that the host provide the 69 following to guests: 2 EXHIBIT NO. 7 August 3, 2015 City Council Staff Report Procedures for Regulating Short-term Rentals 70 o information about maximum occupancy 71 o the location of off- and on -street parking 72 o emergency contact information 73 o trash disposal 74 o the City's noise ordinance requirements; 75 • Violation of Terms. The form states that violation of the terms of agreement 76 would result in a 1 -year loss of Business License subject to review and approval 77 of the Planning Director. 78 79 FISCAL IMPACT: 80 The potential cost for Staff time to administer and approve the Registration Form will be 81 monitored. The Registration Fee can be adjusted over time to address costs associated. 82 with staff time and/or code enforcement issues. It is estimated. that TOT revenue will 83 increase as a result of the proposed tracking and registration process. 84 85 SUMMARY AND RECOMMENDATION: 86 Staff recommends that the Council: 1) review and comment on the Short-term Rental 87 Registration Form and, 2) direct staff to incorporate the Registration Form as part of the 88 Business License approval process for "Living Accommodations". 89 90 NEXT STEPS: 91 Staff will send out a Registration Package to all current Business License holders with 92 Living Accommodations (approximately 400), inviting them to register any short-term 93 rental units. Over the next six months, staff will monitor the registration process and any 94 code enforcement requirements associated with short-term rentals and provide an update 95 to Council in early 2016 on how well the registration process is working. At this time, 96 Council can further discuss modifying the registration process, fee or additional 97 regulations/restrictions. 98 99 Further outreach efforts may include: 1) contacting short-term rental platforms to inforin 100 them of the City's Registration process; and 2) searching for active rental websites in 101 Mill Valley and providing hosts information about the City's Registration process. 102 103 ATTACHMENTS: 104 1. Short -Term Rental Registration Form 105 2. Public Comment Letters 106 107 108 109 ONLINE RESOURCES: 110 • July 6, 2015 Staff Report: http://www.cityofmi.11valley.ora/Index.aspx?oa2e-727 111 • July 20, 2015 Marin U Editorial: 112 htto:llwww.marinij.com/opinionl20150720/marin-ii-editorial-mill-vallev- 113 wrestles -with -unofficial -rentals 114 115 3 EXHIBIT NO.�_ Short -Term Rentals Preliminary Report to the Richmond City Council and City Planning Commission Prepared by the Department of Planning & Development Review October 14, 2015 EXHIBIT No., Contents I. Introduction & Summary II. Current Operation in Richmond Area a. The Basic Statistics b. Number of Stays/Reviews c. Location of Existing Listings d. Sampling of Existing Listings e. Existing Enforcement and Complaints III. Examples of Legislation from Other Localities a. Public Engagement IV. Taxation a. Enforcement of Tax Obligations b. Estimation of Revenue: Lodging Taxes c. Estimation of Revenue: Business Licenses d. Other Cities V. Building Code Requirements for Short -Term Rentals VI. Health, Fire & Safety Regulations VII. Existing Special Use Permits for Tourist Homes VIII. Relevant Existing Zoning Definitions Appendix: A. Resolution No. 2015-R21-28, Report to City Council & Resolution No. 2015-R42-47 B. Methodology of Research C. Sampling of Richmond Airbnb Listings D. Existing Special Use Permits for Tourist Homes EXHIBIT NO. a Introduction & Summary Many localities throughout the country have been grappling with how to manage rental properties found on Airbnb, HomeAway, VRBO and other similar sites. City officials across the country want to make sure that these short-term rentals are managed in a manner that ensures the safety of all involved and protects the welfare of neighborhoods, hosts, guests, and neighbors. While some cities have already established regulations for these short-term rental properties, others are still attempting to regulate this rapidly growing and popular industry in order to create a safe environment that supports this new tourism model, but does so in a manner that promotes safety, courtesy, and respect for the law. This spring the Richmond City Council passed Resolution No. 2015-R21-28 to request that the Chief Administrative Officer conduct a study concerning the use of Internet lodging services in the city of Richmond. While acknowledging the need to accommodate visitors to Richmond participating in, or attending, the upcoming UCI 2015 Road World Championships the study is designed to outline what, if any, amendments to the City's laws and regulations are necessary to address issues created by the rental of real property through Internet lodging services. After receiving the study, the City Council adopted Resolution No. 2015- R42-47 on June 22, 2015, directing the Planning Commission to propose changes to the City's Zoning Ordinance that would authorize short-term rentals of residential properties through Internet lodging services, and conduct a public hearing on the proposed changes as soon as practical. Copies of both Resolutions and the report given to the City Council are included in Appendix A. In the City of Richmond these types of short-term rentals are currently not identified as a permitted use by the City's Zoning Ordinance and are, therefore, prohibited. In order to permit short-term rentals by Internet sites such as Airbnb, HomeAway and VRBO a new definition will need to be included in the Zoning Ordinance and explicitly listed as a permitted principal or accessory use in those zoning districts where they are determined to be appropriate uses. This report provides information about how short-term rentals are currently operating in the city in order to inform any decisions about how they should be authorized. The report includes examples of how other localities have chosen to regulate short-term rentals, and examples of existing special use permits for bed and breakfasts and the conditions imposed on them. Finally, included in the report are existing Zoning Ordinance definitions that are relevant to creating a definition for short-term rentals in order to authorize and regulate them. Principal vs. Accessory Uses At the time this report was started there were more than 500 listings on various internet sites for short-term rentals in the city, including Airbnb, HomeAway, and VRBO. The vast majority of them are listed through the Airbnb platform, with over half of the listings offering an entire house or apartment for rent as an unhosted stay, as opposed to a private room for rent as part of a hosted stay. Additionally, 5% of the listings are responsible for over 50% of the reviewsindicating that on some properties short-term rentals are occurring on a regular basis and may be functioning as a principal use of the property. section 1, page 1 EXHIBIT NO. No other localities that were researched permitted this use as a principal use. It is recommended that Richmond consider short-term rentals an accessory use and design regulations that will ensure that short-term rentals remain an accessory use to a dwelling unit. Hosted vs. Unhosted Stays In Richmond, approximately 56% of the listings for short-term rentals are unhosted. They are for entire homes or apartments, which indicates that there is no permanent resident or host in the unit during the stay. Approximately 44% of the listings for short-term rentals in the city are hosted. This distinction between hosted and un -hosted stays is important in terms of oversight and tourism. If the permanent resident co -exists with the guest, they can more closely monitor any undesirable behavior that may negatively affect neighbors or the neighborhood. They can also serve as a guide to the city. They can let the guests know which local restaurants and coffee shops are the best and what activities are unique to their neighborhood or the city as a whole. This characteristic emphasizes the important tourism aspect of the short-term rental experience in that guests are able to see the area through the lens of a local. Most of the localities researched have more stringent restrictions on unhosted stays, as compared to hosted stays, in recognition of the difference in oversight from hosts as well as neighborhood quality of life from unhosted units. It is recommended permitting unhosted stays, but acknowledge that as presently structured with short-term rental providers enforcement of any limits on the number of nights of unhosted stays will be a significant challenge. Maximum Number of Nights and Rooms The number and character of maximum number of guests and rooms (beyond a whole unit unhosted stay) varies significantly across the cities studied. Staff recommends further study on this matter. Location of Short -Term Rental Uses Currently, the City's Zoning Ordinance only permits bed and breakfasts, under the definition of "tourist home" in limited multi -family residential zoning districts when situated along a Federal Highway and in limited business districts. Most of the localities researched allow short-term rentals in a broad array of districts, and pursue restrictions on other factors than zoning districts. It is recommended that Richmond pursue a similar strategy. Taxation Through the course of our research of Airbnb, the City's Finance Department has determined that it is unlikely we will be able to enlist the company's assistance in collecting and remitting lodging taxes for rentals within the City. The company appears to offer this type of service only in Targe cities where there is a regularly high volume of rentals. Staff anticipates the collection of lodging taxes and the enforcement of business license taxes will be the sole responsibility of the Finance Department. section 1, page 2 EXHIBIT NO. \ Enforcement Enforcement will be a significant challenge. Creating a process to have hosts register is pretty straightforward. The bigger challenge will be managing for compliance with any ordinance conditions, investigating/processing complaints received, and managing what overall will be a paperwork- and staff -intensive process. Without significant help from the short-term rental service providers on many of those issues, the City will always be playing catch-up. The record from most communities that have initiated short-term rental programs is very challenging. That will be the case here, too. KEY CONCLUSIONS Based on that research staff presents the following conclusions at this time for consideration: • Short-term rentals are a new phenomenon. As with all such industries, innovation continually outpaces any regulatory framework a city may adopt to manage or direct its growth. Corrections will need to be made as the industry and the City's comfort level changes over time. This provides an opportunity to provide some oversight to what is presently a totally unregulated industry but changes will be made as the industry matures. • There are ways to provide for the inclusion of short-term rentals into the mix of the city's hospitality industry in ways that can be supportive of Richmond's quality of life, effective enforcement and management of the process, and sound business practices but does so in a manner that does not create such high barriers to entry that the vast majority of hosts continue to remain "underground." • Short-term rental should not be viewed as a large revenue -generator for the City under any existing usage scenario, and is unlikely (and undesirable) to become a Targe revenue generator in the future. • It is important to establish rules, regulations, and parameters to short-term rentals and to ensure mechanisms are in place to enforce such rules, regulations, and parameters, so that citizens, business owners, neighborhoods, and guests are protected from operators who do not comply with the rules. Zoning regulations and enforcement, alone, are likely not sufficient and additional avenues should be considered • The onus will be on the host to document, collect, and remit taxes, not the listing agent such as Airbnb. It will be up to the Finance Department to actually collect the revenue. • The cost (primarily in staff time) of reviewing and issuing permits, collecting revenue, and performing both permit and revenue enforcement will be considerable, equal to at least two to three full-time equivalents (FTEs), at least 1-1.5 in Zoning and 1-.5 in Finance as any short-term rental program is initiated. section 1, page 3 rTy EXHIBIT NO. Section 11: Current Operations in Richmond Area The Airbnb platform contains the vast majority of short-term rental listings within the Richmond area. As such this analysis focuses on listings from that platform (although other internet-related services would also be managed the same). Currently, the company does not share data on hosts, listings, or transactions with regulators, so this analysis was performed by individually researching each listing on the platform from a guest perspective. Please see Appendix B for a further explanation of the methodology for this section of the report. The Basic Statistics The type of short-term rental in Richmond varies from guest rooms in the heart of Downtown to basement apartments on Monument Avenue to entire townhouses or carriage houses in the Fan or Church Hill to larger properties in entirely residential neighborhoods such as the West End and Forest Hill. When the data was first collected on June 22, 2015, there were 434 listings available on the service within the Richmond area. By July 23, 2015, there were 543 listings on Airbnb in the Richmond area, the vast majority within the city limits. By September 1, 2015, that number had grown to a total of 797 listings. The following statistics are based on the approximately 543 listings that were available the week of July 23, 2015: • 60% of the listings were for entire houses or apartments • 56% of the listings for the entire place were for an entire house • The highest number of guest accommodated was 14 • The highest number of bedrooms available at any entire place was 6 Rental Type 7 1% Entire Place • Private Room Shared Room section 11, page 1 Entire Place Rental Type 16 5%._, House • Apartment or Condo Other EXHIBIT NO. Number of Stays/Reviews* An estimate of the number of stays in Airbnb listings is derived from the number of reviews for each listing from the week of June 22, 2015, when there were 434 listings in Richmond. Please note that this is not an exact indication of how many stays have actually occurred in the Richmond area because stays could have occurred without a review being submitted to the Airbnb site. If anything, these statistics would tend to under -represent how many stays have occurred. • At the time of this analysis, there had been over 3,600 reviews in Richmond • 5.1% of the listings are responsible for 50.1% of the reviews • The average number of reviews per listing is 8 and the median number of reviews is 1 • 49.8% of the listings have never had a review This information reveals that while there are a high number of listings in Richmond, nowhere near this high a density of listings have actually received any reviews, which may be due to the fact that they have only recently been added to the web site or that they only use the service sporadically. Almost half of the listings have never had a review and the vast majority have only a handful of reviews. The intensity of the reviews (50.1%) come from a few listings (5.1%) that have been reviewed between 100 and 200 separate times. These listings are essentially operating as permanent lodging facilities. This graph shows how a very small percentage of the listings are responsible for a Targe percentage of the reviews. The number of listings that have been reviewed 100-200 times only represents 1.4% of the total listings, yet they are responsible for 22.8% of the total reviews. 250 no 200 150 a 100 50 z 0 216 Number of Listings per Number of Reviews 123 62 17 11110111111 6 4 4 2 0 1-10 11-25 26-50 51-75 76-99 100-150 151-200 Number of Reviews The only group of listings accounting for a larger percentage of the total reviews is the group of listings with 11-25 reviews. While that group represents 28.4% of the total reviews, it also represents 14.3% of the total listings. 49.8% of listings have never hosted any guests. *Calculations based on data as of June 22, 2075. section II, page 2 EXHIBIT NO. Location of Existing Listings* The Richmond listings on Airbnb are found primarily in the Fan District, the Museum District, Church Hill, Woodland Heights and Downtown with others scattered throughout other neighborhoods. The following maps were created using data from the week of June 22, 2015: 0 reviews 1 to 10 reviews 4 11 to 25 reviews 26 to 50 reviews 7, 51 to 75 reviews '1% 76 to 100 reviews 101 to 1S0 reviews 151 tom200 reviews Citywide :;•Q.� 4 qcp q `4 1) 4 � 7 0; 4 \ Cr? S9 V Byrd Park. Fan District and the Museum District All Listings by Number of Reviews Woodland Heights, Spring Hill and Forest Hill • 9 Downtown and Church Hill section II, page 3 EXHIBIT NO. 6 The six most popular listing areas, responsible for almost 1/2 of all listings and over 60% of all reviews are: • Fan District: 14% listings, 17% of reviews • Carytown: 3% of listings, 14% of reviews • Church Hill: 7% of listings, 11% of reviews • Downtown: 6% of listings, 9% of reviews • Woodland Heights/Forest Hill: 9% of listings, 7% of reviews • Museum District: 8% of listings, 4% of reviews Approximately 60% of the listings for short-term rentals are for entire homes or apartments. This indicates that there is no permanent resident or host occupying the unit during the stay. Some properties - such as carriage houses, two-family properties, others with a second dwelling unit - may still have owner -occupied residency during short-term rental, but there are also many listings for an entire property. It is difficult to determine the property type without reading the description on the listing site - Airbnb does not make addresses of listings available until after a patron books a stay, and hosts may identify a property that has characteristics of a whole unit rental as a shared stay or vice versa. Approximately 40% of the listings for short-term rentals are for private of shared rooms. The distinction between hosted and unhosted stays is important in terms of oversight and tourism. If the permanent resident co -exists with the guest, they can more closely monitor any undesirable behavior that may negatively affect neighbors or the neighborhood. They can also serve as a guide to the city. They can let the guests know which local restaurants and coffee shops are the best and what activities are unique to their neighborhood or the city as a whole. This characteristic emphasizes the important tourism aspect of the short-term rental experience in that guests are able to see the area through the lens of a local. EXHIBIT NO. e section 11, page 4 Stamen .. r,. ..i., �r 5.e ret .)C-f,.luuee Tuckalros Listings with less than 12 reviews Listings with 12 or more reviews Entire Place Listings by Number of Reviews 'Calculations based on data as of June 22, 2015. section 11, page 5 EXHIBIT NO. e Sampling of Existing Listings Floyd Avenue in The Fan District North 27th Street in Church Hill 187 reviews 1 room for $79 per night Average Use Please see Appendix C for a sampling of heavily -reviewed Richmond properties. section 11, page 6 EXHIBIT NO. Existing Enforcement and Complaints Over the past several months, there have been a total of seven (7) complaints regarding existing dwelling units that have been rented on short-term basis through internet lodging services. Of the seven complaints, there have been: • Five complaints about single-family homes • Two complaints regarding multi -family units within condominium buildings Three of the units have been owned by individuals who live out of town where there is no primary resident at the property. Enforcement Procedure Verification of complaints related to occupancy duration and limits is currently extremely difficult to verify and enforce. The mere advertisement of property for short-term rental is not sufficient to serve as a violation; there has to be confirmed use of the property as a short-term rental. Currently, the process for enforcement is as follows: 1. The Zoning Office receives a citizen complaint and investigates the complaint 2. If a violation is found (currently, operating a short-term rental is a violation) a Notice of Violation and Correction Order is issued by the Zoning Administrator to the owner and/or occupant of the property 3. The violator is normally given thirty (30) days to abate the violation, or as Virginia law requires a 30 -day appeal period, appeal to the Board of Zoning Appeals 4. If a violation is not abated or an appeal filed within the thirty day period, a summons may be issued for criminal court. Violation of the zoning ordinance is a Class I misdemeanor, subject up to a $2,500 fine and/or up to a year in jail It will be difficult to enforce any complaints that arise from complaints about operators exceeding the number of allowable rental days during a calendar year. Rental days would be difficult to verify and enforce without some form of permit approval requirement, as well as a registry or other record of days in which a property was used as a short-term rental. Unfortunately, all localities with similar permit approval requirements have had limited success in the operator complying with the requirement, with only a small percentage of available units listed on the site having gone through the permitting process offered by the localities. Currently, the listing agents such as Airbnb have largely not cooperated with localities' efforts to enforce limits on rentable days or other regulatory and enforcement provisions. Cities who have passed more recent regulation have included provisions that put the onus on hosts to maintain a guest registry and records of the number of nights their unit is occupied as a short-term rental, in order to make enforcement of restrictions more feasible. section 11, page 7 EXHIBIT NO. S Locality Principal or Accessory Use & Districts Unhosted Max # of Stays nights and Permitting Public Safety Permitted occupants ADOPTED Section III: Examples of Legislation from Other Localities Localities across the country have chosen to handle short-term rentals in a variety of ways depending on their local economies and neighborhood concerns. Localities, such as New York City, who have a housing shortage and/or extensive hotel industries have chosen to continue to prohibit them; others, such as San Francisco, have permitted them but struggled to enforce their ordinances and will now have a ballot referendum to revoke permissions for short-term rentals. Many localities with economies that rely heavily on tourism, such as Aspen and Durango, Colorado, have chosen to permit them under certain regulations that are embedded in existing tourist home restrictions. All of the localities that have chosen to proactively permit these types of rentals have all included specific regulatory parameters as conditions of their authorization. The following chart outlines the general parameters regulating these types of short-term rentals that other localities similar to the City of Richmond have adopted or are proposing to adopt. section 111, page 1 EXHIBIT NO. F) Type A: no Type A: permit more than 2 good for 2 Smoke & carbon bedrooms; Max # of people set years & must notify monoxide detectors by definition of neighbors Type A: no Accessory use: household: one nonresident Unit must be occupied by or more related persons, plus Type B: conditional use employees, commercial Portland principal Yes not more than 5 additional review with public notice meetings prohibited resident for at least 270 days persons sent to Type B: nonresident during each property employees allowed calendar year Type B: 3 or owners and as part of more recognized conditional use bedrooms, max organizations review, commercial # of guest set within 150 feet meetings allowed by conditional use permit. of the residence but regulated. Section III: Examples of Legislation from Other Localities Localities across the country have chosen to handle short-term rentals in a variety of ways depending on their local economies and neighborhood concerns. Localities, such as New York City, who have a housing shortage and/or extensive hotel industries have chosen to continue to prohibit them; others, such as San Francisco, have permitted them but struggled to enforce their ordinances and will now have a ballot referendum to revoke permissions for short-term rentals. Many localities with economies that rely heavily on tourism, such as Aspen and Durango, Colorado, have chosen to permit them under certain regulations that are embedded in existing tourist home restrictions. All of the localities that have chosen to proactively permit these types of rentals have all included specific regulatory parameters as conditions of their authorization. The following chart outlines the general parameters regulating these types of short-term rentals that other localities similar to the City of Richmond have adopted or are proposing to adopt. section 111, page 1 EXHIBIT NO. F) Locality Principal or Accessory Use & Districts Unhosted Max # of Stays nights and Permitting Public Safety Permitted occupants ADOPTED Nashville Accessory use Yes No more than 4 sleeping rooms Maximum occupancy shall not exceed more than twice the number of sleeping rooms plus 4 Simultaneous rental to more than one party under separate contracts prohibited Max stay 30 days, but no stays of less than 24 hours Annual permit required with $50 renewal fee Insurance required Written notification to neighbors that share a common wall or driveway No signage Smoke alarms No food prepared or served to guest Lessees must be 21 years of age No more than 3% of the single-family or detached two - family residential units within each census tract shall be permitted as non - owner -occupied short-term rental use Philadelphia Accessory use Yes Less than 180 days a year No more than three unrelated persons Under 90 days does not require a permit 90 to 180 days requires permit Must maintain a guest registry No signage Smoke & carbon monoxide detectors Must provide a point of contact & notice of noise ordinances _. section III, page 2 EXHIBIT NO. Locality Principal or Accessory Use & Districts Unhosted Max # of Stays nights and Permitting Public Safety Permitted occupants ADOPTED Madison Accessory use: short-term rental not allowed for non- primary residence Yes Unhosted stays only permitted up to 30 days per year No limit on the number of days for hosted stays Occupancy determined by existing zoning district regulations: Typical low- density residential area is set at family plus one roomer or no more than 2 unrelated individuals Multi -family districts are set at family plus 4 roomers, or up to 5 unrelated individuals Permitted in all districts Must be registered with the Treasurer's office Must be licensed with Public Health Must maintain a guest registry Smoke & carbon monoxide detectors For unrelated guests, each bedroom must have own bathroom OR separate male and female bathrooms must be provided Individual locks on bedroom doors required • Roanoke Accessory use No - owner or leaseholder shall occupy dwelling unit during guest stays No more than 2 bedrooms for guests and no more than 4 total guests Rented only on a daily or weekly basis; stays shall not exceed 14 days Public hearing required No changes to exterior of building occupied by the use section III, page 3 EXHIBIT NO. Locality Principal or Accessory Use & Districts Unhosted Max # of Stays nights and Permitting Public Safety Permitted occupants PROPOSED Louisville Accessory use: Only permitted in primary residence, which is the predominant and principal home of the owner of the dwelling unit Yes Short-term Rentals: Less than 30 days; no more than 2 persons per bedroom plus 4 additional persons (includes primary residents) Temporary Short-term Rental: Less than 7 days, with no more than 2 such rentals within calendar year; no limit on number of occupants Only for Short - term Rentals; none for Temporary Short-term Rentals Annual application $250 fee Inspection required Smoke detectors Proof of Insurance No signage Only permitted in certain districts Charlottesville Accessory use requiring provisional use permit Allowed in all zoning districts that allow Home Occupations Yes - contact information for owner or local "Responsible Party" must be part of permit application Only owners can apply for provisional use permit Applicant must provide documented proof of permanent residence each year for the unit Provisional use permit good for one year Permit applicant provides authorization for a building/code enforcement inspection once per year Notice for adjacent property owners Written fire evacuation plan submitted for permit and posted in unit Permits can be revoked if three or more substantiated complaints are received by the city within a calendar year; or failure to comply with terms of the permit section III, page 4 EXHIBIT NO. Public Engagement Many of these localities, particularly ones passing more recent and comprehensive legislation, have engaged in extensive public engagement process to make sure that they are ensuring neighborhood quality of life while expanding the opportunity for short-term rentals. Most of these processes have involved direct engagement with Airbnb hosts, neighborhood associations, hoteliers, tourism groups, and bed & breakfast owners. The public engagement process used in Charlottesville covered more than a year from initiation to council adoption (adopted September 8, 2015). Charlottesville staff participated in numerous outreach meetings and work sessions with neighborhoods, community stakeholders, short-term rental hosts, the hospitality industry, and other interested groups. Richmond city staff have begun the process of meeting with interested stakeholders to help inform our thinking and to add value to the final report and recommendations. EXHIBIT NO. c) section 111, page 5 AIRBNB, RISING RENT, AND THE HOUSING CRISIS IN LOS ANGELES bane A NEW ECONOMY FOR ALL EXHIBIT NO. , Roy Samaan AIRBNB, RISING RENT, AND THE HOUSING CRISIS IN LOS ANGELES Table of Contents Executive Summary 2 Who is AirBnB? 4 Early growth and Silicon Valley roots 4 Regulatory uncertainty threatens IPO 5 AirBnB's Political Playbook 6 The AirBnB Ecosystem 8 Hosts and listing types 8 Whole unit listings dominate key AirBnB markets 8 The Los Angeles AirBnB Market 9 High intensity use indicates hotel conversion 10 Hosts with multiple units may be professional management companies 10 The bottom of the AirBnB economy 13 AirBnB's job costs 15 AirBnB and the Housing Market 16 AirBnB creates incentives to take units off the rental market 16 High AirBnB density overlaps with higher rents and lower rental vacancy 18 AirBnB in Los Angeles Neighborhoods 21 Who Can You Trust? 