Despite strict laws and a dedicated enforcement team, Santa Monica’s battle against illegal short term rentals is essentially a game of whack-a-mole, according to a report by city staff. Online violators use an array of tactics to outwit investigators, including deleting listings during City Hall business hours and manipulating addresses to appear to be in Los Angeles.
Despite hundreds of listings here, only 187 home-shares are actually registered with the city. The report says it is difficult to know the exact number of illegal listings because platforms like AirBnb refuse to provide data to the code enforcement on the number of listings within city limits. In May 2017, an independent data analyst estimated there were 950 AirBnbs in Santa Monica.
Despite the threat of fines, the report found illegal home-shares are a lucrative underground business.
“Airbnb and its hosts have collected over $31 million, or about $15.5 million annually, from rentals in Santa Monica, most of which are illegal,” the report said. The City collected about $4.7 million in transient occupancy tax (TOT) from home-shares during the same time period.
“If in the long term the City is able to achieve greater compliance, the amount of TOT collected will reduce dramatically,” the report said. Code enforcement has collected $81,577 in fines and fees from violators since the law took effect.
Violators often avoid detection by deleting their postings during the day when enforcement staff is in the office and then replacing them late at night or in the early morning hours when potential tourists are awake and booking vacations.
Even those who appear to play by the rules continue to rent out their homes while they stay elsewhere, a violation of the ordinance. In fact, one in five of the 187 licensed hosts are under investigation for operating their homeshare illegally. The percentage is actually down from 30 percent in March 2016. Santa Monica’s home-share ordinance allows residents to list their homes on websites like AirBnb and HomeAway as long as they are present while guests are staying on the property, register with the city and obtain a license.
“Airbnb remains committed to working with the City of Santa Monica to develop a clear and enforceable short-term rental regulatory framework that preserves coastal access for all California families and allows regular people to earn valuable supplemental income by renting out their homes while they are away,” Airbnb spokesman Charlie Urbancic told the Daily Press.
Santa Monica is still in a court battle with AirBnb over the illegal postings. The city of San Francisco settled with Airbnb and HomeAway last May, with the websites agreeing to register all hosts by January, 2018. The San Francisco ordinance requires homeowners to register but they do not have to present during every short term rental.
The day the requirement kicked in, the number of Airbnbs in San Francisco fell by 55 percent, according to tracking by Host Compliance, a company that monitors vacation rentals. An Airbnb spokesman told the San Francisco Chronicle that as of Jan. 16, “every listing on our platform in San Francisco is in full compliance with the rules.”
“Platform accountability has really reigned in Airbnb’s ability to host illegal listings in this city,” said Dale Carlson of ShareBetterSF, a coalition that advocates for regulations on home rentals.
Airbnb is trying a new strategy in Santa Monica, arguing the regulations are in violation of the Coastal Act by limiting access to cheap accommodations by the beach.
Meanwhile, code enforcement has focused on cases involving multiple units (usually apartments) that have been removed from the city’s housing stock and run as short-term rentals instead. The report said 75 percent of all vacation rental cases originated from complaints filed with the city. Last January, the city amended the law to allow enforcement staff to charge violators with the costs of the investigation in addition to fines.
The report found sharing a home with a resident is the cheapest way to visit the city, with an average nightly rental rate of $163. That number is skewed by guest houses which can rent for hundreds of dollars a night. When those are removed from the equation, the average nightly rent drops to $92, according to the report. Last February, the Council banned new guest houses from being exclusively for short term renters on AirBnb or HomeAway.