Planning Commission Holds Public Hearing on Proposed Amendment to Home Sharing Ordinance

In 2019, the City of Los Angeles began implementing and enforcing a new ordinance regulating “home-sharing” (also known as “short-term rentals”), in which people rent out extra space in their homes for guest stays of less than 30 days, often through AirBnB and similar platforms.  The ordinance went into effect last July, and full enforcement began in November.

At the time the ordinance was passed, City Council members said they would continue to monitor home-sharing activity in the city, and would be open to tweaking the new law as time went on, to make sure it addresses the complex issue effectively.  Earlier this year, the first formal proposal for a small change was suggested – an amendment that would allow people who own small rent-controlled properties, and live in the buildings they own, to rent spare rooms in the unit they occupy as their primary residence.

When the original ordinance was passed, it specifically prohibited short-term rental/home-sharing activity in all units covered by the City’s Rent Stabilization Ordinance (RSO), to help guarantee that affordable, rent-controlled units remain available for the full-time housing market and are not turned into hotel accommodations for people who are not residents of the city.

Since then, however, many owners of duplexes and other small buildings, who also live in those buildings (i.e. “mom and pop” landlords), have said it is unfair that they – unlike owners of single-family homes – are not allowed to rent out spare rooms in the units they both own and live in.

So earlier this year, City Council Member Mitch O’Farrell introduced the new amendment to allow owners of RSO properties to engage in short-term rental activities, but only in the units they themselves occupy as their primary residence.

The amendment, if passed, would subject those rentals to the same rules as all other short-term rentals in the city, would limit participation to just 4,000 units across the whole city, and would cap short-term rentals in owner-occupied RSO units at a maximum of 120 days per year (and no extensions to that cap would be available, as they are to hosts in other kinds of short-term rental properties).

The Department of City Planning opened public comments on the proposed amendment in May, and last night held a public hearing, via telephone, to collect more comments before its official comment period ends at 11:59 tonight (Friday, July 10).

Provisions of the Proposal

In an introductory section of last night’s telephone meeting, Planning officials presented the full details of the current home-sharing rules, and of the proposed new amendment, with a series of online slides (available here).  The key provisions of the current Home Sharing Ordinance are:

• Short-Term Rentals (less than 30 days) are allowed only in a unit occupied as the primary residence of the person offering the rental
• All units must be registered with the city, and all advertisements on platforms such as AirBnB must display a valid registration number
• Short-Term Rentals are allowed for only 120 days per year, unless the host applies and is approved for an extension
• Short-Term Rentals are not allowed in in any rent-controlled properties covered by the city’s RSO (which generally includes multi-family buildings built before 1978)

Key provisions of the proposed amendment are:

• It would apply only to owner-occupied units in specific kinds of small rental properties covered by the Rent Stabilization Ordinance (RSO), where short-term rentals are currently not allowed under the original Home Sharing Ordinance (HSO)
• It would not affect any units already eligible under the original Home Sharing Ordinance and which are not subject to rent control (e.g. single-family homes, condos, and newer rental buildings)
• It would permit owners who live in the small rent controlled buildings they own to engage in home-sharing in their own units
• It would not allow short-term rentals in any RSO unit not occupied by the building’s owner (i.e. no vacant or tenant-occupied units could be used for short-term rentals)
• It would only be allowed for owners of duplex, triplex and fourplex buildings, or in the main, owner-occupied house of single family properties that also have an ADU
• It would require those owner/occupants to register their units with the city and follow the same rules and requirements that other short-term rental hosts are subject to under the current Home Sharing Ordinance.
• Owner-occupants would have to provide documentation to prove their ownership and residency within the unit to be used for home-sharing
• Short-term rental activity would still be prohibited in condos and tenancies-in-common, in units in larger multifamily properties, and units that have been removed from the rental market (e.g. via Ellis Act evictions) within the past 7 years
• Home-Sharing in owner-occupied RSO units would be limted to 120 days per year, and would not be eligible for extensions of that limit
• There would be a citywide cap of 4,000 units allowed for short-term rentals in owner-occupied RSO units (according to city officials, this is less than 1% of the total rent-controlled housing stock, and they further estimate that the cap would be well above the number of owner/occupants who would actually apply for home-sharing in their units)
• Only one unit per parcel would be allowed to register for home-sharing by an owner/occupant
• Enforcement would be the same as for other kinds of short-term rental units (including registration, residence verification, investigation of complaints to the city’s 24/7 hotline at (213) 267-7788, etc.)

Arguments in Favor of the Amendment

After the initial presentation, more than 100 callers queued up to comment on the proposal, with each caller receiving 1.5 minutes to articulate their position.  Callers’ arguments in favor of the amendment included:

Owners who live in their RSO properties should have the same rights as owners of single family residences to rent out their spare rooms.  If owners of single-family properties are allowed to rent spare rooms in the units they occupy, as they are now, callers said, “mom and pop” owners of small rental properties should be allowed to do so too.

The spare rooms that would be rented by most building owners, in their own units, are too small to be rented as full-time residences.

Like owners of single family homes, most owners who live in their RSO properties often use their spare rooms for visiting family members, so can’t and wouldn’t ever make them available for full-time tenants.