22 Public health and safety in hotels 22 ADA compliance and enforcement 23 Strained relations between AirBnB and its hosts 25 Assumption of risk and liability 25 Host guarantee and Peers' homesharing liability insurance 27 The Promise of Tax Revenue 28 AirBnB revenue is clustered in established tourist districts 29 Policy and Regulatory Intervention 30 Portland, Oregon 30 San Francisco, California 32 New York City, New York 33 Southern California Cities 34 Principles for Regulating AirBnB 35 Appendix A: Revenue Calculation 36 Appendix B: Occupancy Rates 36 Endnotes 37 ir„-noAttol Iaane: a new economy for all EXHIBIT NO. / AIRBNB, RISING RENT, AND THE HOUSING CRISIS IN LOS ANGELES Executive Summary Sharing our homes has been commonplace for as long as there have been spare rooms and comfortable couches. Whether through word of mouth, ads in newspapers or flyers on community bulletin boards, renters and homeowners alike have always managed to rent out or share rooms in their living spaces. These transactions were decidedly analog, but they represented a genuine peer-to-peer marketplace. Websites like Craigslist eventually made connecting sellers to buyers far more common. Companies like HomeAway applied the same principle to the vacation home rental market, allowing owners of vacant homes to connect with vacationers. In all these cases, transactions were limited to the buyers and sellers. If there were negative effects arising from the transaction, they were largely limited to the buyers and sellers. AirBnB changes this basic formula. By incentivizing the large-scale conversion of residential units into tourist accommodations, AirBnB forces neighborhoods and cities to bear the costs of its business model. Residents must adapt to a tighter housing market. Increased tourist traffic alters neighborhood character while introducing new safety risks. Cities lose out on revenue that could have been invested in improving the basic quality of life for its residents. Jobs are lost and wages are lowered in the hospitality industry. i1 TURN YOUR LA. PROPERTY INTO A NEIGHBORHOOD HOTEL - :ti'11,1M•„^•r:Yr Wee Make More with UnfairenB Forp:t whitey leng.termtre,t,, . ycrk,.; rent route( tr ,le. r,xn 5uadntPlgt2*the tit pr°per6' iy rontirs�,.•aamra,m. fnr $21111a night. 'Nen year i�rlgkE�ry b, lecithin Into a Incentive hotei•widi,ut y, theivies oro hotel ltnfairrinN n rapidly 1,.:N6P+raany a,eue.•s bring hmNs:eLn'e6nt neighborhoods- Kik, eIghhorhoods. M k, mare money by rldininv,r prvprrty to.iraf our lt,ot'Or..uk today: it's that uuy, �.•c,+Pru.". lieu i,in.iY1rt, Bringing Hotels to L.A Neighborhoods O O tJ F L C D 2 D ate. D '� U C C F a j D _.• .-4-'2'°-°1.--e j w n s L yr= L C .D C L Iaane: a new economy for all EXHIBIT NO. AIRBNB, RISING RENT, AND THE HOUSING CRISIS IN LOS ANGELES This report seeks to explore the history of AirBnB, understand how its public pronouncements deviate from observed facts, and identify the tangible and intangible effects that the company is having on our housing market, neighborhood cohesion and public revenues. A key component of this report is its analysis of the AirBnB market in Los Angeles based on a snapshot of AirBnB listings on October 17, 2014. Through the application of freely available code, we have collected a comprehensive set of data that includes information on AirBnB hosts, prices, listing locations and listing types. These data provide a great deal of insight into the contours of the company's operations in and effects on Los Angeles. First, AirBnB's impact on Los Angeles is far larger than previously understood. We identified 8,400 hosts and 11,401 AirBnB units listed for rent in Los Angeles. Second these units are not, by and large, the "shared" space implied by terms like host or sharing economy. Instead, nearly 90 percent of AirBnB's Los Angeles revenues are generated by lessors with whole units and leasing companies who rent out two or more whole units. Third, AirBnB has created a nexus between tourism and housing that hurts renters. The 7,316 units taken off the rental market by AirBnB is equivalent to seven years' of affordable housing construction in Los Angeles. AirBnB density overlaps with high median rents and lower rental vacancy. The top nine AirBnB neighborhoods have a vacancy rate below the threshold the city uses to deny conversion of apartments to condominiums. As a whole, Los Angeles has seen rental rates grow three times faster than San Francisco, while growth is twice as fast in AirBnB's nine top neighborhoods as in the rest of the city. The UCLA Anderson School of Business considers L.A.'s high cost of housing a "significant drag on job creation." In Venice, as many as 12.5 percent of all housing units have become AirBnB units, all without public approval. There are 360 AirBnB units per square mile in Venice and longtime residents who never intended to live next to hotels now find themselves dealing with noise and safety concerns that negatively impact their quality of life. Over 80 percent of the taxes and economic activity AirBnB claims to generate likely would have come to Los Angeles anyway, resulting in taxes being paid, higher wages being earned and more money being spent by visitors. In short, AirBnB has become a major player in Los Angeles and is having major impacts, often negative. But Los Angeles is a key market for AirBnB as well. AirBnB is moving toward an Initial Public Offering (IPO), and can only capture the billions of dollars it hopes to if it can address one fundamental fact: AirBnB rentals, in L.A. and elsewhere, are largely illegal. This report argues that as the city begins the process of crafting a regulatory regime to address the company's proliferation into residential neighborhoods, any potential policy ought to be assessed by four key criteria: 1. 1_ Housing must be protected Systematic approval requirements must be in place 3. AirBnB must share the burden of enforcement 4. Only true sharing should be allowed y91 TG~'�r�i-r. 3h :NH EXHIBIT NO. AIRBNB, RISING RENT, AND THE HOUSING CRISIS IN LOS ANGELES Who is Air BnB? AirBnB sells itself as a platform akin to a community bulletin board. However, unlike most community bulletin boards, the company takes a percentage out of every transaction, has centralized control over all listings, and maintains a global scope of operations. In other words, AirBnB is a hotel company. It may be deregulated and decentralized. embedded within countless apartment buildings, bungalow courts and leafy suburban streets, but the company's primary function is to make a profit accommodating guests. According to the story AirBnB tells about its founding, CEO Brian Chesky was unemployed when he moved to San Francisco in 2007. A large design conference came to town and Chesky saw an opportunity to generate a bit of income by renting out an air mattress in his San Francisco loft to conference attendees who could not find an affordable hotel room. Chesky and his roommates accommodated three guests and provided them with breakfast. Thus, AirBed & Breakfast - now known as AirBnB - was born.' Early growth and Silicon Valley roots AirBnB's early growth focused mainly on large events like the 2008 Democratic National Convention in Denver and South by Southwest in Austin. With hotels in these markets at full occupancy, AirBnB provided a listing service for individuals with surplus space in their homes or apartments to rent out to like-minded travelers. After successfully completing these proof of concept trials, Chesky and the other AirBnB cofounders were invited to participate in Y-Combinator, a Silicon Valley tech start- up incubator program that connects budding entrepreneurs with major venture capital investors. 2 The company emerged as a favorite of Y-Combinator founder Paul Graham who worked to connect the AirBnB team to his contacts in the venture capital world. An email exchange published on Graham's personal website, with full knowledge and permission of all parties involved, shows that from a very early stage AirBnB sold itself as both a hotel competitor and as the foundation of a new AirBnB's three co-founders, Nathan Blecharczyk (left), Brian Chesky (center) and Joe Gebbia (right) were added to Forbes list of billionaires in 2015. d4AtZir,PWAF* )aa -c9nqm ,. EXHIBIT NO. AIRBNB, RISING RENT, AND THE HOUSING CRISIS IN LOS ANGELES kind of peer-to-peer marketplace—"the eBay of spaces" as Graham wrote to a potential funder. The company touted its revenue stream as "counter -cyclical," arguing that when the economy declined, as it did while AirBnB pursued its initial rounds of financing in 2009, more users would be drawn to the site since they "had to pay the rent."3 In other words, people would want to rent out Renting out residentially zoned units as accommodation for travelers runs counter to land use regulations and zoning codes. their homes because rising housing costs made it harder to afford the rent or mortgage. As we will see, AirBnB returns to this claim time and time again to sell its service to residents, regulators and the public. As we shall also see, the claim is at once misleading and even ironic, since AirBnB itself may contribute to those rising costs. eg latory 62neer tainty threatens IPO Since April 2014, AirBnB has raised nearly $800 million from global investment firms including TPG Capital, T. Rowe Price and Dragoneer Investment Group. AirBnB has been valued at $13 billion, placing the company in the upper echelons of the hospitality industry.4 At this valuation, AirBnB has a higher market value than both Hyatt ($8.4 billion) and Wyndham ($9.3 billion).' According to media reports, the company has been responsible for booking 10 million guest nights since 2008, and its own estimates indicate the company may have booked more room nights in 2014 than major chains like Hilton and Intercontinental. The company generates revenue by charging hosts a three percent commission on each booking and by charging travelers a commission of between six and 12 percent, thus generating a yield of anywhere between nine and 15 percent in commission for every booking.' Market observers expect AirBnB's successive rounds of fundraising are a prelude to an Initial Public Offering (IPO). However, renting out residentially zoned units as accommodation for travelers runs counter to land use regulations and zoning codes.' For example, a March 2014 memo distributed by Los Angeles' Deputy Planning Director Alan Bell states that short term rentals are prohibited in single-family and lower density multi- family residential zones. The memo notes that the status of short term rentals in higher density multi- family and commercial zones is "complex."' Uncertainty around the legality of AirBnB's core business model is further compounded by the fact that the company has not collected the hotel - related taxes mandated by most jurisdictions. Municipalities have explored a range of regulatory options to address the proliferation of illegal hotels in residential neighborhoods. Consequently every municipality represents a proving ground for AirBnB. Each time a city normalizes the company's activities, AirBnB becomes a more stable, secure investment. Receiving legitimacy from major markets, like Los Angeles, is a critical precondition to moving into the IPO phase of the company's growth cycle. Each time a city normalizes the company's activities, AirBnB becomes a more stable, secure investment. laane: a new economy for all EXHIBIT NO. C( AIRBNB, RISING RENT, AND THE HOUSING CRISIS IN LOS ANGELES AirBnB's Political Playbook AirBnB has marshaled a sophisticated political operation any time the company has faced even symbolic regulatory action.9 This generally involves packing a room with dozens of hosts. Armed with compelling stories, these hosts detail the ways in which renting out their spare rooms has enriched their lives and saved them from economic ruin. The hosts seem motivated by a combination of financial self interest and a sincere belief that they compose a beleaguered community. This gives AirBnB a group of personal, heartfelt and therefore effective spokespeople that most corporations can only dream of. This is no accident, but rather the result of a sophisticated operation based on a well - articulated marketing philosophy laid out in the book The Cutting of Brands: How to Turn Customers into True Believers7° Culting's author is Doug Atkin, who also happens to be AirBnB's Global Head of Community." The book is pitched as a way to "teach marketers how to align themselves with a specific segment of the population, how to attract and keep new members, how to establish a mythology about the company, and how to manage a workforce filled with true believers."12 The central thesis is that companies like Apple ("Think Different") and Nike ('Just do it!") share many characteristics common to cults like the Unification Church or the Hare Krishna in that these companies form a strong emotional connection to their customers and these customers view themselves as a part of a broader community. This picture, taken from AirBnB's website, highlights the company's core principle of creating a sense of "belonging" through its service. EXHIBIT NO. q AIRBNB, RISING RENT, AND THE HOUSING CRISIS IN LOS ANGELES As Atkin puts it in the conclusion of Cutting: t' . .'\:.. V... 4. The Culting philosophy is evident in much of AirBnB's marketing, from its founding myth about the air mattress to its use of hosts as spokespeople. To build up this base, AirBnB has hired political field operatives in addition to contracting with traditional PR firms. A simple Linkedln search shows that AirBnB's preference has been for hiring staffers with experience managing political campaigns. A December 2014 job posting for an AirBnB "community organizer" position, for example, listed "[r]ecruiting, training, and managing advocates of home sharing" as the primary job responsibility and "community organizing in political campaign[s]" as the top desired qualification for the position. As is the case with most jobs on a political campaign, the job listing also notes that the community organizer "will be a temporary position."14 laane: a new economy for all EXHIBIT NO. AIRBNB, RISING RENT, AND THE HOUSING CRISIS IN LOS ANGELES The AirBnB Ecosystem AirBnB's success is based on a revenue -generating model marked by externalized labor and overhead costs and centralized, low-risk control over a proprietary marketplace. Exploring the key elements of this marketplace sheds light on how the AirBnB system functions and where the company's internal workings deviate from its public pronouncements. Hosts and listing types AirBnB's business model is composed of three elements: hosts, listings and guests. Understanding the variations among these categories is a necessary step to unraveling how AirBnB generates revenue. AirBnB lists three different types of units as follows: 1. Whole units: An entire home, apartment or other accommodation. Host is not present in the unit during the guest's stay. Private rooms: A space within a host's home or apartment with the expectation of some degree of privacy. Host is present in the unit during the guest's stay. In this listing type, the guest is essentially a short term housemate. 3. Shared room: Guest and host occupy the same living space, with a reduced expectation of privacy. This is the original "airbed" or couch surfing model described by the founder. Renting out whole units exacerbates Los Angeles' ;existing shortfall of rental options while also creating safety hazards and quality of life concerns for Los Angeles neighborhoods, Whole unit listings dominate key AirBnB markets AirBnB's marketing and political outreach may center on private and shared room listings, but an examination of AirBnB listings in three key markets shows that the company's marketplace is dominated by whole unit listings.'` Figure 1 Percent of Listing Types by City 38% 59% NEW YORK CITY ■ Whole Units 32% 64% LOS ANGELES Private Room 34% S; N FRANCISCO Shared Room In all the major markets for which data are available, the number of whole unit listings outweighs the other types of listings by a nearly two -to -one margin, and shared rooms make up an almost negligible portion of the market 16 A breakdown by listing type appears in Figure 1. Understanding the market mix of AirBnB's listings is a necessary step to gauging the effect the company has on residential neighborhoods. Renting out whole units exacerbates Los Angeles' existing shortfall of rental options while also creating safety hazards and quality of life concerns for Los Angeles neighborhoods. EXHIBIT NO. 61 AIRBNB, RISING RENT, AND THE HOUSING CRISIS IN LOS ANGELES The Los Angeles AIrBnB Market In a recent front page Los Angeles Times article exploring AirBnB's effects on neighborhoods, AirBnB reportedly claimed there were "roughly 4,500 hosts in L,A"17 The story did not indicate how many units AirBnB claimed to have in Los Angeles. In fact, this significantly understates the size and scope of AirBnB's operations in the region. According to our data, as of October 17, 2014, there were more than 8,400 hosts in the Los Angeles area, nearly twice what AirBnB claimed. Even that number understates AirBnB's size. We found 11,401 AirBnB lodging units in the Los Angeles hospitality market.'$ The categories AirBnB uses to describe its different types of lodgings are somewhat misleading. Terms like "host" and "sharing economy" imply a shared space and the presence of the person renting out the space in all three listing types. To better understand how the market actually works, we have developed a different system of categorization to more accurately reflect the size, type and scope of AirBnB's tourist -serving operations. These categories are: c Leasing Companies: Lessors listing two or more whole units; c Single Lessors: Lessors listing a single whole unit; and c On Site Hosts: Hosts listing private rooms or shared rooms. Figure 2, based on the company's data, shows that while those who actually "share"—the on-site hosts—are in the majority, they generate just 11 percent of the company's Los Angeles revenue.19 single lessors and leasing companies combine to generate 89 percent of AirBnB's Los Angeles revenue. A full 35 percent of revenue is generated by the six percent of the market that meets our definition of "leasing companies." On-site hosts listing shared rooms accounted for less than one quarter of one percent of AirBnB's Los Angeles revenue. In terms of revenue generation, the spaces which most closely approximate AirBnB's earliest days are almost completely eclipsed by the listings which most closely resemble traditional hotels. Figure 2 Revenue Generation by Listing Agent Type 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 42% Percent of Listing Agents Leasing Companies 48% 11% 54% Percent of Revenue Single Lessors ® On -Site Hosts Y - 89% laane: a new economy for all, EXHIBIT NO. q AIRBNB, RISING RENT, AND THE HOUSING CRISIS IN LOS ANGELES High intensity use indicates hotel conversion Commercial entities—the combination of leasing companies and individual lessors—are responsible for the most intensively used AirBnB units in the city. Rather than representing "surplus capacity" in the housing market, listings with hundreds of reviews present the clearest evidence of the conversion of residential uses into hotels. For example, the most reviewed listing in our dataset is a Venice Beach guest home with 326 reviews and a minimum stay of two nights.20 In Appendix B we describe how we estimate occupancy based on this information. These adjusted booking data show this Venice guest house was likely to have been booked for 1,231 days, or 3.4 years.22 The listing's hosts have been AirBnB members since 2009, meaning this unit had an occupancy rate of 69 percent. The average occupancy rate for a limited service hotel is 67.8 percent, according to PKF Hospitality Research's 2014 Trends in the Hotel Industry.23 The most reviewed AirBnB listing in Los Angeles is this Venice Beach guest house. :41,7111sor—Hrt,,, This rent -controlled Venice apartment building has an AirBnB unit with a 93 percent occupancy rate. The top 10 most highly reviewed AirBnB units had average occupancy rates of 66 percent, in line with industry rates. While not the most reviewed unit in our database one Venice studio, had an occupancy rate of 93 percent indicating this rent controlled unit is a near -constantly occupied hote1.24 Hosts with multiple units may be professional management companies As our category name suggests, "leasing companies" are not individuals. Instead, listing agencies have consolidated AirBnB listings under an assumed AirBnB host. A host going by the name "Ghc" is the most prolific host in our Los Angeles AirBnB database, with 78 whole units in a dense cluster spanning the border between Santa Monica and Venice. Ghc's host page is pictured in Figure 3.25 Ghc is, in fact, the AirBnB page for Globe Homes and Condos, a company that describes itself as a "full service vacation rental management co m pa ny."26 • . 1'r E$ ti, EXHIBIT NO.___` _._ AIRBNB, RISING RENT, AND THE HOUSING CRISIS IN LOS ANGELES Globe Homes' owner is Sebastian de Kleer, who co- founded the Los Angeles Short term Rental Alliance (LA-STRA) with Ari Eryorulmaz of AE Hospitality, another leasing company.27 Given its co-founders, it is not surprising that LA-STRA is unambiguous about supporting the rights of "professionals in the short term vacation rental industry." LA-STRA's mission is to "to organize and unify the vacation and corporate rental community with the purpose of being able to influence new developments in laws and regulations regarding short term furnished rentals."28 However, in a New York Times' piece profiling the proliferation of illegal hotels in New York City, de Kleer was far more succinct saying, "I need to be able to compete with the hotels[]"29 Before listing themselves as Ghc, de Kleer's company maintained its AirBnB presence under the name "Danielle and Lexi." The case of Danielle and Lexi is especially instructive in how complex the AirBnB market in Los Angeles has become.3° In spite of the fact that Danielle and Lexi received a "verified ID" badge on their profile page, we have no way of knowing if they had any role in the properties other than having their photo taken. All the listings featured on Danielle and Lexi's AirBnB host page were actually managed by Globe Homes and Condos. The Danielle and Lexi host page is pictured in Figure 4. Ownership obscured Globe Homes works with property owners to convert their properties into de facto hotels. Tracking down ownership information for these units is difficult as AirBnB only releases exact unit addresses once a booking has been confirmed. However, we were able to determine the exact address of one of the Globe -managed AirBnB properties. A search of public records showed the apartment building, located a few blocks off Abbot Kinney, is owned by Michael Tatum. Tatum also Oirb(1J Velitled £a Ems', .Edam iJP,,u:a K,mlx-: r..` GfIll k4.2:-..h7wu.do About Me Werk G! -Axa Hon, -.s s,ed forolalho Ndrtan? --languages C-mrof , Emosrr.LSP..`nl, Ghat ri.bxb Symbol Hey, I'm Ghc! Los Angeles. Cat fomla, United States • Merninr since Dee:ember CCM s ijnG•a,tr oriir, i • r. r.no PST- V)Mn PST ..,..• -a P.:i Soni PS: •II I._-,. 7.vata d9 Iaut,. tau rviyv,ts,: r. -;J:: rat ba it,neUiftr ,.I_nnr fir •:..: • ws ie�, luau -. • . WI.hore Ieeninlhis'ti::. 514,c(`2fG7 Nld lkn tvotnit En to% an? .::•.; .. : . .-Nelly:rt..* Palm Sm mr/ met smmrafs,Sng !: . r vtgaaffb that as SEM note all 41:1,11m Ai' know:.clga :: a.. • ..,r,wN: .._.. ... ,:as, YHmlw:l yew' Stip l: fir b,::;nr_; n p:nnvne.o,e 4,asantnentiance. Erl y afltre a.•x•ani!lar of a helm. SP:I ,, ... - :....n t.fe�:srvn and,Jaoty 'Mehl arid lelUJirtg. !'od ea lart .. .., ..-hnmv,a!on)watt tolly.40;gt*dlkeh:'•:.m:at yea 1,7 Reviews t67G: Reviews From Guests ar.., ti.o; .. at kul.en ,r: to: 'tract. 'y .*'.1t:,:4 . - ., n. c,n, 4; ar.lwt;a::y tl•. baaehl I9,vc It J < .:..;;.:!, 1. - ,va>iu.MCL Pulkirr9a h,yJ o•,0 7.;;In io maEr 7 el, morfOr -t--..s j t F -hehuksocnt.on aea aw ..:...tY.:.)I 'tom Rarporaatrom Ghc: 'a .:+e ,., i,r y.:V,^ •r:.... ;trod rm. r.,cC•: wt mac..yevr ['Ea tACml Cs'amorsr.l Figure 3: The profile page for Globe Homes and Condos laane: a new economy for all EXHIBIT NO. 7 AIRBNB, RISING RENT, AND THE HOUSING CRISIS IN LOS ANGELES Verified ID J (;) Email Address Verified Phone Number 23 Reviewed 636 Reviews Offline ID Personal in:a About Me Work Globe Homes and ivre.bsite hidden; Hey, I'm Danielle And Lexi! Los Angeles, California, United States • Member since December 2011 Hours of business Qnquiry Answering} Mon -Fri Gam PST -10pm PST Sat -Sun 9em PST - 5pm PST •If after hours please still inquire the responsea may just nor be immediate^ We are your source for e_cclusive vacation property rentals. We have been in business since 2007 and our property base is growing daily. Specializing In Los Angeles beach areas, Hollywood. Palm Springs and surrounding deser, cities, as well as Cabo Sar Lucas Mexico. our friendly team of vacation specialists have an intimate knowledge 0 all our properties and wdl find the vacation rental to suit your needs. Whether your trip Is for business or pleasure, our properties arc outfitted to provide you with a comfortable and pleasant experience. Enjoy all the amenities of a Rotel, such as concierce services, wireless Internet, cable. flat screen television and luxury linens and bedding. Add to that the additional space, privacyand flexibiity of a private vacation home, along with fully equipped kitchens, and you have the perfect vacation. Let us take care of the detatts. Reviews Reviews (032) Reviews From Guests Ctii Verified ID Fantastic home! Beautiful in every way including ,he tableware. Highly recommend it for She Figure 4: Danielle and Lexi were the previous avatars of Globe Homes and Condos on AirBnB. owns 19 other properties throughout Los Angeles and Santa Monica. Many of these properties also happen to be apartment buildings, although to the best of our knowledge these buildings have not been converted into tourist accommodations. Tatum purchased the building on Santa Clara Street, a low-density residential zone, in 2009 Tatum has a contract with Globe Homes, and Globe Homes, under the guise of "Danielle and Lexi," listed the units within the apartment building through AirBnB. The building has at least five units, all of which are covered by the City of Los Angeles Rent Stabilization Ordinance (RSO, also called "rent control").31 Renting these units out to transient visitors allows Michael Tatum to sidestep the tenant protections, bars on eviction, and limited rent increases built into the RSO, while collecting a predictable income stream from tourists. Michael Tatum is presumably well aware of the limitations the RSO places on Los Angeles landlords. His father, Thomas Tatum, donated $125,000 in support of Proposition 98, a 2008 initiative which would have allowed rent control units to become permanently market rate after being vacated by a tenant.32 Thomas Tatum was also a major backer of Proposition 199 in 1996, In spite of the fact that Danielle and Lexi received a "verified ID" badge on their profile page, we have no way of knowing if they had any role in the properties other than having their photo taken. w -economy. • EXHIBIT NO. _ ___ AIRBNB, RISING RENT, AND THE HOUSING CRISIS IN LOS ANGELES along with his business partner, Jeffrey Kaplan. Tatum and Kaplan, who owned several hundred mobile home units in California, would have benefited greatly from the passage of Prop. 199 which was intended to phase out rent control protections in mobile home parks.33 By renting their units out on AirBnB, the Tatums have finally bypassed the RSO, while also providing an instructive example of the relationship between AirBnB and rising housing costs described later in this report. Globe Homes recently retired "Danielle and Lexi" as their avatars. Nonetheless, the Danielle and Lexi case underscores the regulatory complexity that cities face when trying to enforce zoning and housing ordinances at AirBnB units. Danielle and Lexi were not ultimately responsible for following city laws. The actual owners of a property need never interact directly with the traveling public, and AirBnB provides no way to directly contact a property's owner as opposed to its agents or lessees. This case also undermines one of the cornerstones of AirBnB's business model, namely that the company's ratings and identity verification system are a viable means by which travelers can vet their prospective hosts. Danielle and Lexi had a badge prominently featured on their profile page indicating that they had a "verified ID," but they were at least two degrees of separation away from the property's actual ownership. A recent Boston University study suggests that AirBnB's ratings are nearly worthless. According to this study, nearly 95 percent of AirBnB properties boast an average user -generated rating of either 4.5 or 5 out of 5 stars. These inflated ratings are believed to be caused in part by having hosts and guests review each other. As the New York Times coverage of this study noted, AirBnB guests that seem too critical worry they "might get turned down by future hosts who worry [guests] will be too demanding."34 The company does not monitor lodgings in any way, and relies exclusively on these ratings to determine the quality of the accommodation on offer.35 The bottom of the AirBnB economy AirBnB has argued that its service should be legalized on the grounds that it can help ordinary people supplement their incomes or remain in their homes. The company has also taken the position that "outdated" zoning codes are ill-suited to regulate the new, tech -driven "sharing economy." In this economy, AirBnB is a clear winner. As of October 17, 2014 there were 11,401 listings in the L.A. region as defined by AirBnB. Based on an analysis of AirBnB listing data and data provided by the company to the New York Attorney General's office, we estimate the total revenue generated by these units to be $80 million in 2014 alone.36 However, our data show the very individuals who are meant to benefit the most from AirBnB's service— "ordinary citizens"— are more than three times as likely to generate no revenue than hosts with multiple listings. Analyzing listing data from AirBnB's public facing site shows that 38 percent of hosts with a single listing of any type generated no income whatsoever. These hosts have essentially failed to generate any benefit from listing their homes on AirBnB. Our data show that the very individuals who are meant to benefit the most from AirBnB's service - "ordinary citizens" - are more than three times more likely to generate no revenue than hosts with multiple listings: 1. laane: a new economy for all EXHIBIT NO. AIRBNB, RISING RENT, AND THE HOUSING CRISIS IN LOS ANGELES Hosts with access to more resources are able to extract the most benefit out of the AirBnB market. For hosts with two or more listings, the rate of failure to generate revenue is only 11 percent. Only two percent of hosts with five or more listings have failed to generate revenue. Rather than disrupting the existing economic order, AirBnB seems to have simply reinforced that hierarchy. Our data show that AirBnB units are most densely clustered in Los Angeles neighborhoods with rents that are, on average, 20 percent higher than citywide median rent.37 These are affluent neighborhoods with attractive housing stock and easy access to amenities. These are the characteristics that make these places attractive to tourists and residents alike.38 Research conducted by the Harvard Business School has also uncovered a racial component to who is most able to profit in the AirBnB marketplace. Benjamin Edelman and Michael Luca conducted a study which found that "non -black hosts received 12 percent more for a similar apartment with similar ratings and photos relative to black hosts." The authors' statistical analysis controlled for "all of the attributes that are readily observable to a potential tenant browsing listings on AirBnB." Edelman and Luca conclude AirBnB's attempts to build trust into the market it created may have the unintended consequence of enabling its users to impose a "significant penalty" on black hosts trying to earn income through AirBnB. Encouraging hosts to post photos of themselves and links to social media profiles provides all the information needed to engage in discriminatory practices. AirBnB's "verified ID" program may make it easier for prospective tenants to discriminate against black hosts.39 The median percentage of African Americans in AirBnB's key profit -generating neighborhoods is 4.6 percent, below the citywide average of 9.5 percent.4° - F!contain e r Bre-nwrood Heif,h's Brehtwood Park Bel Air - Beverly Crest .... .4irc j ' Beverly ,,..,� Hills Hollywood Hills Vies: South Rohr,>or, Pico L. , H -::,,r • wish Blvd :Arthur Olympic Olympic Park Park Mid City Arlinon Higirs. F rManus ,FJi' ffeison Park Culver City Jefferson Baldr:in Flilb Ci ^r:•.