By Robin Nydes
It was the best of times, it was the worst of times. A true story in two acts.
Act One: Around 8 p.m. after a recent neighborhood meeting. An elderly woman (let’s call her Sarah) comes forward to share her story. She says she owns a three bedroom, ranch style house north of Wilshire:
“This city is killing me,” she says in strained tones. “I used to rent my house a few weeks a year to some nice families, then go and stay with my son in Sacramento. That would help me pay the bills as it’s so expensive to live here. Now, because I can’t set up to do “home sharing” where I would stay on a separate floor, I have to sell. How does that help solve the housing crisis?”
Act Two: Around 1 a.m on the eve of the September 10th meeting of the Santa Monica City Council. A woman (let’s call her Nancy) comes forward to protest a new stricter ordinance.
“I’m an AirBnb “Superhost” with over 600 five star reviews.” She explains. “I have 2 bedrooms that I host as a bed & breakfast… I rent those rooms out to different people. Your new rules will cut my income in half.”
The Council asks a couple of questions, is sympathetic to Nancy’s B&B and agrees on the spot to amend the ordinance and allow up to two groups to be booked at a time in the 2 bedroom unit.
Nancy, the AirBnB Superhost, walks away happy. But Sarah, the elderly home owner struggling to make ends meet, feels forced to sell up and leave Santa Monica.
What’s behind these different outcomes? The elderly woman only feels able to rent her home empty, rather than be present in the home on the few weeks a year she would rent to paying guests. But the City has said empty home rentals are illegal. By contrast, the AirBnb Superhost mentioned that she was a widow, her children were grown and had moved out. Those facts combined with the layout of her home and her own comfort being in the house with strangers has enabled her to turn her home into a successful, 600+ reviewed, busy Bed and Breakfast operation, fully supported by the City.
Let’s step back for a moment to look at the City Council’s stated objectives with regards to neighborhoods. They are to:
Preserve the quality, character & charm
Preserve quietude, cultural, ethnic & economic diversity
Limit density of structures, people and traffic, except where needed to alleviate the housing crisis, especially low income housing
Their guiding principal, as stated by Code Enforcement in their September 10th memo to the Council, is:
“…to strike a balance: allowing residents to supplement their income through home-sharing and providing home-share visitors with more affordable accommodations, while deterring landlords from evading rent control laws, evicting tenants and converting residential units in to de facto hostels or hotels, thus removing needed permanent housing from the market, while at the same time changing the character of and undermining community ties in residential neighborhoods.”
With the above in mind, let’s compare Sarah’s situation (if she were permitted to rent her ranch style home for a few weeks a year, which today is illegal) & Nancy’s AirBnb situation (supported by the Council) and how each would impact their respective neighborhoods.
Sarah would rent to between 3 and 5 groups per year at her ranch style home. Nancy would rent to up to 730 groups (1 group per bedroom, year round) in her two bed B&B.
Sarah would rent for between 21 and 35 days a year. Nancy would rent for 365 days per year, if she could.
Sarah’s renters are typically families or couples looking for a place to vacation. Nancy’s renters are typically singles or couples seeking cheaper accommodation.
Sarah moves out of her ranch style home when her renters move in, creating a minimal increase in human density, and little to no increase in traffic density. Nancy, who stays in her B&B and entertains two sets of renters simultaneously, more than doubles both human and traffic density.
Both women are trying to make ends meet in our increasingly expensive city. However Sarah’s situation, currently illegal, aligns much more closely with the Council’s stated objectives, concerns and principals than Nancy’s Bed & Breakfast.
So why is it Sarah feels shut out of the gig economy and is forced to sell, but Nancy is a gig economy winner who has the council’s support? As mentioned above, the wrinkle here is that Nancy is happy to stay in her home as a host, while Sarah cannot.
“Home Sharing” ordinances were driven by the City Council’s desire to stop the “bad guys” from converting apartments and single family homes to virtual hotels and hostels rented 365 days per year, removing housing stock from an already tight market and evading hotel type taxes. But what the Council doesn’t realize they’re doing in the process is creating a blatantly unfair playing field, providing an impetus to accelerate conversion of homes to B&B’s for anyone who can do so (Nancy mentioned she has 4 friends now doing the same), while harming a much larger segment of the population who, like Sarah, don’t want to, or can’t convert their homes to B&B’s, perhaps because they have young children in the house or are caring for an elderly parent. Sarah’s situation is like many in Santa Monica, they live in their homes most of the year and simply want the chance to supplement their income a few weeks per year so they can survive in an increasingly expensive city.
There is a better, fairer, smarter way. Restricted Short-term Rentals (“RSR”), vacant homes available to rent on a restricted basis. Restriction is the key to stopping short term rental abuses while allowing people like Sarah to supplement their income. Some examples of restrictions might be: homes can only be rented by persons, not companies; homeowners must have been resident in Santa Monica for a minimum of a year to qualify; they must prove physical residence in the home for a majority of the year (7+ months per year): RSR’s can only be offered up to a maximum of 4 months per year; no more than one group booked at the same time, and/or a limited bed count; complaints by neighbors about behavior of tenants may result in fines & the loss of an RSR permit. In summary, there are many ways this can be achieved & controlled.
In addition to levelling the playing field between B&B and non-B&B home owners, this should help everyone financially, including the City of Santa Monica Treasurer. The principal renters of rooms via home shares are singles and some couples. Most families searching for a vacation rental, and most couples who can afford it, desire and pay a premium for “the entire house”, not home share, B&B style rooms. Home shares are always discounted versus empty rentals. So the current ordinance puts Santa Monica residents, and the city treasurer, at a disadvantage versus Venice, Brentwood, Pacific Palisades and Malibu. (The proof is in the pudding. As I wrote this I opened AirBnb for Venice listings. Of the eighteen listings on page one, all eighteen were for “the Entire House.” Private home rentals is where the money is.)
It’s time to end this tale of two cities and create a level playing field for all Santa Monicans. To keep the “bad guys” out, maintain the housing stock and character of this beautiful city we love, while recognizing that evolution and innovation in our economy offer ways for many different types of local residents to survive and make ends meet. Sarah, our 70 year old homeowner who is uncomfortable operating a B&B, is not the bad guy. In fact, allowing Sarah to share in the gig economy like Nancy, to do some type of short term restricted rental, might just be the lifeline she needs to not sell, to keep her here, to preserve the cohesiveness and diversity of our neighborhoods and act as a brake on the gentrification that results from increased costs of living, and as a bonus, brings in additional revenue to the city treasurer.
I believe that’s what you call “Win, win.”
Robin Nydes is the Coordinator of Santa Monica Resident Owners Association, firstname.lastname@example.org