The People vs. Santa Monica: Inside the Government’s Push to Regulate Short-Term Rental Industry

by Jamie Jackson, Heritage Foundation Daily Signal, May 26, 2015

SANTA MONICA, Calif.—Every day, the sun sets on the shoreline here, creating beautiful views that tourists from around the world flock to see.

To enjoy this experience, typically vacationers would have to pay for a hotel costing upwards of $400 a night—or they can try a new option in the so-called “sharing” economy.

Home-sharing websites like Airbnb allow homeowners and apartment dwellers to rent their home and spare bedrooms to vacationers for a fraction of the cost of a hotel stay.

But on May 12, the Santa Monica City Council passed a new ordinance that will impose regulations that make that opportunity much harder to come by.

“Santa Monica City Council is really at war with its own citizens on this matter,” said James Gattuso, a senior research fellow in regulatory policy at The Heritage Foundation.

“Airbnb is a service that is very popular with owners, very popular with visitors—it serves a need on both sides,” Gattuso said. “A lot of residents in Santa Monica want to use Airbnb in order to help themselves make ends meet.”

The ordinance imposes strict restrictions on who can rent out their spare bedrooms for less than 30 days, including requiring those who wish to rent out their spare bedroom or apartment to apply for a business license and to remain on the property during the guest’s stay. The ordinance also imposes a 14 percent hotel tax on hosts.

On June 15, when the law goes into effect, Santa Monica will see a drastic reduction in its Airbnb options, banning 1,400 of about 1,700 vacation rentals available on home sharing websites, according to the Los Angeles Times.

The city of Santa Monica will spend $410,000 in the first year of the ordinance to create an enforcement department that will patrol for violators. Residents could face a $500 fine for violating the ordinance.

The city has set up a website explaining the new ordinance, but for people like Catherine Healy, who says Airbnb supplements her income—including providing money for her to pay for groceries—the council’s decision has real consequences.

“I have three jobs to make ends meet and Airbnb is one of them. All I’m doing is creating a win-win situation for the economy in Santa Monica,” Healy said.

For DonnaLee McHood and her boyfriend Ruben Martinez, Airbnb provides extra income.

“It’s been great. We’re disappointed [with the new ordinance], but at least we still have our full-time jobs,” McHood said.

Martinez believes the move will hurt the city in the end.

“It’s a good way to visit places and spend less money on your lodging accommodations,” Martinez said. “Less people may come to visit because hotels out here are really expensive.”

The Daily Signal reached out to Santa Monica Mayor Kevin McKeown and each council member for comment. No one responded to our request for an interview.

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