• "-v.azer ;ilage Adams Hill 'Cypress Park Mon H6' Lincoln Heights. Chinatown 6e l es Pico F Union eL University. Park rsen South Central rlem is hncd;n Boyle Heights; to+, 'Poe ii9b; A representation of the regions of Los Angeles in which AirBnB generated revenue. Revenue generation is clustered in coastal neighborhoods and in a corridor stretching from the Miracle Mile, through Hollywood and Silver Lake, to Downtown Los Angeles. art �eua"eccnomy.o 0 EXHIBIT NO. AIRBNB, RISING RENT, AND THE HOUSING CRISIS IN LOS ANGELES AirBnB's job costs If AirBnB units were hotel rooms, the 11,401 units on the Los Angeles market would employ more than 7,400 hotel workers, earning an average wage of $14.07 per hour.41 However, one way AirBnB keeps overhead low is to outsource traditional hospitality labor jobs, most notably housekeeping. Housekeeping is likely carried out by domestic workers employed by any number of home cleaning services.42 Domestic workers earn a median wage of $10 per hour.43 For every hour a domestic worker is hired to clean a tourist -serving accommodation, that worker is underpaid relative to a hotel worker by an average of $4.07. If AirBnB lodging employed as many workers as hotel lodging, and assuming a standard 35 hour work week, paying AirBnB's cleaning workforce at the median domestic worker rate results in $1.1 million less in wages than a similarly - sized hotel every week, or more than $54 million every year. In fact, this likely understates the effect in several ways. Although data are not available, it is almost certain that AirBnB units do not provide as many jobs as hotels. Hotels employ workers in many job classifications AirBnB units do not—front desk, valet and parking, telephone operator, shuttle driver, security, and janitorial to name a few. These classifications account for two-thirds of the total hotel workforce. Moreover, unlike in a hotel, most AirBnB units are not cleaned every day, and some may be cleaned by the owner or host rather than by a cleaning company. It is more likely that AirBnB units provide employment for, at most, 20 percent of the number of workers as a similarly -sized hotel. In other words, even a high estimate finds some 1,500 workers in place of the 7,400 that would be in a hotel with as many rooms as AirBnB. The wages paid to workers at AirBnB lodgings may be 13.2 percent of what they would be at a similarly sized hotel, resulting in a difference of $3.1 million a week in wages. Further, AirBnB may actually costs jobs in hotels. A 2014 Boston University School of Management study demonstrated that AirBnB's growth has had a statistically significant negative impact on hotel revenue.44 This effect compounds the downward pressure that AirBnB places on wages, as hotels are less likely to give part-time employees any more hours or hire new staff. For those workers in the AirBnB system, challenges extend beyond lower wages. Domestic workers face a notoriously exploitative and unregulated employment landscape. A study released by the University of Illinois Chicago and the National Domestic Workers Alliance found 61 percent of California domestic workers receive a wage insufficient to support a family and 54 percent of these workers reported working with toxic cleaning supplies. The report also found that "the lack of enforceable standards increases the likelihood of mistreatment"45 Many housekeepers working for a hotel qualify for healthcare under the Affordable Care Act. Domestic workers are likely to be employed by smaller employers or engaged as independent contractors, reducing the likelihood that they will qualify for healthcare. Enforcing discrimination claims, overtime violations, and safety standards is challenging enough when all workers are directly employed by a single employer at a single worksite, but exponentially more so in the diffuse domestic work sector.46 EXHIBIT NO. AIRBNB, RISING RENT, AND THE HOUSING CRISIS IN LOS ANGELES AirBnB and the Housing Whether a market is digital or physical, basic economic principles of supply and demand are still operative. Traditionally, the rental housing market and the hospitality industry do not intersect. However, AirBnB has created a platform that allows landlords to pit tourist dollars against renter dollars. Landlords can potentially earn significantly more money by converting traditional rental stock into AirBnB units, as many appear to have done. Los Angeles cannot afford to lose housing units. The Los Angeles Department of City Planning's Housing Needs Assessment shows that the city needs an additional 5,300 units of affordable housing each year to keep up with demand. However, Los Angeles developers have only averaged about 1,100 units of affordable housing per year since 2006. The 7,316 whole apartments currently listed on AirBnB represents nearly seven years' of affordable housing construction at the current rate of housing development.47 AirBnB has created a platform that allows landlords to pit tourist dollars against renter dollars. Landlords can potentially earn significantly more money by converting traditional rental stock into AirBnB units, as many appear to have done. Los Angeles has the highest percentage of renters of any city in the country. Although the average rental price in Los Angeles has increased over the last three years, median wages have stagnated.48 These factors have combined to make the Los Angeles rental market the least affordable in the laane: a new economy for all Market The 7,316 whole apartments currently listed on AirBnB represents nearly seven years' of affordable housing construction at the current rate of housing development. country.49 According to research conducted by UCLA's Ziman Center for Real Estate, 77 percent of low income Angelenos devote more than half their income to rent. AirBnB creates incentives to take units off the rental market The Morrison Apartments in Venice Beach show this new incentive structure in action. Located one block from the Venice Boardwalk, the 21 units in the Morrison are covered by the City of Los Angeles Rent Stabilization Ordinance. Coldwell Banker Commercial (CBC) recently listed the Morrison for sale. In an Exclusive Offering Memorandum obtained by a member of the Venice Neighborhood Council, CBC presents the conversion of the Morrison to AirBnB units as the prudent financial choice for prospective owners. CBC estimates that a landlord could expect about $200,000 in net annual income by renting these rent - controlled units out on the open market. If the new landlord converts the building into AirBnB units, CBC estimates they could expect to bring in more than $477,000 per year, assuming a 67 percent occupancy rate. The projected rate of return under the Morrison's residential configuration is estimated to be 5.6 percent, while the projected rate of return for configuring the Morrison as an AirBnB building is 13 percent,5O The occupancy rate for nearby hotels is above 75 percent and these properties consistently sell out during the summer high season.s1 EXHIBIT INTO. 9- AIRBNB, RISING RENT, AND THE HOUSING CRISIS IN LOS ANGELES fame THE MORRISON APARTMENTS 14 IS4fM'3STER'NEY UE. VENKE. CA 9u•97 21 UNITS • OFFERED AT $5,000,000 ®LOWY, lit . M. CuK Is1511xU,u AtReN6,^1RBO PRO FOR10, FINANCIAL OVERVIEW _ 11r6.',....k.+tircla.14 We-Alrp.'91 k,,; Vlyrtr,(A4)741_ _'•.. 4tltuo..,F1.+tiiVM4M t, llWYv1'F31Pk. tax Iwo; 1p 09, c.kn t vdt tz u.rnh -t 11 6,4 u n 11,1 fm. 164 .11.10 itt 9a9 COF PAW Ulla*lomuue 1....r.s 9100 Prepared by Coldwell Banker, this financial overview compares the rate of return for a traditional rental listing and conversion to an illegal hotel. It is reasonable to assume that landlords and property owners across the city are making similar cost -benefit analyses with respect to their housing stock. One enterprising AirBnB impresario, Jon Wheatley, even posted a step-by-step guide for buying apartments for the purpose of running a remotely -managed AirBnB listing.52 While Coldwell Banker does encourage prospective buyers to "check with the city" before converting a building into AirBnB stock, the challenges inherent to enforcing the zoning code on more than 11,000 AirBnB units has allowed these sorts of bootleg boutiques to proliferate unchecked throughout Los Angeles neighborhoods.53 This new incentive structure has very real consequences for Los Angeles renters. The Waldorf is an historic apartment building in the heart of Venice. As the building's owner has begun converting the Waldorf into a de facto hotel, long- term residents have felt increasingly unwelcome in their homes. As their friends and neighbors have moved out, their building's owner has listed newly vacant apartments as short-term tourist accommodations rather than bringing in new long- term tenants. Residents also believe their landlord is no longer performing basic maintenance on their apartment because they are not as profitable as the tourist -serving units. I BOUGHT AN APARTMENT TO RENT OUT ON AIRBNB ia20_2ibo.;ehcazaYartr Eat-s-abaen managing it ler ote!} for the pa : year. This pest includes everything lea:T _e as ,ell as s ,n:e r:•: entre number The how-to guide posted by Jon Wheatley detailing how to purchase a rental unit and operate it as an AirBnB unit. laane: a new economy for all EXHIBIT NO. C' AIRBNB, RISING RENT, AND THE HOUSING CRISIS IN LOS ANGELES Table 1 AirBnB's Top Grossing Neighborhoods in the City of Los Angeles Percentage of total Number of AirBnB Listings AirBnB Listings Neighborhood Percentage Residential of Revenue Vacancy Rate Venice 12% 1,137 23% 4% Downtown 3% 270 14% 4% Miracle Mile 9% 848 9% 3% Hollywood 11% 980 7% 3.5% Hollywood Hills 5% 452 6% 3.5% Echo Park 3% 325 5% 3.5% Silver Lake 4% 361 5% 3,5% Mar Vista 2% 191 2% 2.6% Los Feliz 2% 196 2% 3.5% Total 51% 4,760 73% Avg: 3.5% Beyond the nuisance this has caused, Waldorf residents miss the sense of community they once shared with their neighbors. They report being awakened by regular cleaning crew visits and not recognizing the people they pass in the hallways when they get home from work. Even though a portion of their building is already being used as hotel, Waldorf residents would likely be swiftly evicted if they rented out their apartments on AirBnB. In one case, a Venice landlord brought suit against one of his tenants who was renting out her rent -controlled Venice apartment at a nightly rate equivalent to about $3,000 per month, while paying a rent of just $1,000 per month.54 This landlord was presumably aware that his tenant was paying a monthly rent well below the neighborhood's median rent.55 AirBnB is plainly illegal in low density residential areas, and converting a rental apartment into a business is against the terms of most residential leases. Consequently, this landlord had unambiguous legal grounds for an eviction. He is now able to list this unit at the market rate, nearly tripling the rent he earns every month in the process. High AirBnB density overlaps with higher rents and lower rental vacancy AirBnB has units listed throughout Los Angeles, but just nine of the City's 95 neighborhoods are responsible for generating 73 percent of the company's revenue. These neighborhoods are ranked in Table 1 in order of the share of total revenue. The apartment listing service Lovely releases a quarterly report of the Los Angeles rental market charting the growth in median rent. The Q3 2014 report, released December 2014, highlights some dynamics shaping the Los Angeles rental market. The report's key finding is that rents in Los Angeles have increased 10.4 percent between 01 2013 and Q3 2014 with a median rent of $1,865 across all unit types and sub -markets. This represents a growth rate more than three times that of San Francisco.56 The rapid growth in rents has a cumulative effect on the regional economy. The UCLA Anderson School of Business March 2014 Human Capital Report indicated the high cost of housing in Los Angeles has created a statistically significant drag on job creation in the region.57 aa ecIntr`-- Int,�4,r .,1,; z• • ,mc:;" .t EXHIBIT NO. q AIRBNB, RISING RENT, AND THE HOUSING CRISIS IN LOS ANGELES AirBnB market density coincides with neighborhoods that have rents well above the citywide average. These neighborhoods boast an average rent 20 percent higher than the citywide average.58 Rental prices in these neighborhoods have increased substantially in recent years. Real estate listing company Zillow creates an index of Los Angeles neighborhood rents going back to 2011. According to Zillow's data, these neighborhoods have all had double digit increases in rent over the last three and a half years; Hollywood's rent has climbed by 20 percent, while rent in Echo Park has increased by 31 percent. Mar Vista, a residential West Los Angeles neighborhood adjacent to both Venice and Santa Monica, has had a 41 percent increase in rent since 2011.59 As shown in Figure 5, since the beginning of 2013 rents in AirBnB's top neighborhoods have climbed 16 percent, as compared to a 12 percent growth in the citywide median rent over the same time period. Rental pricing is based on numerous economic factors and market forces, and we do not know the exact relationship between AirBnB density and median rents. It is telling that the average vacancy rate for AirBnB's top nine neighborhoods stands at 3.5 percent. The City of Los Angeles places special significance on neighborhoods with low vacancy rates. In 2006, at the height of a boom in the conversion of rent -controlled units into condominiums, the Los Angeles City Council passed an ordinance allowing City agencies to deny Figure 5 Comparison in Median Rent Between AirBnB Top Neighborhoods and Citywide Median Rent 3000 2500 2000 1500 1000 500 c 0 Year -over -year growth: 16% Year -over -year growth: 12% 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 02 2014 Q3 --Top AirBnB Neighborhoods Los Angeles Median tWe EXHIBIT NO. q AIRBNB, RISING RENT, AND THE HOUSING CRISIS IN LOS ANGELES condo conversions in neighborhoods with vacancy rates below five percent.60 Removing rental units from these markets by the thousands, as AirBnB has facilitated, appears to have contributed to declining vacancy rates, and consequent rising rents. Examining AirBnB listings turns up examples like the case of 1010 Wilshire, a high end apartment building with 227 units in Downtown Los Angeles. AirBnB lists Alexandra as the "host," though as with Danielle and Lexi, we have no way of knowing if she runs the building or is merely an attractive image in a photograph. Either way, 1010 Wilshire's management has listed 20 percent of its units as tourist accommodations on AirBnB rather than housing for locals. When the rental market does not work in 1010 Wilshire's management's favor, they can participate in the tourist market instead. This distorts the rental market by limiting rental supply. In doing this, 1010 Wilshire's management is following the path of Removing rental units from these markets by the thousands appears to have contributed to declining vacancy rates, and consequent rising rents. least resistance to the highest rent possible. AirBnB has provided the tools and incentive structure that make this decision not only profitable, but also reasonable. Aral Hey, I'm Alexandra! .u:77.04:. LAbromla, Unl:ed s.:rm • ei.erri1,1,,,,j4,,•:,)3.3 rerr ._ r ‘,a'v-.e _ Reviews ,x6; Rer erws Fter., Gu,.is rtes P.1: A,”4611 wwer+e n..l�ld.p`adw„rnn,wea: �a ra:}ya.,.ta.r>a,ca - J�•ir. w =e,wr.nr,ry s.r.. r,:.,!a.,r:.e•a. •..Jeer• n+,ttrs>ih rx4xt artf+: wr4teA t Oe!f*,ee l,+•r•. MAW �pn l:v.frt-rre'1tit vn7 eM:fortbil me_ k e,Y+ev:sstw:o-.Aml.71.1 ray dav::vveur w.... r71. R.arca Host page for Alexandra, 1010 Wilshire's AirBnB leasing agent. �+y ll'll'llllltl t? te i 11111 11 IIIIl • 11111 IIIII1111!1!� !dl!p;,_; alllIi?IIC(611rII,ITLIr(."11!II!I!IIIIIJI!I!IIU!IIiA[ll JJ1�r lff Tl! TnI ,' ilI!.I!II'_lll!llHill 1I!I1!1llllill!I1 !;il►IJ�1!I" i!IIII!i!IIII!II'11!II! ,,illtt!!iii►iliJ!IIIIlai 'I III!!!IIlllll!INII11l!IIILIIIIIII11iIi ?(lT1TlIIIIL:III!li! I !I!I! IILIlIIII I la 11 i III1111'lljl 11unulh!li!I !11lli1lHin11IlIll I-- 1 , Ili i lijul�nl!n❑II!1ilU1i1llttt 11lI"r11t11r1I1ii",iil'Iii III il!I!II1ml�IJ1im 1 1 1 " ai iii ,,,!l!iui,A( agii AJ .J 1 ° III ll?!r1p1III 1011:-.;_:, .�_:`;'' '11 I! 1 ii 11111 lJIr VIII lit ,'I'.I ' l i40'1;11.1,,'41.1{11"'aa '! ,.!Illq III ! I 131 hi1E¢ _rI!1I!li!!`.. i Exterior shot of 1010 Wilshire from the leasing company's home page. laane: a new economy for all UMW EXHIBIT NO. `l AIRBNB, RISING RENT, AND THE HOUSING CRISIS IN LOS ANGELES AirBnB in Los Angeles Neighborhoods When municipalities implement zoning codes they have a basic purpose, namely the promotion of the health, safety, and general welfare of the community. Zoning codes fulfill this purpose by maintaining a separation between major land use categories (residential, agricultural, industrial, commercial) and by allowing only specified types of use in each major category. Most municipal zoning codes generally do not, for example, allow for the construction of heavy commercial uses in the midst of a single-family residential community.61 The Los Angeles Municipal Code treats residential zones with a great deal of deference, particularly where new commercial developments are concerned. If a new project is proposed that requires a variance from established zoning for an area, neighbors within a 500 foot radius must be notified, and an Area Planning Commission takes up the issue in a public hearing.62 In AirBnB's Venice stronghold there are 1,137 AirBnB units. According to our estimates this is about 12.5 percent of all housing units in the community and an average of 360 AirBnB listings per square mile.fi3 In some parts of Venice whole blocks have been given over to illegal hotel operations.64 Public hearings and approval were not held for any of these conversions. By contrast, a local developer has sought to build the Abbot Kinney Hotel, an 82 -room property, for more than three years, working with the Planning Department, community groups and numerous official and unofficial public forums. Approvals have not been granted as of this writing. One reason for the long process for the Abbot Kinney hotel is concerns about neighborhood character and traffic. As the number of tourists in an area increases relative to the number of permanent In Venice there are an average of 360 AirBnB listings per square mile. residents, it stands to reason that objective and subjective measures of neighborhood cohesion would decrease. A 2012 Urban Institute study pointed to research around residential instability. According to this study, "high residential instability in a neighborhood can result in reduced social cohesion and disrupt institutions which, in turn, can make a neighborhood more susceptible to crime."66 For many long-time Venice residents, this academic verification was unnecessary. They have seen first hand what it is like to have a neighborhood converted into a hotel overnight. For one resident, it has meant watching an 80 -year-old neighbor get sent to the hospital over a confrontation with loud tourists on his block. He notes that there are "different people every week... hanging out smoking on the sidewalks." He feels his community has changed for the worse, a sentiment echoed by another Venice resident forced to leave after 27 years when the house he was living in was sold. He says, "I'm not some romanticist that believes everything has to stay the same, but AirBnB has turned our neighborhood into a nightmare,..We live on a 'walk street'...where we knew our neighbors...I don't know the people here anymore." Numerous tourists moving through a neighborhood can also exacerbate parking deficiencies and worsen overall quality of life for residents. Scott Plante, a past member of the Silver Lake Neighborhood Council, has received more than 30 complaints over the past year from neighbors. These complaints include unfamiliar cars blocking driveways, late night parties on formerly quiet streets, and concerns about child safety in an environment with fewer familiar eyes on the street. As Plante noted in a recent Los Angeles Times story detailing the difficulties Silver Lake has had with AirBnB units, "It's supposed to be a spare room — not corporate interests taking over our neighborhood and turning everything into a virtual hotel."66 Iaane: a new economy for ally: EXHIBIT NO. AIRBNB, RISING RENT, AND THE HOUSING CRISIS IN LOS ANGELES Who Can You Trust? Public health and safety in hotels Hotels are subject to numerous health, safety, and insurance requirements. The city has seen fit to regulate hotels differently than residential properties because they are different in fundamental ways. AirBnB allows hosts to utilize their spaces like hotels without being subject to any of the same regulatory checks to which actual hotels have adapted over the years. According to the Los Angeles Municipal Code, hotels must, for example, keep detailed registries of all guests. These registries are often used in criminal investigations and to "regulate sketchy motels that can serve as magnets for crime."67 AirBnB hosts do not maintain such records. Such registries can also help public health officials in tracking the spread of infectious disease. By design, traditional hotels serve many more guests on a per unit basis than do typical rental apartments. This makes them more likely to act as vectors for infectious diseases and vermin like bed bugs, influenza and measles. Hoteliers are aware of the risks and have instituted protocols to deal with these issues. Hyatt Hotels, for example, has instituted a chain -wide hypoallergenic rooms program that involves medical grade air filters and biannual intensive decontamination treatments.68 Even budget brands like Best Western equip their housekeepers with ultraviolet wands and black lights to ensure each guest room is thoroughly cleaned after each guest checks out. As tech writer Brendan Mulligan discovered, a lack of standardized cleanliness can throw a major wrench into a trip. Mulligan is a self -described "big fan" of AirBnB. Unfortunately, on a recent trip Mulligan was greeted by pillows and sheets which he described as "disgusting" and possibly "soaked in every bodily fluid imaginable." Mulligan goes on to say of the risk involved when booking an AirBnB apartment, "There is no baseline of cleanliness, and no immediate options if it doesn't suit your needs. If, when you check into a hotel room, you see a big stain in the middle of the bed, you can ask to switch rooms, or at the very least to get new sheets. But when you check into an apartment in a foreign city, you don't have that option."69 If AirBnB were to mandate higher standards for their hosts, their business model dictates that each individual host would bear the responsibility for sanitation. The company has made some efforts to connect hosts with local cleaning crews through a partnership with Handy, another shared economy company focused on residential cleaning 7° Nowhere in Handy's promotional material does the company, which outsources cleaning duty to an undefined pool of cleaners, mention the kind of intensive sanitization offered by major hotel chains." As discussed above, our data suggest some AirBnB units are being used with the same intensity and guest turnover as hotels, but without the benefit of cleanliness standards. Without such standards, infectious diseases may be transmitted more easily in AirBnB units. Without registries, public health officials may have a harder time halting their spread. n, arentlen R1uIligsn . :;her 24 nouns of gave! ng got to a dig ..,:t: place. trot nappy we ate stuck here 5 nign'.s Fr v ]ea pray, - ; i. ..0 S.^.,..' .• <'ii EXHIBIT NO. 9 AIRBNB, RISING RENT, AND THE HOUSING CRISIS IN LOS ANGELES Some AirBnB units are being used with the same intensity and guest turnover as hotels, but without the benefit of cleanliness standards. Without such standards, infectious diseases may be transmitted more easily in AirBnB units. ADA compliance and enforcement As public accommodation spaces, hotels are subject to the Americans with Disabilities Act (ADA) compliance standards. Under ADA guidelines, any public accommodation with five or more rooms set aside for guests qualifies as a "place of lodging" and is subject to the accessibility requirements set forth in the ADA.72 ADA requirements for lodging places include accessibility retrofits to entry and exit points, grab bars in restrooms, and designated lodgings for individuals with disabilities. As of 2012, lodgings must also enumerate through their reservation systems the types of accessible features in each handicap accessible room. AirBnB is aware of these requirements, but the company does not verify any of its hosts' claims of wheelchair accessibility. The company's Host Help Center summarizes a few salient points about the ADA and notes that hosts with five or more listings "may" need to comply with the ADA 73 The company also points out that ADA requirements are not generally applicable to residences. Only AirBnB knows exactly which hosts have five or more units at a single address. The best approximation we can make is to examine the number of people an AirBnB listing can accommodate. There are 647 whole unit AirBnB listings in Los Angeles that accommodate five or more people. While these listings may exist in a regulatory grey area, commercial hosts who operate de facto hotels are very clearly operating "places of lodging" as defined by the ADA. One such host owns a multifamily building in Hollywood. He operates this property as a hotel by using AirBnB to list out individual units that are not rented out by long-term tenants. His Cozmo property contains 32 multi -family units, a fluctuating number of which appear to be rented out via AirBnB.74 These units are available for both long-term tenants through the traditional leasing process and to travelers through AirBnB. Were this a full time hotel property, it would clearly be subject to ADA requirements. Figure 6: An AirBnB bathroom in a building with more than five units. There are no grab bars in this bathroom. Figure 7: ADA compliant bathroom in a traditional hotel. Note grab bars and roll -in shower stall. eWpco EXHIBIT NO_ q AIRBNB, RISING RENT, AND THE HOUSING CRISIS IN LOS ANGELES Cozmo units appear to be simultaneously residential and hotel uses. ADA compliant bathrooms in hotels, such as the one at a Hilton, shown in Figure 6, feature grab bars and showers that can accommodate a wheelchair.75 Cozmo management posted the image in Figure 7 to illustrate the bathroom in one of their units that has been marked as "wheelchair accessible" though it does not appear any different from most residential bathrooms.76 Under the ADA, hospitality reservation systems are required to give potential guests the option to reserve wheelchair accessible accommodations. Again, AirBnB's inability to standardize its offerings may land guests who require wheelchair accessibility in some very inaccessible units. Take for example a listing in Hollywood which bills itself as "wheelchair accessible." Perusing its attached photographs, one of which is shown in Figure 8, quickly turns up a picture of a steep staircase leading to the bedroom. There appear to be no additional accommodations in this listing that would allow a wheelchair bound guest to make his or her way up to the bedroom. 4;- 'TUE ADDRESS 1NBO7i:, CALL OR TaT 'MINN MOi7248140 Figure 9: Flyer advertising a party in Ari Teman's New York City apartment. Teman was not aware of this party. Figure 8: A "wheelchair accessible" AirBnB unit in Hollywood. ..a..:'_ EXHIBIT NO. Ci AIRBNB, RISING RENT, AND THE HOUSING CRISIS IN LOS ANGELES Strained relations between AirBnB and its hosts The assumption of trust between AirBnB hosts and guests is the lynchpin holding the AirBnB marketplace together. Every horror story detailing travelers blindsided by misleading AirBnB listings or plagued by bed bugs undermines this trust." Misbehaving or destructive guests also shake the trust that hosts place in AirBnB. Hosts have faced illegal activity in their homes, theft of their belongings, or destruction of their property.78 New York City AirBnB host Ari Teman's experience provides an instructive example of the risk hosts incur when they rent out their homes. Teman agreed to rent out his space because the prospective guest "had a verified account and he seemed legit... he had three positive reviews." Teman alleges the individual to whom he rented his home was in fact a party promoter who never had any intention of using the space as a last minute accommodation for his in-laws as he had initially claimed. A Google search of his guest's phone number turned up the promotional flyer, shown in Figure 9. When Teman returned to his condominium, he discovered a "huge posse of large men and women... looking like they got tossed from a club, hanging out in front" of his condo.79 When he entered his home, Teman described the scene that greeted him as "a group of nearly nude, overweight people" engaged in what the New York Post dubbed an "overweight orgy." After the story broke into the media, AirBnB paid Teman $23,000 to cover the damage resulting from "Pantie Raid."80 Ari Teman's story is admittedly salacious, but for every "orgy" there are undoubtedly countless stories of burned rugs, broken lamps, and stolen items. If these stories were to emerge and paint an uncharitable portrait of the company, it could dim AirBnB's ability to attract venture capital or issue its IPO. Against this backdrop, AirBnB hired Joie de Vivre Hotels founder Chip Conley as its Head of Global Hospitality. Under Conley, Joie de Vivre arose as } h . • . r• r f '`.>tt ate'` ''� "rY.J,+a.l r•j,.�•_-,?.r�. "t.r',...yr. �r..s.,;- • J.fir ri .f' .✓ r• r "'J t.»+ri�F .r Ywi•- >'J��i ���r `� 'r.t-�r.,ry-f�Yf�a•+i'_.,�..r �, ..JJ''^^'i"' ��'y . r r - r� r�r�rYr" r.