The income that owners of SRO properties earn from renting spare rooms in their own units can make up for lost income (such as lack of freelance work or job layoffs) during the current pandemic, and can thus help keep those families in their homes, keep them off various forms of public assistance (food stamps, etc.)  and keep them from having to sell their homes or losing them to foreclosure.

Several callers also said that because their long-term rental tenants are also currently out of work and unable to pay their rent, the owners won’t be able to pay their mortgages and other expenses unless they are also allowed to rent out their own spare rooms.

The money owners of SRO properties could earn from renting spare rooms in their own units provides additional income which helps them avoid imposing rent increases for tenants in the units they do rent out, thus keeping their other rental units more affordable and helping provide stable housing for those long-term tenants.

Most mom and pop owners are senior citizens, retirees, divorcees, and working families with modest incomes, and they rent their spare rooms because they have to to make ends meet, not for the fun of it. (“No one cleans toilets because they want to,” said one member of the Homeshare Alliance of Los Angeles, referring to the frequent cleaning necessary for short-term rentals.)

Several owners who called in to the meeting also asked that the city remove the caps on the number of units that would be allowed to participate citywide under the new rules, and the number of days that spare room rentals would be allowed…especially during the pandemic, when so many small property owners are struggling financially.

And, finally, while many callers opposed to the proposed amendment argued that the city is doing a poor job of enforcing existing short term rental rules (see below), callers in favor of the amendment claimed that the enforcement statistics presented by the city in its introductory presentation – more than 9,000 citations issued so far and more than 6,000 illegal listings removed from advertising platforms – show that enforcement measures are working and should continue to be effective if this limited new category of home-sharing is allowed.

Arguments Against the Amendment

Callers at last night’s hearing who oppose the proposed amendment said they do so for the following reasons:

The City has limited resources for enforcement of short-term rental rules (especially during the current pandemic), so this is the wrong time to expand access to the program, and would require even more resources for enforcement.

The City’s focus during the current and worsening housing crisis should be on keeping more units and spaces available for long-term tenants and Los Angeles residents, and not on creating new “hotel” rooms for “tourists.”

Despite the City’s current enforcement efforts so far, there are still thousands of illegal short-term rental units being offered on platforms like AirBnB, Craig’s List and others, and adding even more short-term rental units to the pool will only exacerbate the problem and make enforcement more difficult than ever.

Allowing one exception to the original rules for short-term rentals will open the door to further exceptions, loopholes and amendments, which will also make enforcement ever more difficult.

The original Home Sharing Ordinance and the city’s enforcement efforts are still not fully rolled out, so no new amendments should be created until the program is fully functional.

The City’s short-term rental hotline, which is a key part of its enforcement scheme, does not work well for units not listed on AirBnB, so more and more people are just listing their units on other platforms, and many abuses of the original system still persist.

The original Home Sharing Ordinance was carefully crafted to strike a balance between the needs of people who want to rent extra space in their residences and the needs of the larger community, and this amendment would jeopardize that balance at a time when housing is in crisis.

Property owners have too often made over-reaching or risky investments in their properties, should realize that some investments just don’t pay off, and they should not be bailed out by the city.

Property owners who chafe at the restrictions on their rent-controlled properties knew those properties came with special restrictions when they bought them.  Also, while the Rent Stabilization Ordinance does put special restrictions on rental properties, other kinds of properties also have restrictions – no one is simply allowed to do whatever they want with their property, whenever they want.

The original Home Sharing Ordinance relies largely on self-declarations from owners to verify their eligibility when registering their properties.  The “no RSO properties” rule in the current ordinance is the only qualification that can be instantly and unequivocably verified with the city…and adding a way for some RSO owners to do limited short-term rentals in their own units muddies the waters and removes the one easily verifiable element from the city’s registration process.  (Or, as one housing attorney who called in last night said, the amendment “will destroy the one sturdy leg on which the Home Sharing Ordinance stands.”)

Large property owners and developers, and unscrupulous short-term rental operators, have found numerous ways over the years to skirt and scam the city’s short-term rental rules, and many still remain in action.  (One caller described an illegal rental, operated by one such owner next door to the caller’s home.  The property, the caller said, is very much in violation of current rules, but has been consistently advertised on AirBnb as a large “Pool Paradise” for large parties, despite the current COVID-19 restrictions.)  So while many small property owners are honest in their intentions, many callers said, every new expansion or loophole the city creates invites further abuse by large and dishonest operators.

Next Steps

If you’d like to comment on the proposed amendment to the Home Sharing Ordinance, you can send remarks to Cally Hardy at the Department of City Planning – [email protected] – until  11:59 p.m. today (Friday, July 10).

After today, comments can be sent to staff at the City Planning Commission, at [email protected].

Over next 60 days, the Planning Department staff will review the comments received so far, then compile and submit a report, draft ordinance, and recommendations to the Planning Commission.  That body will hold its own hearing and vote on the proposal.  Then, if/when it passes at the CPC, it will be forwarded to the City Council’s Planning and Land Use Management (PLUM) Committee, and will then move from there to the full City Council for a final vote.