��i • .ter*'"•' rKFr tM f,, ,r.rff•J• r f 'H �. t^r�,i rpt' ,." Figure 10: An image of a bedbug accompanying Rachelle Bergstein's Yahoo Travel piece (Source: Getty Images). a key player in the boutique hotel segment by redeveloping underused historic buildings in urban cores into high end boutique hotels. In a sense, the Joie de Vivre brand is a spiritual predecessor to AirBnB. Rather than focus on the utilitarian daily needs of travelers, both Joie de Vivre and AirBnB attempt to entice travelers with the promise of a unique hospitality experience.81 One of Conley's key goals at AirBnB is to professionalize the company's hosts.B2 These initiatives currently include professional photographers for AirBnB listings and referral to housekeeping services to ensure a uniformly tidy experience for AirBnB guests.83 Assumption ©f risk and liability AirBnB claims it is not at legal risk in the same way as its hosts and guests. This is because the company treats its hosts as independent contractors.84 As such its legal position has been that it cannot be held liable for the actions of its independent contractors or their guests.85 In high profile cases, like the "Pantie Raid" party described above, the company has settled out of court rather than face prolonged media scrutiny. AIRBNB, RISING RENT, AND THE HOUSING CRISIS IN LOS ANGELES Risk is not distributed equally throughout AirBnB's reservation process. Taking on the highest level of risk are AirBnB's hosts who must contend with the uncertainty inherent in opening their homes to strangers, while also risking the ire of landlords, neighbors, and city regulators. Hosts may also be held liable for injuries suffered by guests during their stay and any property damage that may result from unruly guests. Guests take on the risk of paying someone they do not know upfront for an accommodation that may or may not live up to the listing description. Rachelle Bergstein, a travel writer for Yahoo! News, experienced the pitfalls of AirBnB travel first- hand. Bergstein booked from a host with "terrific reviews." Unfortunately, this host also had bedbugs. The morning after their first night in the "charming" Silver Lake studio, Bergstein and her husband discovered a bedbug the size of an "apple seed" crawling across their duvet cover (See Figure 10). As it turns out, the host Bergstein rented from was in fact "not the owner, or even a tenant... [h]e was a listing agent" who pointed Bergstein to the part of the AirBnB Terms of Service that reminded guests that bookings are "made at the guest's own risk." While Bergstein's host ultimately relented in offering her a refund, she was dismayed to find that receiving a refund meant that she could not leave a review warning other guests of the unit's bedbug problem. She reminds travelers in the review of her AirBnB experience that price should not be the only criterion when selecting a place to stay. As Bergstein noted "AirBnB might have the advantage over hotels when it comes to price and charm, [but] a midrange chain hotel is clearly a better choice if you care about quality control." Bergstein is not likely to give AirBnB another chance until "guests are assured of a corporate guarantee, too."86 Figure 11: Rachel Bassini discovered feces smeared on her couch after she rented out her space on AirBnB. laane: a new economy for all EXHIBIT NO. 7 AIRBNB, RISING RENT, AND THE HOUSING CRISIS IN LOS ANGELES Figure 12: Rachel Bassini's bathroom after she rented out her space on AirBnB. Host Guarantee and Peers' homesharing liability insurance AirBnB does offer its hosts a guarantee that it will cover up to $1 million in "Covered Losses" as defined by the company.a' However, this guarantee only covers property damage and not major areas of homeowner liability such as personal injury suffered by a guest. Moreover, a homeowner's existing insurance may not cover any such liability as the homeowner is engaged in a commercial enterprise' This is a significant point because the fine print of AirBnB's Host Guarantee specifies that it will only cover losses once hosts have exhausted other coverage and only if hosts file claims with AirBnB within a specified window. Hosts are expected to wrangle with their own insurance companies, and with the guests who have damaged their home before AirBnB will even consider paying out on the Host Guarantee.&9 In some cases, AirBnB has refused to abide by its own Host Guarantee, even where damage to a host's property was clearly the result of guest misbehavior. When Rachel Bassini returned to her home after renting it out through AirBnB, she discovered "feces covering the bathroom and couch, used condoms all over the bedroom, and chewed gum on the floors, walls, and couches."Some of the photographs of the damage to Bassini's home are pictured in Figures 11 and 12. When Bassini attempted to collect on the promise made by the Host Guarantee, an AirBnB representative told her that "the Host Guarantee only cover[s] structural damage, not contents." Fearing that she had no further recourse, Bassini attempted to recover damages from her guest, but his AirBnB account had been suspended. AirBnB again denied Bassini's claim because she failed to file a report within 72 hours. The Company issued her a $100 credit and deemed the matter closed. However, AirBnB reversed its decision after media inquiries and agreed to cover the cost to repair Bassini's home, so long as she "submits the proper paperwork."90 In January 2015, Peers, the lobbying group founded by AirBnB marketing executive Doug Atkin, began offering "Homesharing Liability Insurance." There is a monthly fee of $36 for this insurance, which will cover personal injury and other claims up to $2 million for Peers members. However, this insurance does not cover claims related to bedbugs — a key risk associated with accommodating the traveling public. Nor does the policy cover bodily injury arising from violations of the Americans with Disabilities Act or "federal, state, local or common law regulating fire or life safety."41 This policy has only been available for a short time, and it remains to be seen how it will be applied to claims made by hosts who are in violation of their lease agreements and local zoning codes and regulations. EXHIBIT NO._ AIRBNB, RISING RENT, AND THE HOUSING CRISIS IN LOS ANGELES The Promise of Tax Revenue Our best estimates show that AirBnB's Los Angeles County listings generated $80 million in revenue during 2014, of which approximately $58 million was earned within the City of Los Angeles.92 The City of Los Angeles collects a 14 percent Transient Occupancy Tax (TOT) on a monthly basis from all hotel operators in the city limits, yielding a tax obligation of $8.1 million for AirBnB's City of Los Angeles hosts. This tax is meant to be assessed on travelers who rent a room from a hotel, motel, or inn.93 As we explore below, AirBnB often approaches cities with the promise of remitting a monthly fee equal to the TOT in exchange for the passage of regulations that legitimize their business model. The rationale behind this offer is that cities will be adding new revenue to municipal coffers. However, this revenue is mostly reallocated from hotels which would have remitted these taxes anyway. In AirBnB's economic analysis, released in December 2014, the company asserts that 37 percent of its guests would not have visited Los Angeles or would not have stayed as long as they did were it not for AirBnB. Assuming AirBnB's numbers are true, a minimum of 63 percent of the revenue generated by its listings was reallocated from hotels and is not new. If AirBnB had no listings in Los Angeles, these guests would have stayed in Los Angeles hotels, supported good jobs for Angelenos, and had a negligible impact on the city's neighborhoods, all while paying taxes. Because AirBnB merged the "would not have visited Los Angeles" and "would not have stayed as long" categories, it is not clear how these 37 percent of travelers are distributed. If we assume an even split, then the number of travelers who would have come to Los Angeles regardless of AirBnB's listings rises to 81.5 percent. This means Los Angeles would have received between $5.1 million and $6.6 million in TOT from hotel stays were it not for AirBnB. In this scenario AirBnB only offers $1.4 million in new TOT that would not have otherwise been collected by hotels. This figure is equal to about 45 percent of the wages lost by AirBnB's domestic cleaners each year because they are not paid the same wages as housekeepers in the hotel industry doing the same work. AirBnB's study also claimed the company's activities were responsible for $312 million in economic activity and the "support" of 26,000 jobs. As with the tax revenue, we estimate that 81.5 percent of these benefits were merely shifted from one place to another, from hotels to AirBnB. In fact, since visitors who stay in hotels spend more than those who stay in homes, the net effect of staying in AirBnB instead of a hotel is a negative one, and that may well outweigh any additional travel days. Beyond that, there are negative externalities which also go unconsidered in the limited economic impact data that AirBnB released in December 2014. For example, the UCLA Anderson School of Business study found that the high cost of housing has a generated a statistically significant drag on job creation in Los Angeles. Fewer rental units, a drag on job creation, a reduction in tax revenues and a qualitative assessment of AirBnB's effects If .AirBnB had no listings in Los Angeles, guests would have stayed in Los Angeles hotels, supported good jobs for Angelenos, and had a negligible impact on the city's neighborhoods, all while paying taxes. ctrow_fonatkti--. EXHIBIT NO. AIRBNB, RISING RENT, AND THE HOUSING CRISIS IN LOS ANGELES in neighborhoods are key elements that must be considered before a accurate judgment of the company's impact can be rendered. Fewer rental units, a drag on job creation, a reduction in tax revenues and a qualitative assessment of AIrBnB's effects in neighborhoods must be considered before a true judgment of the company's impact can be rendered. AirBnB revenue is clustered in established tourist districts In Los Angeles, AirBnB revenue generation is clustered in key tourist districts. AirBnB claims its service helps drive tourist spending to neighborhoods that are not typically beneficiaries of that spending. However, data derived from the company's public listings do not support this claim. The top ten AirBnB sub markets in Los Angeles are listed in Table 2, with the number of whole units and a revenue estimate. These ten neighborhoods account for more than 50 percent of AirBnB listings as well as nearly 70 percent of AirBnB revenue generated in the Los Angeles area. Taken together, these neighborhoods encompass the heart of the L.A. tourist economy. A May 2014 Los Angeles Chamber of Commerce analysis found the Venice/ Santa Monica/ Marina del Rey area is Southern California's second most popular tourist destination, behind Disneyland. Hollywood, West Hollywood and Downtown Los Angeles are also singled out as key tourist - attracting districts.94 Nestled between Hollywood and Downtown Los Angeles, Silver Lake and Echo Park contain many of the city's top rated bars and restaurants.95 AirBnB is competing with traditional hotels for tourist dollars in the city's most popular tourist serving areas.96 Table 2 AirBnB's Top 10 Revenue Generating Neighborhoods Whole Total Whole Unit Whole Unit Units Units Percent of Units Revenue Neighborhood Total Whole Unit Revenue % of Rev. Venice 882 1,137 78% $11,787,842 $13,474,974 87% Santa Monica 538 773 70% $8,077,411 $9,315,075 87% Hollywood Downtown LA 646 980 66% $5,544,207 $6,747,061 82% 220 272 81% $5,885,101 $6,038,738 97% Mid -Wilshire 514 848 61% $4.079,629 $5,021,018 81% West Hollywood 455 619 74% $3,666,100 $4,181,391 88% Hollywood Hills 315 452 70% $3,541,258 $3,956,867 89% Silver Lake 268 361 74% $2,681,351 $3,043,461 88% Echo Park 230 325 71% $ 2,427,196 $2,639,005 92% Marina Del Rey 136 172 79% $1,582,497 $1,677,048 94% Total 4,206 5,942 71% $48,273,023 $56,094,638 88% is rr :n Tti lawn-evarnew economh tylfor all EXHIBIT NO. cr AIRBNB, RISING RENT, AND THE HOUSING CRISIS IN LOS ANGELES Policy and Regulatory intervention AirBnB's financial future will be determined in large part by the company's ability to convince municipal authorities to grant the company legitimacy by establishing a regulatory framework around the company's operations. When we examine the experiences that city regulators have had with AirBnB three themes emerge: 1. AirBnB will offer to remit fees equivalent to local tax rates to cities in exchange for legalization. These fees are not negotiated into any public code, but instead are determined by a contract negotiated between the company and cities in private. AirBnB will not share information allowing cities to verify the accuracy of the payments.97 2. As evidenced in Portland, Oregon, AirBnB's flagship "Shared City," AirBnB will not participate in the enforcement of the model legislation it provided to the City, nor will the company monitor its listings for compliance.98 3. The majority of AirBnB hosts will not comply with any licensing or permitting systems.99 AirBnB will not modify its listings to require hosts to display their permit numbers, nor will it voluntarily turn over the addresses of unlicensed hosts to regulatory agencies. This refusal extends to providing addresses so that cities can conduct basic safety inspections to ensure the health and well being of AirBnB's own community of hosts and guests 100 In the section that follows, we review the policy experience in several cities, and use the lessons from those cities to begin formulating criteria through which one can assess any potential AirBnB regulations. Before beginning that review, however, we want to raise a critical question about the basic proposal being offered by AirBnB—payment of significant funds in exchange for rules legalizing AirBnB's operations. This system has gone into effect in two cities, Portland and San Francisco. According to a January 2015 Washington Post story, between July 1 and December 30 2014, AirBnB has turned over approximately $5 million in hotel fees to Portland and San Francisco.1O1 The combined unit count of these two cities-7,600—is less than the approximately 8,300 units within Los Angeles city limits. Moreover, tax rates in Portland are three percentage points lower than in Los Angeles. Yet, in just six months, AirBnB has turned over to the two cities 62 percent of what we estimate it would owe in Los Angeles for whole year—a larger market with higher tax rates. We may be severely undercounting AirBnB's Los Angeles revenues and tax obligation. If so, that would explain this discrepancy. However, this does not seem likely, given that we found twice as many hosts as AirBnB reported, and our estimates are based in part on the results of a subpoena by the New York Attorney General. If our estimates are correct, an alternative concern must be raised. By agreeing to a privately negotiated agreement with Portland and San Francisco, AirBnB may be paying more than it is required to pay in taxes. Many have rightly raised questions about how cities ensure they get all they deserve without proper monitoring. But the high payments here suggest an alternative danger—a company like AirBnB could overestimate the dollars involved to incentivize the city to adopt the laws the company wants. Portland, Oregon With much fanfare, AirBnB designated Portland its first "Shared City." This meant that the company and the city had determined to work together to create a regulatory framework that would allow the city to collect hotel taxes in exchange for creating a new category of housing in its planning code—the "Accessory Short Term Rental (ASTR)"102 The City of Portland decided to divide its ASTR regulation into two separate pieces of legislation. The first piece covered AirBnB units in single-family homes, followed by a second ordinance governing AirBnB units in multi -family housing. AIRBNB, RISING RENT, AND THE HOUSING CRISIS IN LOS ANGELES Both pieces of legislation relied on the same basic framework. If hosts complied with the application requirements, they would be granted an ASTR permit. This permit was to be displayed inside the ASTR unit and the permit number was required to be posted on all listings advertising the space. To receive this permit, hosts were obliged to pay a nominal fee, notify their neighbors (or landlords) of their intentions to rent their space and submit to an inspection to verify installation of smoke and carbon monoxide detectors. The policy also limited the number of days that a homeowner could rent a space in his home up to 95 days per year.103 Portland's ASTR policy was passed as an amendment to the City's zoning code. These ordinances remain silent on the issue of hotel taxes. Instead the City's Revenue Bureau negotiated a separate, private agreement to address specific issues around hotel tax collection. A redacted version of this agreement was only made public pursuant to a public records request made by reporter Elliot Njus at The Oregonian newspaper.104 While AirBnB repeatedly denied it was a hotel operator in the agreement, the company was asking for the city to treat it "as though [it] were a single 1,600 room hotel."los Further complicating matters is the fact that a miniscule proportion of Portland's AirBnB hosts have sought legitimization and taxation— the Portland Revenue Bureau estimates that 93 percent of all hosts have not obtained the necessary permits, had their units inspected for building and safety compliance, or notified their neighbors of their intent to operate a short-term rental.)°6 Without any way to regularly identify individual hosts, the City of Portland Revenue Bureau had no way to monitor how the monies it was receiving did or did not relate to the overnight stays of visitors in AirBnB lodgings. As Portland moved towards legalizing AirBnB rentals in multi -family units these issues became key political sticking points in negotiations. Portland Commissioner Nick Fish took the lead in pressing AirBnB to release host addresses to the city. At a late December 2014 hearing, the Regional Head of Public Policy for AirBnB, David Owen, argued against releasing such data on the grounds that it would constitute a violation of hosts' privacy rights. This argument did not pass muster with Commissioner Fish. As he put it: We are not asking for people's confidential information, We are asking for an address of a home-based business, and under your view because that has an Internet component that raises privacy concerns that are different than motels and hotels. We invoke the Internet and we claim an exemption from all the other laws and rules of society. We welcomed you to Portland, hut we have to make sure that the guests in one of your hosts' places—and you do not inspect h `"'x w .ice..'.. _ iyora ,.Y l ': � m. '. EXHIBIT NO. Cl AIRBNB, RISING RENT, AND THE HOUSING CRISIS IN LOS ANGELES your hosts' places—we have to make sure that guest is safe, and the only way that we can do it is to have an address. If we don't have an enforcement mechanism that works why on earth would we give you the green light to do something that we can't reasonably enforce?107 The City did ultimately "green light" the ASTR program to include multi -family units. However, the city also passed legislation to address Fish's concerns. In exchange for granting legitimacy to the majority of AirBnB's Portland listings, companies like AirBnB must now submit contact information for all hosts for any regulatory or tax purpose to the Revenue Bureau, as well as prominently display the host's permit number on all listings.708 How well this will work is not clear. At a public hearing on this policy AirBnB's David Owen refused to commit to following Portland's new regulations if they included disclosure requirements for hosts."' The rules, as currently written, do not create any direct liability for AirBnB so long as they continue to pay money to the city. San Francisco, California Passage of San Francisco's AirBnB regulations was rendered no less contentious by the fact that the city is AirBnB's birthplace. As has been widely noted, San Francisco has undergone dramatic rent increases in recent years. These increases have been exacerbated by the limited supply of housing in the city. Not surprisingly then, the process to pass an ordinance pitted housing advocates against AirBnB as both sought to influence the San Francisco Board of Supervisors. Housing advocates pressed for a requirement that AirBnB pay some $25 million in back taxes.70 They also wanted a ban on AirBnB units in rent -controlled buildings and a prohibition against renting units that have been vacated under the Ellis Act. None of these amendments were included in the final legislation, although some San Francisco Supervisors vowed to pursue these items as stand-alone legislation."' 4faane` ewecono . or Passed in 2014, the San Francisco policy caps the number of days that a whole unit can be rented out at 90 per year. Although monitoring bookings for compliance with this provision would be very simple for AirBnB, the company has refused to assist the city in enforcement, Out of approximately 5,000 hosts, as of February 15, 2015, only 130 had set appointments with the Planning Department to obtain their permits, drawing further comparisons to Portland's experience.12 Building in new enforcement mechanisms now seems necessary to some previous AirBnB supporters. San Francisco Supervisor Jane Kim voted for the original ordinance but is now working to pass a supplemental ordinance that would allow nonprofit organizations to sue to enforce the short term rental law. She believes the first ordinance does not "have enough teeth" to ensure effective enforcement."' Meanwhile, a coalition of affordable housing and community organizations known as Share Better S.F. has begun the process of collecting signatures to place an initiative on EXHIBIT NO. 9 AIRBNB, RISING RENT, AND THE HOUSING CRISIS IN LOS ANGELES the next municipal ballot that would implement far stricter regulations on AiBnB rentals in the City.14 New York City, New York New York City has taken a more hardline approach to regulating AirBnB than either San Francisco or Portland. Under New York State law, residential rentals shorter than 30 days are considered illegal. New York City has taken the lead in halting AirBnB's expansion through rigorous enforcement of this law, while New York State Attorney General Eric Schneiderman has served the company with subpoenas to get exact addresses and revenues generated by AirBnB listings. As a result of these subpoenas, the Attorney General's office found that more than 72 percent of AirBnB's New York City revenue was generated by illegal listings. The Attorney General's report also found that commercial hosts dominated the New York City AirBnB market. Share Better New York, a coalition of affordable housing, community, and labor organizations has been pressing New York City to address the proliferation of illegal hotels as part of a broader New York City residents rally against AirBnB ahead of a January 20, 2015 New York City Council hearing. strategy to maintain rental affordability in the notoriously pricy city. The City Council has pressed for increased transparency and accountability from AirBnB. During the course of an eight hour hearing to determine what impacts AirBnB has had on New York's housing stock, it was found that AirBnB could force hosts to comply with state law, but the company has refused to do so. Upon pointed questioning from City Councilmembers, AirBnB Head of Public Affairs David Hantman admitted not having done any research to determine which listings New York City Councilwoman Helen Rosenthal addressed a crowd of affordable housing advocates as they rallied against "illegal hotels" ahead of an eight-hour hearing on the sharing economy at the New York City Council (Photo: Capital New York). laane: a new economy for all:; EXHIBIT NO. c/ AIRBNB, RISING RENT, AND THE HOUSING CRISIS IN LOS ANGELES are illegal.This answer failed to satisfy New York City Councilman Jumaane Williams. "Wouldn't that be something a responsible company would do if they wanted to keep doing business in New York City?" Williams asked. The company's refusal to assist with enforcement in Portland, San Francisco and New York City seems to have more to do with ideology than with technical capacity. As expressed by the company's Head of Public Affairs, David Hantman, AirBnB believes "very strongly that you should be allowed to rent out your own home whenever you want." The marathon hearing also found that complaint - based enforcement does not effectively curtail the proliferation of illegal AirBnB listings. In the last year, the Mayor's Office of Special Enforcement received nearly 1,150 complaints leading to nearly 900 inspections. However, a recent survey has shown the overall number of AirBnB listings in New York City has not changed since aggressive enforcement began.15 Southern California Cities In the greater Los Angeles area, the cities of Malibu and West Hollywood have begun the process of regulating AirBnB-type rentals within their city limits. The city of West Hollywood, under the direction of the City Manager, created the Shared Economy Task Force to study home and ride sharing in West Hollywood. The Task Force recommended that the West Hollywood City Council draft legislation to amend the zoning code to define "short term rentals" and reiterate that these types of rentals are illegal in West Hollywood. The West Hollywood City Council is now considering the matter.16 In May 2014, Malibu's City Council voted to authorize officials to issue subpoenas to gather accurate information on the scope of short term rentals. These types of rentals are legal under the Malibu zoning code, but must be registered with the city and remit hotel taxes. To date, only 50 Malibu properties have complied with these regulations, although the City noted there are more than 400 listings on various short term rental sites."' Los Angeles City Council has also begun the process of assessing AirBnB's effects on the the city. The Council has convened a Shared Economy Working Group to assess the best practices in regulating the shared economy in the residential sector.18 AIRBNB, RISING RENT, AND THE HOUSING CRISIS IN LOS ANGELES Principles for Regulating AirBnB As we have seen, cities are clearly grappling with how best to regulate AirBnB. While cities have employed a variety of strategies to control AirBnB's proliferation, no municipality has been able to effectively limit the growth and negative effects of the large-scale conversion of residential units into tourist accommodations. What may have been considered "best practices" a year ago, today seem rushed and nearly unenforceable. Given the shifting policy landscape, it may be worthwhile to establish an evaluative framework that can be applied to any proposed short-term rental policy. Housing must be protected Los Angeles has faced a severe shortfall in housing units, leading to low vacancy rates and rapidly increasing rents. AirBnB's highest density is in the neighborhoods where these dynamics have been especially pronounced. Any policy should have protecting housing units as a top priority. Systematic approval requirements Neighborhood cohesion is vital to preserving quality of life and safety in Los Angeles communities. One neighbor's decision to list her unit on AirBnB can have wide-ranging negative effects. As with any land use change that has a potentially negative effect on a community, neighbors in the vicinity of a prospective AirBnB unit should receive advance notification of the potential AirBnB listing and be granted an opportunity to object to this conversion. Based on public input, the city should have the opportunity to approve, reject or impose conditions on a proposed AirBnB conversion. In this way, AirBnB's impacts on neighborhoods can be mitigated and provisions for clear disclosure guidelines and dispute resolution procedures can be established. Los Angeles should also protect renters by requiring permission from landlords before a rental unit can be placed on AirBnB. AirBnB must share the burden of enforcement Cities have not been able to effectively regulate AirBnB. Without the company's cooperation, cities must pay the costs associated with investigation and enforcement of existing zoning codes. Even when AirBnB has seen its preferred legislation pass, the company has refused to participate in policing listings. As we have seen in New York City, enforcement strategies focused only on hosts but not on the company facilitating potentially illegal activity, will fall short. Only true sharing should be allowed The majority of AirBnB's Los Angeles hosts are on-site. Because they are present to monitor their guests' behavior, and because these types of AirBnB listings do not remove units from the Los Angeles housing market, they create fewer negative externalities than other types of AirBnB listings. Protecting these types of listings while curtailing off-site and commercial hosts represents a smart approach to balancing the needs of Los Angeles communities with the desire of some residents to rent out space in their homes while they are present. EXHIBIT NO. 1 AIRBNB, RISING RENT, AND THE HOUSING CRISIS IN LOS ANGELES Appendix A: Revenue CaIcuIati©n Our analysis shows that there were more than 114,000 reviews left on AirBnB listings. The number of reviews attached to each listing is the best approximation of the number of visitors that a given AirBnB unit has accommodated. Since travelers can only leave a review on a listing after they have completed their stay, every review indicates a confirmed stay. However, not every guest leaves a review after her stay, so our estimates are likely to undercount the volume of guests served by each unit. The number of reviews also allows us to approximate the revenue generated by each unit listed on AirBnB. By multiplying the number of reviews, the minimum stay, and the listed price, we have been able to estimate the minimum total revenue generated for each individual unit in our dataset. This formula yielded our initial revenue estimate of $37,726,492 in Los Angeles for 2014. We applied the same formula to data we pulled down from New York City's public AirBnB listings to yield a revenue estimate of $121,219,400. We also compared our estimated revenue to the actual value calculated by the New York Attorney General's AirBnB analysis. The Attorney General's report on AirBnB calculated AirBnB's 2014 New York City revenue based on booking information the company turned over after being served with subpoenas. The Attorney General's office showed AirBnB generated revenue of $282 million in 2014. Using this data point, we created a ratio to determine the relationship between our revenue estimates and actual revenue. We therefore concluded that our Los Angeles revenue was undercounted by a similar rate and revised our estimates upward. This formula also allows us to understand which hosts have failed to generate any revenue at all. We define the failure rate in this instance as the percentage of hosts who have not made any money by listing their space or spaces on AirBnB. Appendix B: Occupancy Rates Occupancy rates for AirBnB listings are calculated by first multiplying the number of reviews by the average minimum stay for all listings. Following the procedure described in Appendix A, we then create a conversion factor based on the New York Attorney General's bookings data. Our New York City dataset showed a total of 239,950 reviews had been left on New York's AirBnB listings. We know from the booking data that there were 497,322 AirBnB stays booked through AirBnB. We then applied this ratio to our own review data to obtain a more accurate estimate of the number of stays at a given AirBnB unit. Hosts list the year that they joined AirBnB, which allows us to then compare the number of stays to the number of days that the host has been active to generate an estimate of an individual unit's occupancy rate. EXHIBIT NO. AIRBNB, RISING RENT, AND THE HOUSING CRISIS IN LOS ANGELES Endnotes 1. "AirBed & Breakfast for Connecting '07." Core77. N.p., 10 Oct. 2007. Web. 19 Feb. 2015. htto://www.core77.com/ blog/events/airbed breakfast for connecting 07 7715. aso#comments, 2. Y-Combinator has been responsible for such varied tech mainstays as Dropbox, Reddit, commenting system Disqus, and meme sharing service 9Gag, among others. 3. Graham, Paul. "Subject: Airbnb." Paulgraham.com. N.p., Mar. 2011. Web. 19 Feb. 2015. htto://www.oaulgraham. com/airbnb.html 4. Bradshaw, Tim. "Airbnb Valued at $13B Ahead of Staff Stock Sale." CNBC.com. CNBC,LLC, 23 Oct. 2014. Web. 19 Feb. 2015. htto://www.cnbc.com/id/102117120#. 5. De, Michael J. "New Capital Could Raise Airbnb Value To $10 Billion." DealBook New York Times, 20 Mar. 2014. 6. According to the company, AirBnB's commission on each booking is dependent on the "size of the reservation." The company is not clear on whether this refers to the dollar value, length of stay or some other factor. 7. Bradshaw, AirBnB Valued $13B, CNBC 2014. 8. Sumers, Brian. "Airbnb's Short-term Rentals Break Law in Los Angeles, Says City Memo." The Daily Breeze, 21 Mar. 2014. Web. 9. Kudler, Adrian. "Airbnb-Affiliated Lobbying Group Defeats Venice's Attempt To Regulate Vacation Rentals In Los Angeles." Curbed LA. Vox Media Inc, 25 Nov. 2013. Web. 19 Feb. 2015. 10, Spector, Michael. "TPG -Led Group Closes $450 Million Investment in Airbnb." The Wall Street Journal. Dow Jones & Company, 18 Apr. 2014. Web. 19 Feb. 2015. 11. Atkin is also the founder of Peers, a lobbying group representing several sharing economy enterprises including Uber, home cleaning service Handy, as well as AirBnB and its competitors like VRBO, 12. Atkin, Douglas. The Culling of Brands: When Customers Become True Believers. New York: Portfolio, 2004. Print. 13. Atkin, 2004. 14. Linkedln Job Posting for Airl3nB Community Organizer Position https://www.linkedin.corn/iobs2/ view/12357022.. 15. New York City and San Francisco data from Slee, Tom. "The Shape of Airbnb's Business." Whimsley. N.p., 26 May 2014. Web. 19 Feb. 2015. Los Angeles data from author's data set. 16. Ibid. 17. Alpert -Reyes, Emily. "Los Angeles Gives Hosts, Neighbors Mixed Signals on Short-term Rentals." Los Angeles Times. Los Angeles Times, 7 Feb. 2015. Web. 19 Feb. 2015. 18. This market includes independent cities that are generally linked to Los Angeles by hotel industry analysts. These include Santa Monica, West Hollywood, Culver City, Long Beach, and Malibu. 19. Figure 2: Author's calculations. 20. Author's calculations. 21. Conley, Chip. "What I Learned from You.' Blog.airbnb. com. AirBnB, Inc., 3 June 2014. Web. 19 Feb. 2015. 22. See Appendix B. 23. PKF Hospitality Research Trends in the Hotel Industry U.S. Edition 2014. 24. AirBnB, Inc. AirBnB Listing Page: https://www.airbnb com/rooms/528860. Accessed 19 February 2015. 25. AirBnB, Inc. Ghc AirBnB Host Page httos://www,airbnb, corn/users/show/1463129 Accessed 19 February 2015. 26. Globe Homes and Condos, About Us htto://www globehomesandcondos.cam/about-us Accessed 19 February 2015. 27. Los Angeles Short Term Rental Alliance, Our Story, http://www.la-stra.org/our-storv/ Accessed 19 February 2015. 28. Los Angeles Short Term Rental Alliance, Mission Statement, htto://www.la-stra.org/mission-statement/, Accessed 19 February 2015. 29, Higgins, Michelle. "Vacation Rentals Pile on Luxuries." The New York Times. The New York Times, 01 Jan. 2011. Web. 19 Feb. 2015. 30. Screen Shot of Danielle and Lexi Host Page. Accessed 3 December 2014. 31. LADBS Parcel Profile report. 32. "California Proposition 199, Phase -Out of Rent Control on Mobile Homes (1996)." Ballotpedia. N.p., n.d. Web. 19 Feb. 2015. 33. Ingram, Carl. "Voters to Decide Fate of Rent Control in Mobile Home Parks." Los Angeles Times.12 Mar. 1996. Web. 19 Feb. 2015. 34. Streitfeld, David. "Ratings Now Cut Both Ways, So Don't Sass Your Uber Driver." New York Times. 30 Jan. 2015, Web. 19 Feb. 2015. 35. Mosendz, Polly. "Face -Off: NYC Lawmakers Grill Airbnb on Illegal Hotels." Newsweek. 21 Jan. 2015. Web. 19 Feb. 2015. AIRBNB, RISING RENT, AND THE HOUSING CRISIS IN LOS ANGELES 36. For a methodological breakdown on how we arrived at this figure, see Appendix A. 37. Analysis based on AirBnB dataset and Zillow neighborhood rent estimates. 38. Ong, Paul, Rosalie Ray, and Silvia Jimenez. "Impacts of the Widening Divide: Los Angeles at the Forefront of the Rent Burden Crisis." UCLA Ziman Center for Real Estate Working Papers Series (2014): UCLA Luskin School of Public Affairs, UCLA Anderson School of Business, Sept. 2014. Web. 19 Feb. 2015. 39. Edelman, Benjamin G. and Luca, Michael, Digital Discrimination: The Case of Airbnb.com (January 10, 2014). Harvard Business School NOM Unit Working Paper No. 14-054. 40. Mapping L.A. Project and ACS 2013 5 -year Estimates. 41. Bums, Patrick and Daniel Flaming. Repaying Hospitality: Economic impacts of Raising Hotel Workers Wages and Benefits in the City of Los Angeles. Economic Roundtable. 1 December 2013. Wage estimate based on wage level set by Los Angeles Hotel Worker Living Wage and average hotel worker wages as reported in the Bureau of Labor Statistics. 42. Lawler, Ryan. "Airbnb Drops Homejoy From Cleaning Trial. Handybook Remains On In Three Test Markets."TechCrunch. AOL, Inc., 21 July 2014. Web. 19 Feb. 2015. 43. Burnham. Linda. and Nik Theodore. "Home Economics: The Invisible and Unregulated World of Domestic Work." (2012): National Domestic Workers Alliance, 2012. Web. 44. Zervas, George et al. "The Rise of the Sharing Economy: Estimating the Impact of AirBnB on the Hotel Industry". Boston University School of Management. January 2014. 45. Theo, Nik, Beth Gutelius, and Linda Burnham. "Home Truths: Domestic Workers in California." (2013): n. pag. Www.datacenter.com. Center for Urban Economic Development, University of Illinois at Chicago, 2013. Web. 19 Feb. 2015. 46. Burnham, Home Economics, 2012. 47. LADCP Housing Needs Assessment htto://planning. lacity,org/Housinglnitiatives/HousingElement/Text/Ch1 !d• 48. Bergman, Ben. "High Rent, Few Options: Rising Rents and Short Supply Have Angelenos Weighing Their Choices 1 89.3 KPCC." SCPR. Southern California Public Radio, 17 Apr. 2014. Web.19 Feb. 2015. 49, Ong, Impacts, 2014. 50. Coldwell Banker Exclusive Offering Memorandum, The Morrison Apartments, Accessed from: http:// www.keeoneighborhoodsfirst.com/wo-content/ uploads/2014/07/14 Westminster Marketing Package. pdf, 51. PKF Trends 2014, 52. Wheatley, Jon. "I Bought An Apartment To Rent Out On Airbnb." NeedWant. N.p.. 28 Oct. 2014. Web. 19 Feb. 2015. 53. Coldwell Banker, Morrison. 54. Haller, Eric. "Venice Tenant Evicted for Airbnb" Yo Venice. N.p., 2 July 2014. Web. 19 Feb. 2015. http://www. vovenice.com/2014/07/02/venice-tenant-evicted-for- airbnbt 55. Zillow Median Rent Index. 56. Lovely, Inc. "Lovely Rental Market Report 03 2014." Livelovely. Lovely, Inc, Jan. 2015. Web. httos:// livelovelv.com/reoorts/o32014. 57. Yu, William. "Problems and Solutions for Los Angeles' Economy: Human Capital, Public Education and Migration."UCLA Anderson Forecast, Human Capital Index March 2074 (n.d.): n. pag. UCLA Anderson Forecast, Mar. 2014. Web. 19 Feb. 2015. 58. Author's calculations based on Zillow Median Rent Index. Median rent differs here based on differences in proprietary methods used by Zillow and Lovely. Lovely provides a citywide median. while Zillow provides a neighborhood -specific breakdown of rent prices going back to 2011. 59. Calculations based on analysis of Zillow Median Rental Price report. 60. LAMC Section 12.95.2(F)(6). 61. "Purposes and Uses of Zoning." Chapter3 The Objectives, Purposes and Nature of Zoning (n.d.): n. pag.Albemarle.org. Albemarle County, VA. Ditto:// www.albemarle.orc/upload/imaoes/forms center/ deoartments/Countv Attornev/forms/LUchaoter03- puroosesan natureofzoning.odf. 62. See: LAMC Sec. 12.10. 63. Analysis based on population and average household size. Census 2010. 64. Mapping L.A. population estimate and AirBnB Listing data. 65. Morenoff et al (2001) and Sampson et al (1997) as cited ;0-N- 4-. A` ;a �,-wle lm -As .vim + 4) EXHIBIT NO. 9' AIRBNB, RISING RENT, AND THE HOUSING CRISIS IN LOS ANGELES in Urban Institute "Building Succesful Neighborhoods". April 2012. 66. Alpert Reyes, Mixed Signals on short-term rentals, 2015. 67. Liptak, Adam. "Supreme Court Will Consider Police Searches of Hotel Registries." The New York Times. The New York Times, 20 Oct. 2014. Web. 19 Feb. 2015. htto:// www. nvti mes.com/2014/10/21/us/supreme-court-will - weigh-in-on-oolice-hotel-searches.htm I. 68. Orwoll, Mark. "Hyatt Cleans Up Its Act with New Hypoallergenic Rooms." Travel + Leisure. Time, Inc., 13 Oct. 2010. Web. 19 Feb. 2015. 69. Mulligan, Brenden. "Dirty Pillows: The Unsolved Problems Of Sharing Services." TechCrunch. AOL, Inc., 1 Apr. 2012. Web. 19 Feb. 2015. 70. Lawler, AirBnB Homejoy 2014. 71. Handy Cleaning Services Page. htto://www.handv.com/ bookings/new/services/3 Accessed 19 February 2015. 72. U.S. Department of Justice, Civil Rights Division, Disability Rights Section. ADA Checklist for New Lodging Facilities < htto://www.ada.aov/hsurvev.htm> Accessed 19 February 2015. 73. AirBnB, Inc. Host Help Center ADA and FHA Compliance httos://www.airbnb.com/help/article/898. 74. At the time of this report's writing, the Cozmo had 15 units for rent through AirBnB. 75. Hilton Corporation. Hilton San Diego Airport Accessible Rooms Amenities. htto://www.hiltonsandiegoairoort, com/rooms-suites/accessible. Accessed 19 February 2015. 76. AirBnB Listing fora unit in the Cozmo Building. https:// www.airbnb.com/rooms/81543, Accesed 19 February 2015. 77. Bergstein, Rachelle. "What Happens When You Get Bedbugs From an Airbnb Rental? It Isn't Pretty." Yahoo Travel. Yahoo. Inc., 23 Oct. 2014. Web. 19 Feb. 2015. httos;//www.vahoo. com/travel/what-ha peens-whe n- vou-get-bedbuos-from-an-airbnb-100719834572.html. 78. Rosario, Frank, C.J. Sullivan, and Joe Tacopino. "Airbnb Renter Returns to 'Overweight Orgy." New York Post, New York Post, 17 Mar. 2014. Web. 19 Feb. 2015. htto:// nvoost.com/2014/03/17/ai rbnb-renter-claims-he- returned-home-to-a n -orgy/. 79. Eaton, Perry. "Airbnb.com Renter Throws New York Sex Party, Costs $67k+ in Damages." BDCwire. The Boston Globe, 17 Mar. 2014. Web. 19 Feb. 2015. htto://www. bdcwire.com/ai rbnb-com-renter-throws-new-vork-sex- party-costs-67k-in-damages(. 80. Rosario, Overweight Orgy, 2014. 81. Joie de Vivre Hotels, About Us, htto://www.idvhotels. com/about/ 82. Lawler, Ryan. "Airbnb Launches New Mobile Apps, Introduces 'Host Home' To Provide Smarter Tools For Managing Listings." TechCrunch. AOL, Inc., 12 Nov. 2013. Web. 19 Feb. 2015. 83. Carr, Austin. "Inside Airbnb's Grand Hotel Plans." Fast Company. 2015 Mansueto Ventures, LLC,17 Mar. 2014. Web. 19 Feb. 2015. 84. AirBnB, Inc, AirBnB Host Help Center, jlttos://www. airbnb.com/help/article/414. Accessed 19 February 2015 85. Bridges, Virginia. "Airbnb Hosts Run Risks Renting Rooms." Raleigh-Durham News Observer. 12 Jan. 2015. Web. 19 Feb. 2015. 86. Bergstein Bedbugs 2014. 87. AirBnB,Inc.AirBnB Host Guarantee httos://www.airbnb, cam/terms/host guarantee Accesed 19 February 2015. 88. Lieber, Ron. "A Liability Risk for Airbnb Hosts." The New York Times. 05 Dec. 2014. Web. 19 Feb. 2015. 89. https://www.airbnb.com/terms/host guarantee 90. Bort, Julie. "An Airbnb Guest Held A Huge Party In This New York Penthouse And Trashed It." Business Insider. 18 Mar. 2014. Web. 19 Feb. 2015. 91. Peers Homesharing Liability Insurance htto://www.peers. ora/oroduct/homesharing-liability-insurance/#product details Accessed 19 February 2015. 92. See: Appendix A. 93. Advancement Project. "Following the Money: Understanding Los Angeles City's Finances and Impacting the Budget." (2011) Advancement Project, 2011. Web. 19 Feb. 2015. 94. Wallace, Emily. "Los Angeles Tourism: A Domestic and International Analysis." (2014): n. pag. Lachamber.com. Los Angeles Chamber of Commerce, May 2014. Web. 95. Kuh, Patrick. "The 75 Best Restaurants in L.A. - Los Angeles Magazine." Los Angeles Magazine. 9 May 2014. Web. 19 Feb. 2015. 96. Graham emails. Conley interview. 97. Section 8(a) of Transient Lodging Tax Agreement Between AirBnB, Inc. and the City of Portland Revenue Bureau states that "Street addresses will not be provided on tax returns. The Bureau will test the 4:= as e� a eusi��oa ran,: EXHIBIT NO. AIRBNB, RISING RENT, AND THE HOUSING CRISIS IN LOS ANGELES ongoing accuracy... on audit." And Seciton 8(b) states; "Generally, no personally identifiable information... will be provided about guests, hosts or listings. AirBnB's platform creates unique identifiers for guests, hosts, listings and reservations and these will be provided to satisfy document requests upon audit." httos://www. docu mentcloud.orci/documents/1223398-lodcina-tax- aoreement-between-airbnb-and-the.html. 9 June 2014. 98. Author's transcription of video posted at httos://vimeo. com/115206496. Willamette Weekly. 99. Leis, Michelle, "Portland Airbnb Hosts Are Slow To Comply With Regulations On Short Term Rentals." Oregon Public Broadcasting, 12 Nov. 2014. Web. 19 Feb. 2015. 100. Hutchins, Ryan. "Airbnb Comes under Fire during 8 -hour City Council Hearing I Capital New York."Www. capitalnewyork.com. Capital New York, 20 Jan. 2015. Web. 19 Feb. 2015. 101. Badger, Emily. "Airbnb Is about to Start Collecting Hotel Taxes in More Major Cities, including Washington."Washington Post. 29 Jan. 2015. Web. 19 Feb. 2015. 102. Spencer, Malia. "Airbnb Launches Shared City Initiative in Portland" PDX BizPulse. Portland Business Journal, 26 Mar. 2014. Web. 19 Feb. 2015. 103. Portland Zoning Code Sec. 33.207. 104. Transient Lodging Tax Agreement Between AirBnB, Inc. and the City of Portland Revenue Bureau. Published by the Porltand Oregonian at 1-ittos://www.documentcloud_ ora/documents/1223398-lodcaino-tax-acireement- between-airbnb-and-the.html#document/o3/a167055 105. Njus, Elliot "Airbnb. Acting as Portland's Lodging Tax Collector, Won't Hand over Users' Names or Addresses."Oregonlive. The Portland Oregonian, 21 July 2014. Web. 19 Feb. 2015. 106. Theriault, Denis. "Nick Fish Balks at Allowing Short -Term Rentals in Apartments and Condos; the Expansion Still Passes." Portland Mercury. Portland Business Journal, 14 Jan. 2015. Web. 19 Feb. 2015. 107. Mesh, Aaron. "VIDEO: City Commissioner Nick Fish Berates Airbnb Lobbyist." Willamette Weekly. 22 Dec. 2014. Web.19 Feb. 2015. 108. Portland, OR Zoning Code Sec. 33.207. 109. Mesh, Nick Fish Berates, 2014. 110. Said. Carolyn. "Supes Back 'Airbnb Law' to Allow Short-term Rentals, with Limits." SFGate. San Francisco Chronicle, 8 Oct. 2014. Web. 19 Feb. 2015. 111. Jones, Stevem T. "SF Supervisors Vote to Legalize and Regulate Airbnb's Short-term Rentals." San Francisco Bay Guardian. 7 Oct. 2014. Web. 19 Feb. 2015. 112. Said, Carolyn. "S.F. Airbnb Law Slowly Takes Effect While Challenges Continue." SFGate. San Francisco Chronicle, 3 Feb. 2015. Web. 19 Feb. 2015. 113. Marzorati, Guy. "Enforcement Issues Remain as San Francisco's Airbnb Law Takes Effect." KQED News. KQED, 2 Feb. 2015. Web. 19 Feb. 2015. 114. lbid. 115. Hutchins, AirBnB Under Fire, 2015. 116. Barragan, Bianca. "West Hollywood Thinking About an Outright Ban on Airbnb." Curbed LA. Vox Media Inc, 4 Feb. 2015. Web. 19 Feb. 2015. 117. Stevens, Matt, and Martha Groves. "Malibu to Crack down on Short-term Rentals via AirBnB, Other Websites." Los Angeles Times. Los Angeles Times, 27 Mar. 2014. Web. 19 Feb. 2015. 118. Los Angeles City Council File # 14-0593. EXHIBIT NO. 9 Airbnb Is Infuriating the Neighbors. Is It Time for New Rules? I... http://www.laweekly.com/news/airbnb-is-infuriating-the-neighb... La WEEKLY' AIRBNB IS INFIJRIATINGTHE NEIGHBORS. IS ITTIME FOR NEW RULES? BY STEVEN LEIGH MORRIS THURSDAY,JANUARY 22, 2015 1 9 MONTHS AGO cnc % `'hr eS 4 Illustration by Fred Noland You're one of six college friends in, say, New York or even Nepal, and you want to visit Hollywood for a weekend. You can book a hotel for $75 to $350 a night, or you can seek an apartment or room in somebody's home via Roomorama, VRBO or the granddaddy of online short-term rental services, Airbnb. On Airbnb, you and your pals find a cozy, clean one -bedroom apartment in a 12 -unit Franklin Village co-op — a complex owned mostly by on-site residents — for $150 per night. Welcome to the "sharing economy," represented by services such as Airbnb in the private home/room rental business. EXHIBIT NO. 1 of 5 10/8/15 8:34 PM Airbnb Is Infuriating the Neighbors. Is It Time for New Rules? I... http://www.laweekly.com/news/airbnb-is-infuriating the-neighb... 2 of 5 After your host, the apartment unit's owner, gives you the keys and a gate opener, you and your compatriots go drinking before rolling two rented minivans into your allocated space under the building. You drag your suitcases up the stairwell at 2 a.m. to be confronted by the irate homeowners association president. The neighbors are weary of tourists jarring them awake in a residential neighborhood. They're even madder at the host, for turning their homes into a hotel. The following morning, you're met with hostile glares - one neighbor, who lives next door; mutters that he was kept awake by the sound of the toilet being flushed all night by six occupants. Another screams at you to move the second minivan because it's blocking her car. Of course you didn't know that only one vehicle is allowed per space. You shrug. What difference does it make? You'll be gone tomorrow. This scenario is playing out from Silver Lake to Sherman Oaks, Hollywood to Venice, as the city of Los Angeles wrestles with how to regulate Airbnb and its brethren. According to the San Francisco -based company's records, Airbnb hosts collected $43.1 million in L.A. gross rents last year. Yet with notable exceptions, local zoning codes ban these rentals of fewer than 30 days in residential L.A., for the reasons above and more. According to the Venice Neighborhood Council, almost all Airbnb rentals in residential L.A. are illegal. Yet trying to determine whether Airbnb is violating the zoning code on a particular property can be a byzantine task, thanks in part to L.A.'s impenetrable system of property zones layered with subzones and sub-subzones. And then there's the question of whether anyone among City Hall's 50,000 employees is tasked with the job at all. As L.A. city planning director Alan Bell explained, in a widely circulated email: "Short-term rentals are prohibited in agricultural zones; the R1 and other single-family residential zones; the R2, RD and R3 lower -density, multifamily residential zones; and RAS3 residential accessory service zone. Areas governed by specific plans, overlay zones and other specially zoned areas may have different rules." Good luck figuring out what's legal on your block, whether it's in Canoga Park, DTLA or Mar Vista. But let's try just one property, the Airbnb operating inside the Franklin Village co-op. City planner Katie Peterson guided L.A. Weekly through the city's public ZIMAS interactive map, at zimas.lacity.org, which any member of the public with some patience can use. She discovered that the property is in a forbidden, RD zone. But it took Peterson, a zoning expert, the rest of an afternoon to research if there were any "specific plans" or "overlay zones" that would override that ban. There weren't. EXHIBIT NO. 1 10/8/15 8:34 PM Airbnb Is Infuriating the Neighbors. Is It Time for New Rules? 1... http://www.laweekly.com/news/airbnb-is-infuriating-the-neighb... Mayor Eric Garcetti's response to L.A. residents upset by disruptive, Airbnb-style operations next door has been to create a "whistleblower" program. Violators are sent a warning from city treasurer Antoinette Christovale that they may be liable for hotel taxes, and to contact the Department of Finance, which sent out an unknown number of such warnings last year. It's an odd enforcement system, since officials depend on violators to turn themselves in, and Finance is trying to collect taxes on an activity that's probably illegal. An indignant resident also can try calling the Department of Building and Safety, which may or may not levy a fine. In a letter last year to the L.A. City Council, a group calling itself the Short -Term Rental Awareness Coalition warns that even Airbnb says the homegrown enterprise is being taken over by speculators tapping a Wild West housing market. That, in turn, is screwing up the overheated, overcrowded housing stock. As residents dish out $2,000 a month for a nothing apartment in most of L.A. these days, investors and developers are upping the ante. A 2014 study by UCLA determined that L.A. now is the most unaffordable city in the nation for renters, who pay a stiff 47 percent of their income for rent. But investors are buying certain well -located rental stock, then subleasing the homes or apartments to Airbnb tenants at more than the $2,000 or $3,000 a renter might pay. Owners in hot spots Venice and Silver Lake have evicted long-term tenants for probably illegal Airbnb hotel "conversions." People who never thought of being landlords are getting into the act. In a trendy mid-L.A. neighborhood, a retired couple whom L.A. Weekly agreed not to name has converted an enclosed garden into a mini -sanctuary for a couple of chickens, a miniature horse, two pot-bellied pigs, a couple of goats, sheep and a turtle. With the couple's knowledge of farming and their rigorous devotion to cleanliness, their tiny farm -in -the -city is odor -free — and alluring to Airbnb renters. Behind their horse stable, they've converted an outbuilding into a trio of rustic -style vacation rentals. Without the extra money they'd survive, but it's welcome. Their discreet "cottage industry" has drawn no neighbor complaints, though it's probably illegal. The one problem they've encountered was a con artist who cited a "squatters rights" law to announce that she was staying long-term — and rent-free. (It took an arduous eviction effort to force her out of their backyard.) At the Franklin Village co-op, board president Chris Danna says major problems recur with "one-nighters in town for a good time, and consideration for others just isn't a priority." He pleaded with one co-op owner to find more settled, long-term Airbnb visitors. Another fed -up neighbor finally reported her through Mayor Garcetti's whistleblower program. EXHIIBIT NO. 10/8/15 834 PM 3of5 Airbnb Is Infuriating the Neighbors. Is It Time for New Rules? 1... http://www.laweekly.com/news/airbnb-is-infuriating-the-neighb... That, not surprisingly, did not work. Neither the Department of Finance nor Department of Building and Safety is prepared for all the landlords and building owners keen on turning residential neighborhoods into de facto business districts. Last year, the Franklin Village co-op board restricted renters to a minimum stay of 30 days. That made no difference. The renegade owner there simply says she's dealing with "guests," not "tenants." Airbnb has been lobbying municipal governments to allow motel -style overnighting rules on residential streets, and it won a sweeping victory in Portland, Oregon: The company now has unrestricted ability to arrange short-term rentals in Portland's single-family homes. Last August, the L.A. City Council unanimously approved a planning recommendation to study the pros and cons of the so-called sharing economy and its impact on the affordable housing stock. Policy changes may come as soon as this year. Monica Semus, an 86 -year-old Hollywood Hills homeowner, says her neighbors in that community of winding streets and soaring views have died or have moved — and many of the survivors now rent out their places via Airbnb. "The whole neighborhood is now people who come and go every week or two. They're nice enough people," she says ruefully, "but I have no real neighbors anymore." Contact: Steven Leigh Morris Follow: L.A. Weekly L.A. Weekly Sponsor Content ©2015 LA Weekly, LP. All rights reserved. EXHJBIT NO. 1C) 4 of 5 -- 10/8115 8:34 PM C 2 O ,., 1 a) y Y N i3 ., O o ti U m . 0 ,>0 A d O d'� Ccn Y 0. Q w 00 L O au— ,U�O . . o 0 prfl ,ci o a0 a yU� J :u ›., C :ter, y co1 aYF0 0'u 0 3 y^. b„ v d c-0, 0" 3;° '''a cam r t4. 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O aa)) :.o x 0 0 4 y ;0 .5 a, w R...„ 0 T " O ' °'4,.00p00..,0� • tO,C 2 - o 0 0 `) i'• U 0 3 0 0 FA 0.b v U ak 5N� • gC� Cd 5.5 .a.N § 43 N 0 V '� w. 7 °,1). 8, O U y a.s A C^/j' N °i .p a) X0..0 °j 0 .O -0 0 °) yr ,_, CL. a, 0 : rte ,-,F., ' <c U p (� 00 U LY y N y'° 5_0,• y 0 .0...-.'' 8'.ca.-moi.g .0' -0 g "c ii 0 'R'rz"yis v U ca>.O.a�,o�`�n U) �oa,y3��vo M...... r. a a).F ~ �:a��i.a C a) C F T°_. 4U., ' 5 0 tQ 1 iii •.E o -5 °a t. e in C7 ' 0 0° 0 o ao,.o a a.E t0 Ct aoocstan. c o>~ate ax a)5°a98>.°a3t0°�ga F.4 .03 .=,,, a)0 ,to • U1 3'v 5�x 0.o op3 .> a9ix = New Worry for Home Buyers: A Party House Next Door - The New York Times ljt4slcur jack ituxro http://nyti.ms/1 jhQQwn YOUR MONEY Page 1 of 5 New Worry for Home Buyers: A Party House Next Door OCT. 9, 2015 Your Money By RON LIEBER AUSTIN, TEX. — The houses are often among the nicest on the block, or at least the biggest. They may be new construction where a smaller structure once stood, or an extensively renovated home with cheery paint in shades of yellow or blue. But then the telltale signs appear, including an electronic touch pad on the door that makes it easy for people to get in without a key. The ads on HomeAway or Airbnb eventually confirm it: A party house has come to the neighborhood. Some neighbors have warmed in recent years to travelers dragging suitcases through their residential neighborhoods, and they are happy that the visitors spread their money around. But when profit-seeking entrepreneurs furnish homes they do not live in to make them attractive to big groups and then rent out those houses as much as possible, parties and noise are nearly inevitable. And so it goes here in Austin, where a group of enraged and occasionally sleepless residents have taken their complaints to the city. Austin made rules in 2012 that were meant to keep short-term rentals under control, but the neighbors argue that many of the rules are unenforceable. EXHIBIT NO. tbf http://www.nytimes. com/2015/ 10/ 10/your-money/new-wony-for-home-buyers-a-party-house-ne... 10/20/2015 New Worry for Home Buyers: A Party House Next Door - The New York Times Page 2 of 5 This week, I rented one of the most notorious party houses in Austin and invited some of the neighbors over for a chat to ask a few questions. Where do the rights of property owners to rent out their homes end, and where do those of quiet -loving neighbors begin? Do all home shoppers now need to be on the lookout for nearby problem properties? And if so, what might happen to home values when revelers can bunk up next door on any given night? These are not new questions. In resort areas in particular, people have been renting out investment properties for ages. What's new is how easy it has become for people to make money by listing rooms or homes and for visitors to save money by staying there. This is particularly true in good-time destinations like Austin, Nashville, New Orleans and other bigger cities. When Austin tried to bring some order to the proceedings three years ago, it limited the number of unrelated people who could stay in one place at one time to six. (It also capped the number of certain listings in many neighborhoods, albeit with a loophole that has allowed many unregistered properties to hit the market.) Nevertheless, listings began appearing all over the city advertising beds for 10 or 15 people, or more. Austin has become a popular bachelor party destination, and the website Thrillist described one Airbnb listing as "the perfect place to bed down for a bonkers bachelor party, as it's a short bike ride from downtown, just the right blend of weird & huge, and not at all unaccustomed to rowdy entertainment." Emmy Jodoin lives next door to that house with her family. "It is loud, and there is live music and karaoke stuff, and it's all done outside because of the pool," she said. "They're out in front at 4 in the afternoon waiting for their Uber to come, drunk on the front lawn." Homeowners had other complaints about guests, including trash bins overflowing with beer cans, public urination, catcalling, foul language, racist remarks, companies throwing events and the appearance of a rainbow -colored painted pony. "Sometimes, when they are outside, they're playing beer pong just wearing their underwear," said Hazel Oldt, age 11, who can see them next door from the third -floor rooftop garden of her house. EXHIBIT NO. http://www.nytimes.com/2015 / 10/ 10/your-money/new-worry-for-home-buy ers-a-party-house-ne... 10/20/2015 New Worry for Home Buyers: A Party House Next Door - The New York Times Page 3 of 5 Many of the complaints result when there are well over six people staying at these houses. So how do owners get away with renting to more people than city rules allow? "Determining how many are occupying versus just visiting is almost impossible," Carl Smart, who is the director of Austin's code department, said, chuckling as he did so. What was so funny? Had some of the guests been coached to say that they were related? "I think so," he said. "There is no way for us to disprove or to prove it. We could ask them to, but they don't have to, so we have to take their word for it." KVUE, a local television station, tagged along with code enforcement officers who heard from guests at one house that there were triplets inside and that someone else was related to a fifth guest by marriage. The neighbors would prefer that the city simply cap guests at six people — or, better yet, stop allowing what they describe as rogue hotels to operate in residential neighborhoods. (They have no problem with people renting out their entire homes occasionally or renting rooms more frequently, while the owners themselves are in residence.) At HomeAway, which is based in Austin and also owns Vrbo.com, executives did not want a ban and said that renting out one's home on a short-term basis was a fundamental right. Nor do they think that it is a commercial activity. "It's a residential use of the property," said Matt Curtis, who runs its governmental relations efforts. "It's no more a business than someone renting it out long-term would be a business." Even if no one, in this instance, is doing any actual residing? HomeAway's contention is that the visitors coming for the weekend are the residents in this context. Mr. Curtis questioned how widespread the problem was. Airbnb provided some statistics about its customers, noting that from Oct. 1, 2014, to Oct. 1 this year, 87 percent of trips to Austin involved four or fewer people and 97 percent involved eight or fewer. The average age of Airbnb guests in Austin is 36. According to the research company Airdna, of the 1,414 Airbnb listings in Austin as of Aug. 31 with three or EXHIBIT NO. l http://www.nytimes.com/2015/ 10/ 10/your-money/new-worry-for-home-buyers-a-party-house-ne... 10/20/2015 New Worry for Home Buyers: A Party House Next Door - The New York Times Page 4 of 5 more bedrooms, 33 offer lodging for four or more people per bedroom while 618 sleep over two per bedroom. Airbnb offers a hotline for neighbors having problems with hosts anywhere it operates and is building tools that will try to recognize parties before they happen, say when someone books a large house and that listing is immediately viewed by many other site visitors. Since October 2012, Austin has received 266 complaints about the type of registered properties where the homeowner is generally not present. Twenty percent of the properties have at least one complaint, with an average of 2.4 complaints among those. Seventeen percent of the complaints were about over -occupancy. The house where I stayed has received 15 complaints, and the city has suspended its license once. The walls have "Dumb and Dumber" and "Anchorman" movie posters, and the three bedrooms are full of bunk beds and futons. "Our neighbors understand that your group is here to have a good time," the listing says. But not too good a time. Each door to the outside has a framed copy of Austin's noise ordinance nearby, and Jason Martin, a limited partner with partial ownership in the property, sends an extensive list of house rules to guests urging them not to disturb the neighbors. "It is extremely professionally run," he said. "Any word of a bachelor party or fraternities is an immediate no-go." In fact, house parties and "organized social events" are not allowed on the premises, a rule I thought I was not breaking when I invited the neighbors over. There's another rule noting that "all persons entering the premises are counted as chargeable guests." I should have reread the rules and reviewed my original communications with Mr. Martin once I decided to hold the gathering in the days after I made the booking. Those visitors were especially concerned about their property values. For many of them, their homes are their largest asset. Jessie Neufeld, who bought her home right before the local rules changed in 2012 and now has a 2 -year-old child, put it most bluntly. "We did not buy our house to be living next to a hotel," she said. EXHIBIT NO. http://www.nytimes.com/2015/ 10/ 10/your-money/new-worry-for-home-buyers-a-party-house-ne... 10/20/2015 New Worry for Horne Buyers: A Party House Next Door - The New York Times Page 5 of 5 "Would you buy a home if you knew a hotel like this was operating next door, if you wanted to set your life up and raise a family?" I put the question to two real estate professionals whose names I saw on for -sale signs for homes that were next to or close to some of the party houses. Were the properties going to sell for less because of the problem properties nearby, and did they have a duty to disclose these houses to any and all buyers? Katie Brigmon of Dash Realty did not want to answer many questions about her listing, a house that is very close to one problem property, and my call to her quickly went dead. Jeff Grant from Saddle Realty said that he wasn't aware of the short-term rental several homes down from the house he's trying to sell on Hidalgo Street. "But my philosophy has always been disclose, disclose, disclose," he said. "I don't think it affects property value in the least." It probably won't if the buyer simply wants to rent out the home every weekend. But every other home buyer ought to be searching Airbnb, HorneAway and similar sites for listings that are close to a home that they're considering buying. Ms. Neufeld said she resented the fact that people making a living from renting out homes for the weekend have put her own home's value at risk. "They are leveraging our neighborhood for their profit, telling people to come stay in this beautiful place where you would like to pretend that you live," she said. "And they are making people miserable." Twitter: @ronlieber Make the most of your money. Every Monday get articles about retirement, saving for college, investing, new online financial services and much more. Sign up for the Your Money newsletter here. A version of this article appears in print on October 10, 2015, on page B1 of the New York edition with the headline: Animal House Shakes Up Cul -de -Sac. © 2015 The New York Times Company EXHIBIT NO. http://www.nytiines.com/2015/ 10/ 10/your-money/new-worry-for-home-buyers-a-party-house-ne... 10/20/2015 ADVERTISEMENT Home Sharing in the New Economy - Western City - August 2015 - Sacramento Page 1 of 7 ABOUT 1 ADVERTISE I EDITORIAL INFORMATION 1 SUBSCRIBE 1 LOG IN 1 MY ACCOUNT 'City THE MONTHLY MAGAZINE OF THE LEAGUE OF CALIFORNIA CITIES ° HOME I, OPFOLTL!NTfIES I C..ENDAR I ARTICLES TOPICS WEB EXCIUSJVES CONTACT I. ARCHNES WESTERN CITY !AUGUST 2015/ HOME SHARING IN THE NEW ECONOMY Site Search 72.DF 1 FOREC5ST: SPONSOR THIS SECTION FIND OUT HOW u I SHRRE,_ 6i -t E EMAIL FRNT ®FEED Home Sharing in the New Economy BY TREVOR RUSIN AND ANDREA VISVESHWARA Topics Community Services Economic Development & Redevelopment Environment, Energy & Climate Change Governance, Legislation & Law Municipal Finance Land Use & Planning Personnel Public Safety Public Trust & Ethics Public Works & Infrastructure Youth EXHIBIT NO. 13 http://www.westerncity.com/Western-City/August-2015/Home-Sharing-in-the-New-Econ... 10/12/2015 Home Sharing in the New Economy - Western City - August 2015 - Sacramento Page 2 of 7 Aaff�T �I ADVERTISE 1 EDITORIAL INFORM -00N 1 SUSSCFJS£ 1 LOG IU 1 MY ACCOUNT. nom- V7i A I Rtimayes/Shutterstock.com About legal Notes This column is provided as general information and not as legal advice. The law is constantly evolving, and attorneys can and do disagree about whet the law requires. Local agencies interested in determining how the law applies in a particular situation should consult their local agency attorneys. Site Search This article is the second in a two -pan' Legal Notes series on °New Economy' issues in cities. Trevor Rusin is an attomey with the law firm of Jenkins & Hogin LLP and can be reached at trusin..localgovlaw.com. Andrea Visveshwara is an assistant city attorney for the City of Petaluma and can be reached at avisveshwaragci.petaluma.ca.us. With short-term residential rentals exploding in popularity in the "new or'sharing° economy, many cities are taking a hard look at the impacts of such rentals in the community_ Online hosting platforms such as Airbnb, HomeAway and Flipkeyi have created a direct connection between hosts (for 72.OF 1 FOREC?STs EXHIBIT N0. 1 2 http://www.westerncity.com/Western-City/August-2015/Honate-Sharing-in-the-New-Econ... 10/12/2015 Home Sharing in the New Economy - Western City - August 2015 - Sacramento Page 3 of 7 AseXarjngeskeeirignitallOwnelanditraYglegestilgraernPriraW4Wars and home or room tor short penods of time. Opponents are concerned with loss of housing stock and the make it easy to rent a Site Search residential character of neighborhoods. Neighbors may complain about impacts from parking, traffic and noise, as well as other public safety issues. Hotels may also complain that short-term residential rentals do not have the same overhead costs and regulation that they face. Alternatively, proponents may desire to supplement their income with such rentals for a variety of reasons, such as to offset a Job loss. The business community may also welcome the positive effects of more visitors who frequent city restaurants and purchase other services. Although not specifically designed to address the sharing economy, cities' traditional regulatory tools allow communities to address short-term rentals and their potential impacts. This article provides an overview of these tools and their reach. Short -Term Residential Rentals Can Be Regulated as a Land Use The California Court of Appeal in Ewing v. City of Carmel -By -The -Sea considered whether a city ordinance that banned short-term rentals (residential property rentals of 30 days or less) was valid °The ordinance was based an the city's General Plan policies related to strengthening the residential character of neighborhoods in the city by limiting commercial uses in residential neighborhoods.° The plaintiffs owned a single-famlly property in a residential district and rented the property to tourists for short stays.w They argued the ban ordinance did not advance a legitimate govemment interest, citing a lack of complaints about the rentals." However, the court found that the short-term rentals alone sufficiently threatened the residential character of a neighborhood because "short-term tenants have little Interest in public agencies or In the welfare of the citizenry.""rAccordingly, the court upheld the city's prohibition. A city is not limited to imposing a strict prohibition or ban and may use its constitutional police power to allow short-term rentals subject to conditions designed to address potential negative Impacts. Options indude a density restriction or allowing the rentals only in certain areas to mitigate against harm to a neighborhood's residential character. Alternatively, a city may allow short-term rentals where the host is present (for example, renting a room or guesthouse), but prohibit them where the host is not present (for example, renting the entire residence). Cities may also consider limiting the number of days in a calendar year that a property can be used as a short -tens rental or implement related parking or noise restrictions. One option for implementing conditions Is requiring hosts to obtain an administrative permit or otherwise register with the city pursuant to an ordinance. A key benefit of this practice is that it makes the host known to the city and facilitates communication. The city may also charge a permit fee, which can offset the cost of administering the permitting program. Short -Term Rentals May Be Taxed Short-term rentals also present a potential source of revenue for cities. Revenue and Taxation Code section 7280 allows a city to tax "the privilege of occupying a room or rooms, or other living space, In a hotel, inn, tourist home or house, motel or other lodging unless the occupancy is for a period of more than 30 days.' Thus, these rentals may already be subject to a city's transient occupancy tax (TOT) ordinance, depending on how the jurisdiction has defined its ordinance. 17-7 72.0E 1 EOREc.esr EXHIBIT NO. http://www.westerncity.com/Western-City/August-2015/Home-Sharing-in-the-New-Econ... 10/12/2015 Home Sharing in the New Economy - Western City - August 2015 - Sacramento Page 4 of 7 • Aedrredditi m @ p93iiti TGr>aaities.Eointnwitftsrdn(JLS,9adrIgReaoomgAit) Legislature that may be taken up again in January 2075747-1871fiEbill would amend section 7280 to declare that existing law allows a city to levy a tax on short term rentals pursuant to its TOT ordinance on either a host or a hosting platform. s a two-year bill in the A short-term rental may also be considered a business, subject to a city's business license and tax requirements. Enforcing Compliance With Local Ordinances Permitted Use by Right in All or Certain Zones. The easiest and most cost-effective ordinance to enforce is one that allows short-term rentals. This type of ordinance may include a requirement that hosts register with the city. Such an ordinance will also generate the greatest tax revenue if the rentals are subject to the city's TOT. It encourages registration and payment of taxes because: • There is no benefit to avoiding registering; and • There are heavy financial penalties (including back taxes, penalties and interest) for not complying. Site Search Cities that employ this type of ordinance will not only be able to take enforcement action against problem rental properties (for example, properties that violate nuisance, noise or special -event permit ordinances), they will also be able to educate and communicate more effectively with hosts. If short-term rentals are permitted in only some areas of the city, the benefits will decrease proportionally. This type of ordinance may work best in a city where there are not significant concerns about housing stock being depleted. Bans. This type of ordinance is the next easiest to enforce because a single violation is enough for city staff to take enforcement action, and once a violating property is found It can be monitored. Although a ban may eliminate some short-term rental use, it may also drive the hosts underground. Some hosts may disguise their properties online, falsify or eliminate the rental paper trail and use middlemen to avoid detection and repercussions. Such deception makes enforcement costly and time consuming, with no tax revenue to offset the cost of enforcement. One option to simplify enforcement is to adopt an ordinance that bans advertising of short-term rentals. There is no right to advertise illegal activity, which opens the door to taking action directly against websites that facilitate such rentals."" If passed, SB 593 might provide another tool for enforcing a ban as it would prohibit website platforms from advertising short-term rentals in cities where they are not allowed. Allowed Subject to Conditions. These ordinances are seen as a compromise between local proponents and opponents of short term rentals. However, the conditions imposed: • Are harder to prove. A city must show not just that a rental occurred, but that the rental violated the conditions because, for example, it exceeded the number of rentals allowed in a year for the property or rented out an entire home instead of a room (depending on the conditions in the ordinance); • Make violators harder to detect because renting is allowed. It is much easier to detect rental activity than to determine If specific conditions are being violated; and • May discourage host registration if conditions are too complex or burdensome. The effect conditions will have on registration should therefore be carefully considered. If SB 593 passes in 2096, enforcement of such ordinances may be more feasible because of the information that hosting platforms will be required to provide to cities. For now, enforcement may prove challenging. Enforcement Tools Short-term rentals can be easily disguised to look like legitimate long-term rentals. A few tools exist to make enforcement efforts easier. They include education efforts, legislative subpoenas, undercover operations, using advertising against hosts, and TOT collection by the hosting platform. 72.0F 1 FORECAST, EXHIBIT NO. 1 http://www.westerncity.com/Western-City/August-2015/Home-Sharing-in-the-New-Econ... 10/12/2015 Home Sharing in the New Economy - Western City - August 2015 - Sacramento Page 5 of 7 rsAdupittis2A=1F.SkpcNiti the,•r,4, a.un6yi gtukarsPr SShouldeera Prin}ary focus. The hosting pa orms may •e open a assis mng suc e ort'. Legislative subpoenas. All California cities can issue subpoenas to aid investigation and enforcement related to short term rental ordinances. These subpoenas are a powerful tool and can be used to: • Obtain information from hosting platforms; and - Obtain information directly from hosts. Site Search While effective at gathering information from hosts or websites based in the same county as a city, enforcing a legislative subpoena against more distant hosts may face stiff resistance. If enacted, SB 593 would also require hosting platforms to produce quarterly reports detailing the addresses, dates of stay and amounts paid for short-term rentals booked on their platforms. This information could aid a city in assessing TOT owed and detecting rentals that violate an ordinance "a Undercover operations. These efforts can be an effective tool if a city has a ban or allows short- term rentals subject to conditions. However, a substantial investment of staff time is needed for the investigations. Use advertising against hosts. Without online hosting platforms, short-term rentals would exist only on a small scale. As a result, most hosts advertise on the platforms. Information from hosting platforms should be downloaded, preserved and investigated. TOT collection by the hosting platform. If a city collects TOT from short-term rentals, the city can request or require the hosting platform to collect and remit the fax directly to the city. Thus far, Airbnb has been the only hosting platform willing to collect TOT at the request of a city and does so in San Francisco, San Jose and Malibu. Consider Local Options Carefully Cities have a variety of options available in crafting an ordinance that best addresses short-term rentals in the community. The right ordinance may differ greatly among cities, depending on the local goals for the regulation. Ordinances that focus on the key impacts of concem and that are easy to understand and straightforward to enforce will have the best success in meeting the community's needs. For more information about short- term rentals, visit the League's "Hot Issues" page at wvm.cacilies.orglvacationrentals, Legislative Subpoena Guide Authority Execution enerat Law Cities: Govemment Code sections 37104-37109 harter Cities: California Constitution Article XI, sections 3(a) and 4(e), nd may be codified in city's charter. Note: A charter city's subpoena power may be broader than a general la itys power. • Subpoena must be authorized by ordinance or similar enactment, signed by the mayor and attested by the city clerk" 72.0F 1 FORECAST' EXHIBIT NO. [ 3 http://www.westerncity.com/Western-City/August-2015/Home-Sharing-in-the-New-Econ... 10/12/2015 Home Sharing in the New Economy - Western City - August 2015 - Sacramento Page 6 of 7 AB UT I ADVERTISE I EDna1 w.P•F4Sewedvn seurePrsannetms aielVsubpoena4xr • Must detail a valid legislative purpose, the need for the subpoena and the relevance of the materials or testimony sought xi • Note: "Matters relating to the Investigation and enforcement of tax measures are proper legislative concerns.''di Must comply with general subpoena requirements, notably: • The materials/testimony sought must be sufficiently defined; • It must not be overly broad or unduly burdensome; and - 1t must not run afoul of any statutory or common law privilege that prevents disclosure?' • To ensure complete records are produced, both records and an appearance at a city council meeting should be demanded. If complete records are produced three days before the meeting, the personal appearance can be excused_ Consequences f the subpoenaed party fails to comply, the city needs to report the solation to the superior court. The judge will issue an attachment for the arty and begin contempt proceedings where the disobeying party faces Ines and/or jail." Footnotes: See www.airbnb.com, www.homeaway.com, vrnw.flipkey.com. .11(1991) 234 CaLApp.3d 1579. 5 Id. at p. 1589. Ix Id, at p. 1564, 1590. Id, at pp. 1589-90. vi Id. at p. 1591. Site Search '5 Pittsburg Press Co. v. Pittsburgh Commission on Human Relations (1973) 413 U.S. 376, 388. v`Ts An example of a legislative subpoena issued in a short-term rental context can be found online at http•11www.cavities.org/getatfachmentiPolicy-Advocacy;Hot-Issues/Vacation-P,entals/Subpoena-to- Y BY C-Inc-6-30-14.pdf.aspx. ix An ordinance that requires hosting platforms to collect TOT may be challenged in court by the hosting platforms. Of note, San Francisco Municipal Code section 41 B.5(d) requires hosting platforms to collect TOT owed, but It is not enforcing this requirement against hosting platforms such as HomeAway, which challenged the ordinance in federal district court..HomeAway v. City and County of San Francisco, No. 3:14 -CV -04589, 2014 WL 5510760 (NDCA 2014). " Gov't Code § 37105; Connecticut indemnity Company v. Sup. Cf. (2000) 23 Cal.4t' 807, 814. 'd See C.C.P. § 1987. "i Connecticut Indemnity Company, 23 Cal.4th at 614. .ii City of Vacaville v. Pitamber (2004) 124 Cal.App.4a' 739, 748. xtv See Flora Crane Service, Inc. v_ Sup.Ct. (1965) 234 Cal.App.2d 767; Southern Pacific Co. v. Sup.Cf. (1940) 15 Ca1.2d 206. "" Gov't Code §§ 37106-9. 17 72.0F 1 FORECAST EXHIBIT NO. l http://www.westeincity.com/Westem-City/August-2015/Home-Sharing-in-the-New-Econ... 10/12/2015 Home Sharing in the New Economy - Western City - August 2015 - Sacramento Page 7 of 7 nealtotcoveditullhetaddielo~terzatopkoan(4enkutsllarlgafXdaearilsilu (couch); Karamyshibhutterstock.com (bedroom) This article appears in the August 2015 Issue of Western City Did you like what you read here? Subscribe to Western City 1) ierstock.com Site Search Home 1 Job Opportumlies [Calendar I Contact I Archives About I Advertise 1 Editorial information 1 Subscribet My Account Copyright 2015 League of California Cities. Alt rights reserved. pttt'dby RIVISTA IA Gociengo Ted-tnology 1 PriVaCy FOLICy IP: 72 OF 1 FOqECA57* EXHIBIT NO. 1 http://ww-w.westerncity.com/Western-City/August-2015/Home-Sharing-in-the-New-Econ... 10/12/2015 League of California Cities - Vacation Rentals Page 1 of 2 Strengthening California Cities through Advocacy & Education Home > Policy & Advocacy > Hot Issues > Vacation Rentals Vacation Rentals Background Resources In the News ' Ordinances League of California Cities' staff recently sent a request to member cities to determine the level of interest in forming a staff -level working group on the issue of vacation or short- term rentals in residential neighborhoods. Member response showed a high level of interest in discussing this topic, so a Residential Vacation Rental Working Group was organized. The group has held several conference calls to discuss the impacts cities have experienced resulting from the increased popularity of these rentals, and related issues such as the effective collection of city transient occupancy tax related to the rentals. In addition, the League has received inquiries on this issue from cities and other , interested stakeholders, and is aware of the continuing media coverage on the growth of residential vacation or short-term rentals throughout California. This webpage contains resources for cities on this issue including recent news articles and ordinances.that various cities have adopted on this topic. EXHIBIT NO. 114 http://wvt w.cacities.org/Policy-Advocacy/Hot-Issues/Vacation-Rentals 10/12/2015 Petaluma, Napa lay out vacation -rental rules North Bay Business Journal#dHutlSdaK6ft... Page 1 of 3 BusiT ness Journal NORTH SAN FRANCISCO BAY AREA: SONOMA, NAPA AND MARIN COUNTIES HOME NEWS NORTH BAY WINE INDUSTRY LEADS & RESEARCH OPINION RESOURCES EVENTS CONTACT 0OMIh1t AN UNIVERSITY OF CALIFORNIA 1N PARTNERSHIP 1n1TH BOON PASS), Avvy Search SEARCH SUBSCRIBE TO THE NBBJ Richard Dawkins Ja,-Nim Pc -Pin Ted Koppel Isabe4Aasnde Otmla Sletnam Patti Smith LECTURE SERIES 2016 BOOK OF 110 0. ADVERTISING OPPORTUNITIES Petaluma, Napa lay out vacation -rental rules Fly Nonstop from Wine Country It, Ilk 1!1 **L CO11.11' YAP, alaskaalr.com 800.2527521: TM' 606 682.2221 LOS MGM'. • 1 �ooV!1 S.n wMCI .- Len Slrefs. Fly STS Charles M. Schulz- Sonoma County Airport (STS) r� We're Working On Your Railroad! A vacation rental on a private lane off Chalk Hill Road outside of Healdsburg, (Chris Hardy\ Far The Press Democrat) BUSINESS JOURNAL STAFF REPORT November 6 2015, 4.39PM Order Article Reprint Sponsored Content top honors. Another Round of Top Honors For This Hospital: A Testimony to Extraordinary Care By Lucile Packard Children's Hospital Stanford In the U.S. News & World Report 2015-16 Best Children's Hospitals survey, Lucile Packard Children's Hospital Stanford has again received Petaluma and Napa have become the latest North Bay locales to put rules in place over how homes are rented to vacationers. Applications for short-term vacation rental permits are available now from the city of Petaluma, and will be available from Napa shortly after Dec. 3. In recent months, the counties Sonoma and Napa have been revisiting their approaches. The Petaluma City Council approved a vacation -rental ordinance in September. It allows all or part of a residential property to be rented out for stays of less than 3o days. The ordinance took effect Oct. 14, and enforcement will begin Jan. 1. EXHIBIT NO. 15' f ® a' SIGN UP FOR OUR EMAIL NEWSLETTER REGISTRATION W .NOMINATIONS Top Real Estate Projects in the North Bay Awards nominations due Nov 11, 2015 Health Care Conference Et Healthiest Companies Awards Fri, Nov 20, 2015 from 7:30am • 11:00am at Hyatt Vineyard Creek Motel E Spa Wine Industry Awards Tee, Dec 1, 2015 from 4:OOgn - 6:30pm at Hyatt Vineyard Creel. Hotel & Spa Top Real Estate Projects in the North Bay Awards Thu. Dec 12. 2.015 from 4:00pn1. 6:30pm at Sheraton Petaluma Coverage in Depth Cyber -crime, malware Warren Capital fraud case The Buck Institute research on aging Emergency trauma care Most Read Stories Today This Week Medical marijuana manufacturer expands A New crowdfunding rules seen as wine -direct boon Evy's Tree makes a Noodle something special Santa Rosa -Orange County flights to start in 2016 http://www.northbaybusinessj ournal.com/northbay/sonomacounty/4717549-181/petaluma-... 11/9/2015 Petaluma, Napa lay out vacation -rental rules 1 North Bay Business Journal#dHutlSdaK6ft... Page 2 of 3 'Petaluma's short-term vacation rental program was developed over two years, with extensive input from residents on both sides of the issue," said Ingrid Alverde, Petaluma's economic development manager in a statement. "The program was designed to preserve the unique character of Petaluma's residential neighborhoods, while allowing property owners to benefit socially and financially from the growing short-term vacation rental trend? Short-term vacation rental "hosts" — property owners or designated managers — must follow specific guidelines regarding the rentals and complaint procedures regarding their neighbors. Hosts must have the required Petaluma permit and business license to rent all or part of a residential property to a guest for few than 3o days. Permits cost 8307 per calendar year, and the business license costs 846 for the first year, followed by an annual renewal fee. Hosts must also pay transient -occupancy tax monthly. The program limits the number of guests to two per bedroom, plus an additional two overnight guests. Hosts must also provide sufficient parking to ensure safety and minimize neighborhood impacts in their property's immediate neighborhood. The city's established neighborhood -preservation ordinances also will apply to all short-term rentals and guests. Hosts are encouraged to inform renters of these ordinances and must be available to address violations of these ordinances at all times during guest stays. Hosts with repeated violations will have their permits revoked. Applications are available at the City's Planning Division during business hours Monday -Thursday, 8 a.m.-5 p.m. The Planning Department is located at 11 English Street, Petaluma, or online at citvofpctaluma.net. Napa short term rentals The Napa City Council approved its short-term rental ordinance Nov. 3. The guidelines are similar to Petaluma's. Applications will be available online after Dec. 3. The fee is 5570, and will be limited to 6o applicants. Once approved, a yearly permit fee will be accessed. Hosts also must pay transient -occupancy tax. As in Petaluma, occupancy is limited to two bedrooms, each with two guests, and adequate parking must be provided. It is also prohibited to use the vacation rental unit for a wedding, auction, commercial function or other similar event inconsistent with the permit. Quiet times are designated as 9 p.m. -7 a.m. Sunday -Thursday and 10 p.m. -7 a.m. Friday and Saturday. The hosts also need to see that renters do not create unreasonable noise or disturbances, engage in disorderly conduct or violate provisions of the permit. The city will provide written notice to all property owners within 500 feet of the conditional approval of the vacation rental. 112 Show Reader Comments Sonoma West Medical Center open for business 22 named far 2015 wine business awards North Bay health leaders to address ACA, other Issues People: Week of Nov. 9, 2015 Vintner tests water -wise waste -to -energy innovation Petaluma, Napa lay out vacation -rental rules PISE1r;T1 St BRINKERu. l:ter'lrip. Global 50)1114MS. SERVING TIrE COMMUNITY'S ACCOUNTING AND BUSINESS ADVISORY NEEDS SINCE 1985 EXHIBIT NO. i .3 Our Network Our Network Find local Businesses K vrsordts) Location- sania rasa, ca Popular SearchesI ,...A te"etcpm Search http://www.northbaybusinessj ournal. com/northbay/sonomacounty/4717549-181 /petaluma-... 11/9/2015 Dan Watrous From: Diane Crane lacopi Sent: Monday, October 05, 2015 4:43 PM To: Dan Watrous Subject: FW: CA city leaders unite behind McGuire's online vacation rental legislation Alice just sent me this... Alice Fredericks Begin forwarded message: From: "Mills, Carole" <Carole.Mills@sen.ca.gov> Date: October 5, 2015 at 9:32:51 AM PDT To: "Alice Fredericks (alice@alicefredericks.net)" <alice@alicefredericks.net> Subject: FW: CA city leaders unite behind McGuire's online vacation rental legislation FYI — Penalties are state enforced and escalate in monetary cost to the vacation rental businesses who list vacation rentals in cities/towns where local ordinances have made vacation rentals illegal. (See below) Carole Mills, District Representative Senator Mike McGuire Carole.Mills@sen.ca.gov 415-479-6612 From: Lindecker, Kerrie Sent: Friday, October 02, 2015 3:20 PM To: Lindecker, Kerrie Subject: CA city leaders unite behind McGuire's online vacation rental legislation For Immediate Release: October 2, 2015 Contact Kerrie Lindecker, Kerrie.Lindecker(a sen.cagov or (707) 319-3654 1 • • EXHIBIT NO. 1(0 City leaders from throughout California throw support behind Senator McGuire's online vacation rental legislation Today's vote urges all cities across the state to take action in support of SB 593 for the 2016 legislative session San Jose, CA — Momentum for a bill that creates a simple solution to a growing challenge — communities being overwhelmed by issues related to online vacation rentals — is already building for 2016 within just weeks of the 2015 legislative session ending. Today, at its annual conference, the League of California Cities — the leading advocate for cities all throughout the Golden State — formally added their endorsement for SB 593 to its 2016 legislative platform. "Home sharing helps countless Californians pay their bills and stay in their homes in the state they love, but the business of home sharing has evolved from its roots of couch -surfing. This is now a multi -billion dollar business run by giant corporations," said Senator Mike McGuire (D-Healdsburg). "Our bill is simple, all it does is make online vacation rental businesses follow local laws just like the rest of us." Today's League of Cities vote solidifies that local governments are firmly behind Senator McGuire's proposal that - would give cities and counties the information they need to collect tourist taxes due to them from online vacation rental businesses. "I am grateful to the hundreds of city leaders who took action today on this common sense solution that will put the share back in the sharing economy," Senator McGuire said. The premise of SB 593 is simple: it will reinforce local Iaws that are already on the books. Where vacation rentals are Iegal, the bill will assist local jurisdictions with the regulation and collection of tourist taxes. The legislation will take the burden of paying the tourist tax off of the homeowner and would require that online vacation rental platforms collect the tax at the time of checkout. This simple action will allow cities and counties to reinvest hundreds of millions of dollars into safer neighborhoods, good parks, strong public schools and smooth streets. Where vacation rentals are illegal by local ordinance, the bill would prohibit online vacation rental businesses from making a rental in that community. Currently, cities and counties have to fight individually with online vacation rental companies to obtain the information they need to enforce local laws and collect taxes on overnight stays. Online vacation rental businesses have been ignoring local laws for years and communities are bearing the brunt of the burden brought on by these mostly unregulated vacation rentals. West Hollywood Mayor Lindsey Horvath has been a strong advocate for the legislation and brought it forward to the full General Assembly of the League of California:Cities today. "The City of West Hollywood, along with communities across the state, supports this bill because it is a practical solution that empowers local governments to make and enforce local decisions. SB 593 prevents a one -size -doesn't -fit -all solution from Sacramento." SB 593 also protects the confidentiality of vacation rental hosts and renters. The legislation mandates strict confidentiality of all rental information disclosed by online vacation rental businesses by excluding all related data from the California Public Records Act. This is the same confidentiality procedure hundreds of cities and counties have with the lodging industry across the state. Additionally, cities and counties will have the ability to opt -in to the state law in order to participate. "We appreciate Senator McGuire's efforts to advance SB 593. This legislation is designed to support existing city and county efforts to address land use and other issues that arise from the temporary rental of residential units, and collect the applicable transient occupancy taxes to support important local services," said League of California Cities President and Rancho Cucamonga Mayor L. Dennis Michael. Other supporters include: California Police Chiefs Association, California Professional Firefighters, California Alliance of Retired Americans (900,000 members strong) California State Association of Counties (representing all 58 California counties), The Rural County Representatives of California (representing rural California counties), 2 EXHIBIT NO. I(() Dan Watrous From: Peggy Curran Sent: Monday, October 05, 2015 8:59 AM To: Scott Anderson; Dan Watrous Subject: FW: STVRs in Tiburon Attachments: AirBnB-Final.pdf; AirbnbExpertPlaybook5 28_15.pdf FYI Margaret A. (Peggy) Curran. Town Manager, Town of Tiburon 1505 Tiburon Boulevard Tiburon CA 94920 1 415.435.7383 From: Colin Crawford[mailto:colincrawford(agmail.com] Sent: Saturday, October 03, 2015 10:59 PM To: frankf&standingstonegroup.com; Councilmember Alice Fredericks; Peggy Curran Cc: Colin Crawford; Vice Mayor Erin Tollini Subject: STVRs in Tiburon Looking forward to the discussion on how to best manage and. regulate STVRs in Tiburon on Tues Oct 13th. I've been continuing to research this issue and came across a couple of reports - the first is from http://www.laane.org and was produced in March 2015 and covers the LA area in particular but is extremely comprehensive - it's not entirely anti STVRs but it calls for better regulation and compliance. EXHIBIT NO. 17 1 From: Elizabeth Selig[mailto:elizabethselig(7sbcglobal.net] Sent: Tuesday, October 06, 2015 7:17 PM To: Patricia Seyler Cc: Dan Watrous; Councilmember Jim Fraser Subject: Vacation rentals Hello Ms. Seyler, Thank you for taking the time to meet with me yesterday, I know you and your fellow officers are extremely busy and I appreciate all the hard work you do for the community of Tiburon. I would like it to be put on the record that as a tax paying and law abiding citizen I feel strongly that the town of Tiburon should be held responsible to enforce the laws that are already in effect. I understand that there is some confusion as to how to handle the recent influx of short term vacation renters in Tiburon and that the town council is trying to decide how to regulate VRBO. I have no objection to a home owner having the right to rent his place while on vacation, as long as he has a permit and pays the daily hotel tax. But I am very bothered that this year 2 condo's in the building that I have lived in for the last 20 years have been sold to absentee owners with the sole intention of renting them out as vacation rentals full time, without permits, without the permission of the HOA and without notifying the rest of the building's owners. Living in a condo where we are in close proximity to our neighbors presents challenges as it is, but we develop relationships and a mutual respect for each other. With short term vacation renters that respect is not there. It is quite disturbing to me to have different neighbors every week, especially rude and cheeky renters that tell me that there is nothing that I can do because the town of Tiburon doesn't enforce the law. I have tried to contact Christian Lagerling, who purchased 45 Harbor Oak Drive #22 on more than one occasion, but my phone calls and emails are ignored. I did meet the owner of unit #12 while she was waiting for one of her renters to arrive, I forgot her name but she was nice enough to tell me that she had no idea that she needed to get a permit and pay a daily hotel tax. She also told me that she was waiting on the final decision from the town council, so she obviously knows the rules and is aware that she is "allowed" to break them. She continues to have short term renters. I went to Town Hall on two separate occasions and spoke with Daniel Watrous, Tiburon planning manager and not only was he not interested to listen to my concerns, he actually told me that if I didn't leave the building he would call the police and have me removed. As I previously stated, I am a tax paying law abiding citizen and I think I have the right to ask the town of Tiburon to uphold the laws that are in place. I do not appreciate being talked to in this manner by someone who is an employee of the town of Tiburon where I pay my taxes to pay his salary. I will take your advise and send a letter to the Marin IJ and the Tiburon Arc. Thank you again for your understanding. Respectfully, Elizabeth Selig 415 994 6906 EXHIBIT NO. 1B Dan Watrous Front: Terry Hennessy [terrysjewelry@comcast.netj Sent: Wednesday, October 07, 2015 3:09 PM To: Peggy Curran Cc: Cres Van Keulen; Ken James Subject: Short Term Rentals Dear Mayor Doyle and Councilmembers, As you consider whether to continue your ban on short term rentals, may I bring an issue to your attention. I have been a resident of the Point Tiburon Marsh Homeowners Association since 1987 and originally moved to Tiburon in 1967. Occasionally owners rent out their unit for a month or two while on vacation. This has never caused a problem. Earlier this year, a neighbor sold their unit to a couple who live in upstate New York. They moved in with furniture from another Marin apartment, and stayed about 3 weeks. Amidst rumors to the contrary, they assured their downstairs neighbor they would only rent the unit for six months and return to move in permanently. We have had at least 5 different sets of renters since they returned to upstate New York several months ago. The current tenant arrived with a U Haul truck, a car and a motorcycle. They are allowed one parking space. The Town doesn't have any enforcement mechanisms. This .unit on Marsh Road is being rented through a real estate agent. Do you want the Town of Tiburon to be turned into an adversarial neighbors reporting on neighbors community? Unless neighbors complain, the Town is unaware of houses and apartments being rented out. There is no income to the Town. I've looked at the AirB&B website and they cautiously don't list addresses until you dig deeper into the site. Will you waste Town staff's time researching through multiple data bases looking for rentals? What's to prevent the Town from becoming a destination community? Investors will buy up condominiums for the sole purpose of turning them into a business. Why not - it's lucrative. Homeowners will then be penalized by endangering their ability to get mortgages when there are too many rentals in a condominium complex. Point Tiburon Marsh has already reached that threshold. Please uphold your original vote to ban these short term rentals. In the event, the original vote doesn't prevail, please consider mandating that the property being rented MUST BE OWNER OCCUPIED and only rented out a couple of times a year when the family is on vacation. Respectfully submitted, Terry Hennessy 7 Marsh Road Tiburon, CA 94920 1 EXHIBIT NO. 141 10/8/15 Dear Tiburon Town Council Members, ra)E@ME 1111 OCT 12 2015 PLANNING DIVISION Regarding short term rentals, I appreciate that the Tiburon Town Council wants to keep current with trends, technology, and the share economy. There are good reasons for using social media, Nextdoor, and even Airbnb, at times. None of us should close our minds, or our doors, to these activities. That said, the Town Council also needs to review the flip side of these ventures; polls that are not what they purport to be, and, more importantly, a flow of cash and real estate ventures that favor investors. First, I would Iike to comment on the polling aspect: Nextdoor.com purports that 78% would favor it with some regulation. As you may recall from the September 2 Town Council meeting, the Nextdoor.com survey rankled me. I have worked in survey design for transportation studies since acquiring my PhD from Penn. When I read a poll, I ask who commissioned it, and was it done fairly? Nextdoor.com is not a random sample of the community; the people who subscribe to Nextdoor are younger, newer to the community, and more computer savvy than the average Tiburon resident. It is not representative of the community. Speaking of the community, I had the pleasure to know our resident survey expert, Mery Fields, before he passed away. I am a member of AAPOR, the American Association for Public Opinion Research and its Pacific Chapter. [ doubt that the Field poll would have approved of how Nextdoor executed the online survey. One response required a (yes/no) about sharing your property (rights) and the second response was a (yes.. under certain circumstances). You should know that after the Sept. 2 meeting, the "owner" of this online poll contacted me via email. He then surreptitiously changed the poll's wording. The poor execution of the poll and the wording changes suggest there is a serious, backroom effort to hijack public opinion. On a bigger scale, I hope the Town Council will ask who is pushing the agenda forward. Are they acting as single, highly engaged owners, or as a more organized cadre of interests? At the council meeting in September, it seemed that it was the engaged owners, seizing the moment. More than one speaker remarked an Airbnb rental would benefit their children by offsetting the costs of a family vacation abroad. I doubt that is the full story. I used to live in Los Angeles to the South, and it has become a popular Airbnb town. In the (attached) article from LAWeekly, note the proclivity of investors to purchase EXHIBIT NO. 'ti well -located rental stock, so that they can "turn -it -around" for Airbnb tenants. The Airbnb rentals are more profitable for landlords than standard fixed -term leases. Unfortunately, a steady stream of hotel -like visitors does damage to the neighborhood and community. It also drives up the cost of fixed -term rentals, a trend currently happening in San Francisco. Airbnb does have some benefits though - it fires up the residential sales market and the resulting tax -base. Airbnb rentals are a multi -faceted issue, and zoning, property rights, neighborhood cohesion, and real estate speculation all come into play. In closing, let me say that if the Town Council is serious about preserving the local community, it will scrutinize both the short term polls and long term residential impacts. Sincerely, Jane Gould, PhD 2040 Centro East info@janegould.com Encl: LA Weekly on Airbnb. dated 2/22/15 EXHIBIT NO. '2b Town of Tiburon Vacation Rentals / STVRs (Short-term vacation rentals) A Short-term Vacation Rental (STVR) is a residential property that is rented for less than 30 days. Sites used to facilitate STRs include airbnb, VRBO/Homeaway, FlipKey, and Craigslist etc. Goals of AdHoc Committee Members - Frank Doyle, Alice Fredericks Other participants - approximately 25 members of the public representing different points of view on the issue (This is how the Ark reported the goals of the adhoc committee - but it would be good to confirm) A compromise that preserves residents' option of renting out their homes for short periods, several times a year while discouraging the proliferation of high -turnover units by absentee property owners. The initial proposal by the Town of Tiburon Planning Commission created a set of recommendations to allow STRs: 1. Change the term " seasonal rental unit" to " vacation rental." [or use the term short-term vacation rental (STVR)] 2. Require adequate on-site and/or off-site parking as a condition of approval. 3. Require a 7 -day minimum for any vacation rental. [why set a specific number - as already looking to reduce the activity by professional renters] 4. Do not allow permits to be issued for properties with commingled rights (common areas, pools, access, parking, etc.) with neighboring units, unless there is unanimous consent among property owners or there are written CC&Rs in the case of a EXHIBIT INTO. Zi Colin Crawford Memo October 11, 2015 condominium or townhouse complex. 5.Require committee to submit an annual reporting statement to the Town. 6. Require courtesy notices to be sent by the Town to neighboring property owners prior to issuance of a vacation rental permit. [how are neighbors defined —within 100 feet, 300 feet?] 7. Increase fees and penalties to recover ongoing costs of enforcement. S. Allow permits only for homes that are the " primary residence" of the property owner. [goal is to try and eliminate the commercial / professional renter] With the exception of Commissioner Kulik, the commissioners appeared generally in support of regulated STRs. Their initial approach covered a lot of the core issues, although with all the additional input that's been received, plus the recent analysis and actions of different CA jurisdictions it is suggested that a more comprehensive set of suggestions based on community input be submitted for further consideration. Town of Tiburon Planning Commission members: - Commissioner John Corcoran - Commissioner Lou Weller - Commissioner Erica Williams (Vice Chair) - Commissioner David Kulik (Chair) - Commissioner Jon Weiner Data on current popularity of STVRs It is important to try and get some solid estimates of the number of units; the number of units, number of days units rented, average rental prices, occupancy levels both in total and by neighborhood to better understand the scale of the current STVRs. Colin Crawford Memo October 11, 2015 2 EXHIBIT NO. G A quick review of the sites shows that the two main sites airbnb and Homeaway (which includes VRBO) each list around 50 - with significant overlap across the sites. Airbnb (showing 45-47 listings - not all maybe active http: //bit.ly/1 Qj QVum http: //bit.ly/1 FZDcJg Homeaway (approx. 50) http://bit.ly/1 GDCNa5 VRBO. http://bitly/1L6MIJf Flipkey 4 listings http : //b itdy/ 1 LI GcvJ Craigslist No STVRs - only long-term rentals currently being listed This data shows the approximate scale of the STVR operations in Tiburon and can be use to estimate the economic benefit to the local merchants and the opportunity for TOT and permit revenues to the Town of Tiburon. This data could be requested from the STVR platforms for 2014 - as they had to provide 1099s to the IRS. However, indications are that the STVR platforms are reluctant to share any data on individual property rentals Examples: Based on an estimate of 100 units, renting an average of 25 per annum times at an average daily rate of $200 with a 10% TOT - income $50,000 . Colin Crawford Memo October 11, 2015 EXHIBIT NO. 2 ( 3 Assuming an annual permit fee of $250 plus an application fee of $25 - on permits of 200 units - income estimates $27,500 Economic benefit to town - 2,500 days of unit rental assuming an average of 2 people per unit spending $100 on food, restaurants and other activities - spend in Town approximately $500,000 plus sales tax. The above are just very rough examples and can be fine tuned as more data is obtained. Obtaining information from the local Chamber of Commerce on the sentiment towards STVRs from local businesses and if they believe such visitors make a significant economic difference would be helpful. Application procedures and rules The goal is to draft a set of regulations that are clear, transparent, not over complex but enforceable. Regulations that gives property owners flexibility in renting out their property while protecting the rights of neighbors to the quiet enjoyment of their neighborhood. It is recognized that issues vary significantly by location and type of property Application / Permits Set non-refundable application fee of $xx [Maybe waive the fee for 90 days to encourage prompt registration] Annual permit fee of $xxx (simplified annual renewal required - if no complaints received. [Maybe waive the annual fee for those applying during first 90 days of the program to encourage registration] License / permit cannot be transferred on property sale Colin Crawford Memo October 11, 2015 EXHIBIT INTO. 2 Consider setting number of available licenses by neighborhoods? (High-density area issues to be considered, based on the neighborhood logistics) [Maybe too complex and impractical - Condo complexes already regulated by CC&R and HOA regulations - higher density SFH areas such as Old Tiburon to rely on complaints procedure for enforcement] Provisions to notify nearby neighbors prior to approval of initial [May be overkill - do not want to give the neighbors a power of veto without cause if notification is to take place - how is a neighbor defined - within what distance?] Permits only to be issued for primary residences - investment properties to be excluded? [Need to define primary residences - is it necessary to exclude investment properties given the other proposed restrictions of total number of days etc.] Non standard residential units - houseboats, airstreams etc. to be included Recommend no limit on minimum days to - rather focus on the total number of days a unit can be rented in a year - such a restriction will discourage professional / commercial activity. Set number of days a unit can be rented in total in a year to be set (90- 150 days). [To be a reasonable number, but one that discourages full time STVR activity by commercial entities] Ban on STVRs where common shared areas, pools access, parking etc.) Unless unanimous consent [Issues around Condos are more complex but should be covered by CC&R and HOA rules] Colin Crawford Memo October 11, 2015 EXHIBIT NO. 2 / Ban on parties, weddings, events and commercial activities Limit on number of guests based on available accommodation (2 per bed maximum - number to be stated as part of allocation process. Set maximum number of "guest" per property - definition of guests to include "visitors" to prevent abuse?) Should property owners to use best efforts to obtain information on all guests. [Hard to enforce and may be impractical but offers property owners some protection - maybe enough to focus on the primary renter.] Transient Occupancy Tax of 10% to be Levied by STVR platforms or with the annual returns. Wherever possible to be automatically collected by the STVR platforms and remitted to the Town Fee structure and stiff penalties for violation to be established, including revoking permit if certain number of legitimate complains received [Enforcement policy - strong. medium or mild? Active enforcement or complaints based - three strikes rule?] Recomrnend: All STVRs to have proper instructions and guides covering: o On / off-site parking o Instructions for trash disposal o Fire precautions and other emergency procedures o Emergency evacuation procedures including traffic routes (earthquake and other disaster preparedness). Survival kits etc., o Town ordinances regarding noise, smoking etc. o Good neighbor conduct rules Colin Crawford Memo October 11, 2015 EXHIBIT NO. 2 6 o Emergency contacts who are able to receive calls any time of day or night if owner not on property Recommend: All SVTR rentals to be encouraged to follow safety procedures o Smoke alarms, Carbon Monoxide monitors o Fire extinguishers o Medical Kits o Earthquake survival kits o Safety card, how to turn on/ off utilities etc. Renewal process o Fees and license to be paid o No outstanding ordinance issues or complaints o Insurance required? o Proof of TOT payments Colin Crawford Memo October 11, 2015 EXHIBIT NO. Enforcement procedures Enforcement is a major issue - whether a complete ban is in place or if there are a set of rules and permits for STVRs. The majority position favors properly developed and enforced regulations.. There will need to be a reasonable level of trust that property owners will correctly report their rental activity. (Reporting for Tiburon business licenses falls into a similar category.) The council has the opportunity to initiate a system of reasonable regulations, to review how it is working over a 1- 2 year period and adjust the rules as necessary. • Rules to be fair, clear, reasonable, easy to access and enforceable Regulations should support the guiding principles of the town for quiet enjoyment of neighborhoods Not be overly onerous on the owners renting their properties Be cost effective for the Town of Tiburon to operate Must be firm on compliance and enforcement o Notices to be placed in the various Town of Tiburon communications channels noting permits for STVRs required o Educate all local realtors / brokers that permits are required so new owners are fully aware of the regulations o Option of inspection visits? o Complaint driven investigations Colin Crawford Memo October 11, 2015 8 EXHIBIT NO. Z o Violation fines or revocation of permits for neighborhood complaints (noise, trash, parking etc. where solid evidence provided - three strikes? o Fines for operating without a permit - potential lien on property? o Revocation of permit or a year suspension for non compliance o Property owners required to have adequate insurance and comply with and mortgage lender requirements o Town to carry -out periodic audits of STVR platform to identify violators Colin Crawford Memo October 11, 2015 EXHIBIT NO. 2 i 9 List of pros and cons for STRs Pros STRs have been a feature of Tiburon's residential zones for many years without major incidents. A review of The Ark's police reports does not show incidents related to STVRs - much more likely to read about neighbor -on-neighbor disputes, loud / late parties etc. Issue of STVRs is not going away - they are already occurring despite the current ordinances. Relying on neighborhood reporting and complaints is problematic. Clear rules on STVRs will remove this practice from the underground economy Good, clear, enforceable regulations not a complete ban is the recommended way forward There are potential economic benefits (see examples above) - attracting visitors to the town supporting local businesses Enforcement can be covered by permit fees and transient tax STVRs provide additional accommodations when local hotels are full - so visitors do not have to stay off the peninsula. STRs can provide additional accommodation during a natural disaster such as an earthquake when people may be displaced from their permanent residents STVRs can provide neighborhood accommodation for those not wishing to stay in commercial areas STVRs allow property owners modest revenues streams for other activities. Especially for those retiring or on fixed incomes 1� Colin Crawford Memo October 11, 2015 EXHIBIT NO.2 STVRs can provide companionship for those looking to rent rooms in their properties STVR platforms have greatly improved reviews, ratings and security systems to protect all parties. There are extremely few issues being reported despite the high activity volume - 17 MM rentals in summer 2015 across airbnb alone. Cons There have been a number of issues raised by opponents of STRs. Inconsiderate actions impacting neighbors by property owners or renters should be dealt with and when appropriate, permits revoked. Key issues cited: Community impact, changing the nature of the neighborhood - Neighbors are reluctant to report issues or unsure how to Potential "commercialization" of the neighborhood with investment / business properties Quiet enjoyment of the neighborhood can be impacted and disrupted by STRs o Parking / traffic congestion issues are major issues in certain neighborhoods o Perceived crime and security issues - (although many other services bring strangers into the neighborhood). o Noise issues due to additional visitors Colin. Crawford Memo October 11, 2015 EXHIBIT NO. 2-1 o Trash issues due to additional visitors (Should be noted that the quiet enjoyment of a neighborhood can be disrupted as much by other neighbors as by STVRs) Impact on property values, possible disclosures on sale if STVRs operated nearby? Reduced inventory for rentals and may drive out long-term renters Colin Crawford Memo October 11, 2015 EXHIBIT NO. 2-1 12 Benefits of booking via STVR hosting -platforms Trust and reputation Reviews and recommendations Low service charge 3% (6-12% to renter) Platform collects money Platform has details of property owners and renters Insurance coverage (but limited and requires claims first on host policy) Platforms can automatically collect hotel, transient taxes Colin Crawford Memo October 11, 2015 EXHIBIT NO. 2"1 13 TO: Tiburon Town Council members FROM: Barry Wilson RE: Short-term rentals in Tiburon At the recent Town Council meeting I Beard many arguments about the economic advantages of conducting short term rentals and promises that short-term renters would be held to high standards of good behavior. But I believe that inevitably bad experiences will also occur: • Good neighborhood relations can be difficult to maintain. But it is a powerfid incentive to good neighborly behavior if both parties know they'll see each other next day, next week and next month. Short term renters have a different perspective and owe nothing to the neighbors. It is much less mortifying to disturb your next door neighbor with loud noise and rude behavior if you'll be leaving in the morning and never returning. There is rich history behind the phrase, "What happens in Las Vegas, stays in Las Vegas." • The majority of homeowners are responsible people and want to avoid causing trouble for their neighbors. But while a homeowner is vacationing in Europe, he is unable to monitor his tenants' behavior. In commercial activities, such monitoring is done by the hotel front -desk With house rentals, the responsibility to complain falls to the neighbors. Whether they want to or not, their recourse is to call the police. The police must undertake hotel front -desk complaint duties. • The Tiburon Police will respond to complaints but have limited power and can be directed by tenants to get off their property. • To those who favor this policy change, please ask, "What if short-term rentals were proposed for the house next door to you? Or, suppose a series of short-term renters began at the house next door with frequent loud parties. Would you feel differently?" • Permitting short -terns rentals is tantamount to lifting zoning restrictions. Zoning was created in response to the inherent differences between commercial and private activities. Commercial districts exist to confine those disruptions to known, clearly - identified areas. • Tiburon --especially Old Tiburon and Lyford Cove have highly unusual lots. Veiy small and close together both side-to-side and front -to -back You are cheek -by -jowl with your neighbors and often their actions are visible or audible or both. • Absence of evidence (widespread complaints about short-term tenant behavior) is not the same as evidence of absence. At least, solicit the experiences of neighbors who have lived next to frequently rented houses. Many have personal stories but didn't want (or know who to whom) to complain. • Sausalito has banned short-term rental activity. Why? Might it be that their higher tourist profile has already generated sufficient complaints that the Town Council was moved to action. We should reach out to see what motivated their decision. While I am sympathetic to the urge to increase cash-flow andf nance that trip to Europe, I am skeptical that allowing short-term rentals in Tiburon will prove an unqualified boon for those who wish to reside in peace in our tightly packed neighborhoods. -Barry Wilson EXHIBIT No. ___ From: Colin Crawford[mailto:colincrawford@gmail.com] Sent: Tuesday, October 13, 2015 10:46 AM To: Peggy Curran; Councilmember Alice Fredericks; frank@standingstonegroup.com Cc: Colin Crawford Subject: STVRs - professional landlords Importance: High I received the agenda for this evening's meeting. Thanks, it should be a most interesting one. A number of people have brought the issue below to my attention privately and may raise it tonight. Even if they do not, I think it's important that the adhoc committee works out how to handle this. It's a very different situation to someone renting out an occasional room or their whole home when they travel for a month or so. I believe it goes to the heart of one of the most important and possibly contentious issues around STVRs in Tiburon. Therefore, I wanted to ensure you have time to give it appropriate consideration. Hosts Lisa and Steven Wear - Belvedere residents are professional landlords with 9 properties around the world - see http://www.tiburonlanding.com/about-us-1.htm1 and http://www.jarrellandassociates.com Three of these properties are in Old Tiburon area. Neighbors in the the Solano area of Tiburon where the properties are located seem to complaining about the disturbances - traffic /parking issues etc. I do not know if there have been specific complains about the renters in these properties. The hosts appear to conduct their business very professionally. According to the listings — the hosts are collecting TOT directly from the renters. They may be one of the few with a permit from the Town. https://www.airbnb.com!rooms/12046 https://www.airbnb.co mho° ms/12047 https://www.airbnb.comIrooms/11936 The question is should the Tiburon rules on STVRs place any limit on the number of properties an owner can have and make available for rent in an area ? When you have three properties all in a neighborhood such as the densely populated Old Tiburon area then the commercialization of a neighborhood argument has more substance ! In the end, it will come down to enforcement no matter what rules end up being put in place, the Town needs to have a clear position on compliance and enforcement. See you later at the meeting. Best, Colin EXHIBIT NO. 23 Dear Mayor Frank and all others participating, Thank you for opening up the discussion to members of the community --that is what good local government is all about! I think there are things that most of us can agree on; here is my take: • Focus on the Trouble -makers without throwing the baby out with the bathwater. We agree that most short-term rental owners are not causing problems with their neighbors, and we acknowledge that a tiny minority is responsible for most of the complaints. It is important that the Town not unncessarily over -regulate, harass, or drive underground those property owners who are not bothering their neighbors. To the extent possible, nuisance issues should be addressed the same way any other nuisance is dealt with. 0 0 1 can tell you that long term renters are not immune from being a nuisance, and because they are there to stay, the consequences of that can be even worse. In the 1990s I owned a house on 2177 Centro East. Every weekend, there would be loud drunken parties just up the hill from my house at 2180 Vistazo East, making noise until 3 or 4 in the morning. I had to call the Tiburon PD just about every weekend to get the people at that house to pipe down. It turns out the owners, the Denebeims, had two college age daughters, and they used their parents' house as a party platform just about every Friday and Saturday. I had many sleepless nights for about 5 years, when I decided to buy another place in Tiburon. It turns out the Denebeims were selling that house, and so I bought it from them in 2001, much to the relief of all of my current neighbors. To this day, my neighbors enjoy peace and quiet, even with my occasional short term renters, unlike the situation with the previous owners. My point is that a long-term rental can be worse than short term. There are never any guarantees and long term rental is no panacea. A Point system should be implemented to keep track of properties that cause problems. After 3 strikes, the Town should focus its enforcement efforts on those [hopefully very few] nuisance property owners for further enforcement. This would reduce the Town's enforcement burden, from 50 or so properties, to just one or two [until they go away]. • If the Town hopes to have more than 7 permit holders, it is vital that the Town makes a very public P.R. effort to communicate to short term rental owners without scaring them away, to make them feel secure EXHIBIT NO. VIP that if they sign up with the Town, that the permit application process will be simple, fair and impartial, and that the Town isn't going to reverse itself and yank their rights away in the future. I would recommend that the initial permit be VALID FOR 10 YEARS, with the right to renew the permit every 10 years if there are no significant violations. Those Tiburoners that are against short term rentals might initially have a gut reaction that this would be a bad idea, it can be explained to them like this: By granting a long term permit, this provides a CARROT, that is, an incentive to apply for the permit, since this would reduce the threat of uncertainty (a major reason right now for not applying), and secondly (more importantly) A STICK, the threat of revocation for violations would carry a much greater weight and be of much greater consequence. Keep in mind, the 10 year permit would only be valid as long as the permit holder did not create a nuisance for the neighbors. That would be a very powerful incentive. The longer this license period would be, the stronger would be the incentive, and conversely, the shorter the period, the less the incentive. And it would help quite a bit if the rules and regulations were as simple and as unrestrictive as possible (while also accomplishing the Town's goals of restricting purely speculative renting of properties). The more restrictions you place on such rentals, such as minimum number of days rental period, or maximum number of rental days per year, the FEWER permit applications you will obtain. If you keep the rules simple and unrestrictive, make the permit application easy, and promise to grandfather present permit holders in case of future changes of policy, I think you'll see a rush of permit applications, which will make them more responsive and better owners. • The Town should reduce the TOT to 5 percent. Again, those opposed to short term rentals might have a gut reaction against it, but the goal here should be to encourage participation in the legal Permit process, not to discourage it. (The Town could slowly ratchet up the tax in later years). Clearly, when less than 10 percent of homeowners have permits, the Town is doing something wrong. (1) the price is too high. (2) the Town is portrayed in the ARK and other newspapers as being rabidly anti -short term, so property owners are scared off, (3) the permit process seems EXHIBIT NO. _z(-1 difficult and convoluted, which is a P.R. problem that the Town can solve by creating a web page explaining the permit process, and making clear that it is easy and straightforward provided that the permit applications make a "pledge" to be good neighbors and follow basic common sense guidelines. think that people who are anti -short term rental can be convinced that a lower TOT would be to their benefit, since it would bring more homeowners into the licensing program and thus increase the Town's regulatory influence over a greater number of homeowners. • While I agree that "no commercial use" and "no weddings" might be a good policy, I think this can be accomplished simply by establishing occupancy limits. However such limits ought to be scaled so that smaller units can have a slightly higher density, and larger houses, a smaller density, because there will always be the situation where you have families with three kids, and it just doesn't make sense to force them to rent a 3 BR house. I'd recommend the following scale: 1 BR - 3 persons 2 BR - 6 persons 3 BR - 7 persons 4 BR and up - 8 persons for occupancy of 9 or greater, a temporary use permit must be obtained. That being said, if the Town Council wanted to prohibit "commercial use", "weddings", and the like, I would support it, since I think it's just common sense, but on the other hand I'm opposed to trying to legislate common sense, and I think the simple occupancy limits would accomplish the same goal. I would also suggest that, whereas the Occupancy Limit ought to be enforced, I would suggest that by community outreach, the Town of Tiburon could communicate "Dos and Don'ts" to property owners, regarding the best practices to "avoid annoying neighbors, receiving complaints, and falling under the special scrutiny of the Town's "enforcement team". This is all PR, I realize, but a little education and PR can go a long way to improve some of the few problems that have occurred. • No off-street parking. It should be a violation of policy to allow bringing more vehicles than can be parked off-street. • Regarding catering trucks: While I think people bringing catering trucks is a stupid idea and this should never happen, this is another case of where we should keep it as simple as possible. The maximum occupancy rules EXHIBIT NO.7 should eliminate the need, since you don't need a caterer for 8 or fewer persons. Common Areas. When someone in a condominium or apartment building or other such structure with common areas wishes to do a short term rental, Whereas I sympathize with people who live in condos with common areas, this is really a matter for the HOAs to regulate through their CC&Rs. In condominiums and the like, it is really the jurisdiction of the HOA to resolve this, NOT the Town of Tiburon. TIBURON SHORT TERM RENTAL HOMEOWNERS ASSOCIATION I'm not the one with the time and inclination to start such a thing, but I think such an association would be a great idea so that homeowners could self -educate and self police each other so that they may be more welcome in the community. I would certainly be willing to contribute, but I travel too much to be able to take the lead on this. Such an association could even provide benefits like insurance, community outreach, and most importantly, regular communication among its members regarding best practices. Sincerely Bruce Powell EXHIBIT NO. 2-`4 Dan Watrous From: Lea Stefani Sent: Wednesday, October 14, 2015 8:41 AM To: Peggy Curran; Dan Watrous; Scott Anderson Subject: FW: Tiburon Vacation Rental Ordinance - Thoughts FYI From: Danny McNamara [danny@swirl.net] Sent: Tuesday, October 13, 2015 10:26 PM To: Lea Stefani; frank@standingstonegroup.com; Councilmember Alice Fredericks Subject: Tiburon Vacation Rental Ordinance - Thoughts Dear Mayor Doyle and Councilmember Fredricks, Thank you again for a productive meeting today. I really appreciate you taking the time and considering these complex issues. Per your request, here are some of my ideas for a future ordinance. (And note, I don't rent out my home in Tiburon, I just love to rent homes in other towns and don't want to be a NIMBY!) Some Parameters 1. Any ordinance needs to balance the rights of homeowners to rent out their property - with their neighbor's right to a clean, safe, quiet residential neighborhood. 2. Any ordinance needs to be easy to understand, abide by, and enforce. 3. Any ordinance should let responsible STR owners thrive AND help neighbors get rid of 'bad seed' STR owners. KISS Solutions The best ordinance will Keep It Simple. Owners rent their homes to make money. Stiff penalties on owners when their quests break town rules will ensure owners screen & apply stiff penalties to their quests who break rules — thus fewer bad seeds. 1. Require VHR Permits. Max $100/year. Can't be so expensive that it becomes prohibitive for person who wants to rent their home once a year will skirt this rule (or waive the requirement for people who rent out home less than 2 weeks a year). STR owners will need to renew permit annually. Permit is for 2 occupants per bedroom. Parking is for # of off-street parking spots they have. Owners must put permit # on any VRBO / AirBnB listings. Permit includes # parking spots, # of guests allowed (2/bedroom), local contact phone number, and Zink to town rules and fines. Owner must also display permit and rules and regs on back of front door when renting home (Lists town noise ordinance, fines, parking and number of guests allowed, etc.). The town can easily check the STR websites and email the owners from the listings to notify them of the rules and fines if they don't abide by them. Do this once a quarter or so. 2. Collect 10% TOT tax. Owners must pay quarterly. (Send bills to all owners once / quarter.) Helps pay for enforcement & perhaps some town improvements! 3. Implement Three Strikes Rule. Anyone whose property has 3 violations/year will lose their STR permit for 12 months. Each violation could include a fine too. Since these complaints are typically calls to the Tiburon Police Dept and the police dept decides whether people are too loud, blocking driveways, etc. It seems it'd be somewhat simple for them to report on. 4. Enforce current town rules. We already have parking regulations, noise ordinances, one way street laws, trash laws, litter laws, etc. We simply need to enforce the existing laws — tell people they exist. 1 EXHIBIT NO. 25 Other Possible Additions 5. Primary residence only or # days / year. Difficult to enforce, and likely the above regs should weed out the bad seeds. But if must, 1 think primary residence only is easier to police/enforce. The other option is that you can only rent for less than X days or Y% of year, but I think this may be unnecessary. I don't really think many people are buying homes in Tiburon just to rent them out. It's just not that type of town. I'd think the properties are much more valuable to people who work in SF and want to live nearby. But maybe I'm wrong. Seems some people in the townhomes were dealing with full time vacation rentals — which I agree I wouldn't like nextdoor to me either! 6. Minimum Stay Requirements. You could have 3/5/7 day minimums, but I think these will be redundant to the above rules and more difficult to enforce — most primary resident owners in Tiburon aren't going to clean out their closets to make space for a 2 night guest anyway. But l do know my longer Tahoe renters typically are the most considerate renters... Sincerely, Danny McNamara Paradise Drive Homeowners Want Ability to maintain property rights. Now and in the future. 1. Want income from unused property/rooms 2. Don't want to be NIMBY 3. Don't want too much government Neighbor Want Keep the residential feel of neighborhood. Nobody wants a hotel next door. 1. Quite nights (due to parties, etc.) 2. Easy parking (no one blocking driveways, etc.) 3. Fewer strangers (crime? Rude?) All Parties Want 1. Likely want tourist income to keep restaurants and shops vibrant. But don't want Fisherman's Wharf 2. Want to maintain property values. 3. Want places where family / friends and selves can stay for short term when visiting / remodeling Council Wants 1. Ordinance that is easy to maintain / manage / fair / low expenses (possibly even revenue generating) 2. Happy constituents 2 3. Beautiful, friendly town EXHIBIT NO. 2- From: Bruce Powell [mailto:bruce@calou.com] Sent: Wednesday, October 14, 2015 1:26 AM To: Peggy Curran Cc: Councilmember Alice Fredericks Subject: re: short term rentals - Good Neighbor Policy Dear Town Council for your reference, this is the "riot act" form that I require every renter of our house to agree to. Each of my renters knows they can lose a $2000 deposit if they annoy our neighbors. That keeps them in line. But honestly, the type of people I rent to are all "high income", and so are mostly "highly educated" and "high class", so I never have a problem. As I mentioned in the last email, I think the best way to improve the situation is, by OUTREACH and EDUCATION to homeowners regarding best practices. And as I said, I think the barriers to becoming a permitted homeowner are way too high (the perceived complexity to apply for a permit, and the perceived likelihood of a permit denial, combined with the high TOT tax rate). If the Town would lower all of these barriers (starting with a reduction in the TOT), I think the Town would have a MUCH higher compliance rate and, not only collect MORE revenue despite LOWER tax rates, but more importantly, have more influence and control over the situation. As long as only 1 in 10 homeowners who do short term rentals are applying for permits, the Town has no control or influence. So, as I said in the last email, the way for Tiburon to increase the number of homeowners to get permits is to ENGAGE them, rather than to scare them away. • Start by running some articles in the Ark, saying the Town is "ready to do business with homeowners with short term rentals". • Secondly, create a web page that outlines the policies and procedures to getting and keeping a permit. And keep those procedures and permits to an absolute minimum, otherwise you will be sacrificing participation. • Third, announce that the TOT will be eliminated or cut in half, for the next 10 years, in the hope to get everyone licensed. • Fourth, announce that permits, once granted, will be valid for 10 years, as a CONDITIONAL PERMIT, subject to the lack of certifiable complaints from the neighborhood. (And to safeguard agains a Hatfield VS McCoy sort of neighbor grudge, that should require as a general rule the objection of at least 2 neighbors, and should still be subject to the review of some council or committee, because even 2 neighbors can unfairly gang up, so we need, in rare instances, some review process). EXHIBIT NO. 24 The purpose and reason for a 10 year [revocable] permit is that, a 10 year license is a great incentive to get one, and once you have it, a 10 year license is a huge incentive to want to keep it by not annoying your neighbors. In 99% of cases - problem solved! Anyway, here's the form I use, see what you think of it. sincerely Bruce Powell EXHIBIT NO. 2'0 From: Alan Lefkof [mailto:ablefkof(agmail.com] Sent: Wednesday, October 14, 2015 1:47 PM To: Peggy Curran; Dan Watrous Cc: Scott Anderson Subject: Good Subcommittee Meeting last night Peggy and Dan Thank you for trying to tackle this difficult online rental situation in Tiburon. The only thing I did not understand was why there was reluctance to discuss the idea of a 28 day maximum per year for online rentals. It certainly fits the mental model of a family taking 2 vacations per year of 14 days each and then getting rental income while they are gone. I really worry about the neighborhood risk even with that lower amount of churn and fear the first time a house burns down on fire or suffers a burglary or a child molestation after an online rental from a bad apple renter or owner. Clearly the people in the audience doing more (or wanting to do more) than 28 day per year rentals, either : 1. Have strong experience as lessors and know how to vet with the online process ----but sadly a minority of the amateur owners seeking rental income will truly learn the vetting process.. 2. Have NO respect for their own personal property and are willing to take large uninsured risks in that property ---they too will eventually learn ! And maybe no respect for their neighborhood either? If appropriate,please pass along this email to the other Town Council members and other staff. thanks Alan Lefkof Treasurer, Marinero Owners Association (132 Tiburon Homeowners) EXHIBIT NO. z7 From: Colin Crawford[mailto:colincrawford©gmail.com] Sent: Wednesday, October 14, 2015 9:50 AM To: frankCa>standingstonegroup.com; Councilmember Alice Fredericks; Peggy Curran Cc: Colin Crawford Subject: adhoc meeting follow-up Thanks for hosting the meeting last night. I thought it was very productive and look forward to your report to the council on November 4th My takeaways were that there was general agreement on eliminating the commercial activities while allowing reasonable activity by residents who want to rent out a room (home -sharing) or to travel and use the additional income to fund that activity. The long-term concerns over the potential to change the neighborhood character were noted but I believe this fear can largely be eliminated by good, enforced regulations. It was recognized that each neighborhood had different characteristics - density etc but that it would be nearly impossible to set different rules for each neighborhoods - such as set -back regulations. There was general agreement that enforcement would be a challenge and that any enforcement rules needed substantial penalties. Hopefully most of the enforcement will be the responsibility of the property owner who should be required to clearly post rules of stays and reference local ordinances. Some key elements to be incorporated into the regulations: - primary residence requirement (to eliminate multiple investment properties) - limits on number of days for renting full properties (quite a wide range on this - I favor 75- 90 but there was a push toward a lower number - I don't think it should not be less than 62 days) - current airbnb average is around 68. I do not support a minimum stay rule. - annual permits (and initial application - fees to be determined - I'd favor low fees to eliminate registration hurdles) I support a regulation that requires a permit number to be referenced on all listings). Permits should require the listing of local contact to deal with any issues. - enforcement procedures (the devil will be in the details - I'd support significant fines - $500 per day for major violations - similar to San Diego). I'd support maximum occupancy limits - say 10 and a ban on "commercial" activities such as company events, wedding receptions, etc. There needs to be a clear process for filing complaints. home -sharing to be treated differently to renting out full properties -(I recommend home - sharing is not subject to a cap - or if the STVR cap is reasonable at say 75 days that will probably cover all the likely home -sharing activity too). I don't think home -sharing should be totally exempt. - all rentals to be subject to TOT EXHIBIT NO. 28 - one year trial and review to determine what's working. There was a lot of "hope" from council members that the proposed / revised CA state legislation SB 593 will solve many problems by requiring more accountability from the hosting-platofrms. I hope that comes to pass in the same way CA forced Amazon to collect sales tax. However, I'm sure the hosting platforms will resist. If you need someone to be the enforcement officer - happy to offer my services for a reasonable fee ! Again, thanks for conducting this process in a very transparent and open way and bringing in the community to provide commentary. Best, Colin Colin Crawford 137 Geldert Dr Tiburon, CA 94920 EXHIBIT NO. 1 From: Colin Crawford[mailto:colincrawfordOgmail.com] Sent: Wednesday, October 14, 2015 10:18 PM To: Peggy Curran Cc: Councilmember Alice Fredericks; frankOastandingstonegroup.com; Colin Crawford Subject: STVRs - compliance issues As a follow-on to last night's meeting On the compliance issue - The private residence issue is interesting but has a few wrinkles - in the case of Bruce Powell - he was at the meeting last night and appeared very reasonable - claims to travel most of the time but in reality his principal property at 2180 Vistazo East is rented full time at at average daily rate of over $600 per day. It's posted on all the vacation rental sites and the calendar is open for the year ahead. https://www.airbnb.com/rooms/13421 http://www.homeaway.com/vacation-rental/p221483 http://www.vrbo.com/208857 https://www.flipkey.com/tiburon-vacation-rentals/p453828/ He also has a property in Tahoe. I believe he has a permit - generally he seems to be a "good actor" yet it's hard not to see his current activity as commercial in a residential neighborhood. In this case from a neighborhood perspective I can see how some would argue for a lower total annual days limit If there is a limit of say 75 days - it's still a nice earner for him but not a lucrative as it's been to date if he tries to rent out full time - although in reality the months of May to Sept are the ones where the activity will happen. Will be interesting to see how the Town addresses such a situation. Fascinating ! Best, Colin Colin Crawford 137 Geldert Dr Tiburon CA 94920 EXHIBIT NO. From: Ulrik Binzer[mailto:binzer(ftostcompliance.com] Sent: Wednesday, October 14, 2015 12:29 PM To: Peggy Curran Subject: Following up on last night's short-term rental meeting Dear Peggy, Thanks again for allowing me to participate in last night's ad-hoc committee meeting on possible ways to regulate short-term rentals in Tiburon. As you know I have been a big advocate of sensible, fair and balanced regulation of short-term rentals since this debate started, and as requested by Mayor Doyle, I just wanted to follow-up with you with some additional thoughts for the Town to consider as it work with the Town Council to draft up the new regulation. Suggestions to consider for inclusion in the final rules: • All hosts must be primary residents of the listed property (no absentee owners allowed) • Hosts are only allowed to rent out their homes on a short-term basis for 75 days per calendar year • All hosts to have a valid permit (as is the case today) and liable for a large fine ($1000 per day) if they are caught using or advertising their homes for short-term rental use without having such a permit. • Make it a condition of all permits for hosts to include specific language in their lease agreements and property descriptions that address the following topics: o The maximum amount of people allowed at the rental property at any given time is equivalent to the amount of permanently installed beds in the home (this way we can avoid guests having large parties) o All guests cars/motor cycles etc. must be parked either on the property's designated parking spaces or parked at public parking areas (this way we can avoid guests parking their cars in a way that it is inconvenient to the neighbors) o By leasing the property, the guest agrees to adhere to the Town of Tiburon's rules, regulations and ordinances including the towns sound ordinance (this way we can make sure that renters are aware of their obligation to respect the local rules and regulations) o All rentals are subject to the 10% Transient Occupancy Tax o Any violation of the rules above can result in immediate eviction of the guest and a fine to the host of no less than $1000 To see an example of how these principles have been incorporated in our standard rental agreement, please see the attached word document that you are free to use however way you want. On another note, I also wanted to follow-up on our brief conversation after the meeting about the possibility of having my newly founded company Host Compliance EXHIBIT NO. 29 (www.hostcompliance.com) assist the Town in monitoring and enforcing its existing short-term rental regulation as well as the future rules the Town Council may decide to implement. As a resident of Tiburon I would be more than happy to offer our services for free as part of a 1 year trial contract. The only thing I would ask for in return would be a bit of input from you on your team on the product and services as well a reimbursement for our direct costs associated with running the program in the town (Le. postage expenses associated with mailing hosts and other incidentals expenses that the Town would incur anyway if it was to run a similar program internally). Please let me know if you think this would be of any interest. I would be available to meet and discuss potential ways for us to help you anytime. Best regards, Ulrik Binzer Founder & CEO Linked profile P (415) 715-9280 M (857) 928-0955 F (303) 200-8502 E binzer@hostcompliance.com EXHIBIT NO. 2--g Original Message From: cathleen gouveia [mailto:ryangouveia(icloud.com] Sent: Wednesday, October 14, 2015 12:23 PM To: Peggy Curran Subject: Thoughts on Short Term Rentals Hello Peggy, I would love to share some points of view with you counter to Air BNB and the other rental sites. As noted, I was not able to attend last night due to our related moving complications. At present, I don't have my wifi set up as we just moved in yesterday to a new home in Tiburon. We've lived here since '98. Please let me know when you need my input by and I will draft something for you as soon as I am hooked up again. Best Wishes, Cathleen EXHIBIT NO. 3(4> From: Colin Crawford[mailto:colincrawfordORmail.com] Sent: Thursday, October 15, 2015 9:30 AM To: Peggy Curran Cc: Colin Crawford Subject: Re: STVRs - compliance issues Let me know - if I deluge you with too much info - you won't offend - however I feel very strongly about getting to a good solution to tackle this important issue. issue. I support a regulated system with strong enforcement and it upsets me to see the abuses that are obviously taking place, by a few "bad actors" - placing "hotels" in local neighborhood and putting burdens of enforcement onto the town while impacting the character of the neighborhoods. This sours the whole system from those who wish to engage in some home-shaing or occasionally renting out their property when traveling. Hopefully a focus on principal private residence (needs to be clearly defined to cover those traveling for a year or two 1) requirement to disclose permit numbers, plus a cap on the total number of days a STVR can operate in the year and all enforced by strong penalties - $500-$1,000 per day for bad offenders will quickly clean up the whole system. There are definite economic benefits to the town for a regulated system of STVRs. Identification of rented properties in Tiburon is a little challenging but it's actually not too difficult - just a fair bit of manual labor. There are some people working to devise technology systems to scrape the hosting platforms and use other methods to double check the address but there are only partially accurate (less than 50%) but hey will improve over time. The hosting platforms don't disclose addresses - although of the three major ones FlipKey gets the closest to identifying the property but cross checks still are required to confirm. At this time compliance requires manual work to build the database of rented properties I'd suggest the Town builds or has built a database of all the current STVRs on the main hosting platforms - airbnb, homeaway, and flipkey but also records those LTRs as well as they have the potential for become STRs - Zillow and other restate portals can help in the identification. In the final analysis STR and LTR are in the 100-150 range - low enough that a manual process can easily be used. Once the initial database is established - updating is relatively straight forward and can be done periodically (perhaps quarterly) along with compliance audits If you want help with this - just let me know. Best, Colin EXHIBIT NO. 31 From: Matthew Le Merle [mailto:mlemerle@gmail.com] Sent: Thursday, October 15, 2015 3:11 PM To: Lea Stefani; Mayor Frank Doyle; Peggy Curran Cc: Colin Crawford Subject: Re: Tiburon Short Term Rental Workshop Invitation Peggy Thank you for facilitating the meeting on Short Term Rentals. 1 have shown the list of items being contemplated (tile "post its") to some others who were invited but not able to attend. For the most part, people seem to feel that this is a very good list of parameters upon which to build a fair and reasonable plus relatively simple regulation. However, most of the people reacted negatively to one specific parameter: 1. The parameter in question is "If you don't have a large set back, your neighbors must agree to you being able to get a permit" 2. The shared view was that since this is a controversial topic to begin with, and since almost everyone in Tiburon is likely to have one neighbor who might not want STR's even if the remaining three or four neighbors agreed, you would essentially be giving a veto to that one neighbor in every case. 3. Meanwhile, since the issue with small set backs is noise and disturbances, these are easily covered both by existing noise and disturbances regulations and also by the three strikes and you are out policy 4. It does appear to be the case, that this parameter would lead to that scenario - every house in Tiburon with small set backs would be held ransom by a single neighbor who chose to be unreasonable for whatever reason One person said it well: "Since the fear of parties and noise is the issue, next thing that will happen is we will need to get every neighbor to agree if we want to hold a kids party, a school party, a labor day or July 4th party, a charitable fund raiser, etc etc. They all create more noise than a six person family renting our house ever would (this was an owner of a small three bedroom house speaking). So that was the only major issue raised by the list as it currently stands that I received Thank you Yours sincerely, Matthew Matthew C. Le Merle EXHIBIT NO. 32 From: Bruce Powell <bruce@calou.com> Date: Thursday, October 15, 2015 at 8:37 PM To: Alice Fredericks <alice@alicefredericks.net> Subject: Re: short term rentals - Good Neighbor Policy Alice, thank you, and I would like to say, I think a Tiburon Short Term Rental Owners Association would be an excellent idea. I don't have the time or energy to take the lead on this (because we travel several months per year), but would be willing to contribute as a board member. But such an organization could go a long way to educate other owners regarding best practices and also do a little self policing of its own members. In the absence of such an organization, I'd be willing to contribute to a PR effort for the Town to bring more STRs [Short Term Rentals] into compliance with obtaining permits. I think the best thing the Town of Tiburon could do would be to declare that STR owners are "welcome", provided they follow certain guidelines consistent with being "good neighbors". The Town should specifically declare that its opposition to STRs is permanently OVER, and that any STR owner that is willing to be a good neighbor is welcome to apply for a permit, and that such permit shall be granted in most cases. The Town should also make it clear that the first year's license shall be provisional and renewal of the license shall be conditional upon a review of complaints. There should be some safeguards against complaints from a sole, single complainant, because we have the occasional Hatfield & McCoy neighbor feuds, so we wouldn't want that to factor entirely into the equation, so I'd suggest that complaints would have to be received from at least two neighbors in most cases. I feel very strongly that the reason there are so few permit applications is because of the perceived risk of applying for an application, and having said application denied. The ARK, and to a lesser extent the IJ, have unfairly portrayed the Town as extremely biased against STRs. These articles have scared off most STR owners, and prevented them from thinking of applying for a permit. For that reason, 1 think requiring permit applicants to obtain approval from their neighbors prior to obtaining a permit would be a very counterproductive idea, because most property owners would be loath to having to contemplate that hurdle and would rather remain underground. The only result of this would be fewer permit applications, which is the opposite of that the Town wants. If you want them to come out from underground, you have to make the permit application process simple, easy and free of uncertainty. Let the enforcement rest on the complaint process, coupled with outreach to permit holders in terms of best practices. Once granted, a permit could be reviewed after one year. If there have been complaints, then let there be a hearing to air the complaints, and also allow the permit holder have a chance to address the complaints and ameliorate the problems. After a reasonable time, If the permit holder continues to be a "nuisance", then revoke the permit and subject the property to special scrutiny regarding enforcement. Meanwhile, If the Town could communicate to STR owners suggestions for best practices, as I have described, (or if there was an Association to accomplish that same goal), I think we can get 90 percent of the STR owners on board with best practices, which would solve 99% of the problems that the Town has to consider. sincerely Bruce EXHIBIT NO. 33