07-16-2019 - Item 13 - Discussion Regarding Short Term Rentals In West CovinaAGENDA ITEM NO. 13
AGENDA STAFF REPORT
City of West Covina Office of the City Manager
DATE: July 16, 2019
TO: Maya• and City Council
FROM: David Carnany
Interim City Manager
SUBJECT: DISCUSSION REGARDING SHORT-TERM RENTALS IN WEST COVINA -MAYOR PRO
TEM WU
RECOMMENDATION:
It is recommended that the City Council discuss short-term rentals (i.e. A rBnb, VRBO, FlipKey, HomeAway, etc.)
in West Covina and provide any applicable direction accordingly.
BACKGROUND:
On January 16, 2018, the City Council discussed the Municipal Code standards that prohibit short-term rentals in
the City and potential changes to the Code if the City Council wanted to allow such uses. At the conclusion of the
discussion, the City Council voted 5-0 to receive and file the report and continue to prohibit short -tern rentals. At
th June 4th, 2019, City Council Meeting, Mayor Pro Tern Wu asked for this item to be agendized for further
discussion.
DISCUSSION:
The issue of the
regulation of short-term
rentals includes abroad spectrum of listings
often grouped
together.
Types of Short -Term Rentals
There are in fact tlu•ee different types of short-term rental listings.
Vacation Rentals- are listings for units that are used almost exclusively for short-term rentals. The unit is
not a primary residence for• along -teem tenant. These are the types of listings that generally cause the most
anxiety for neighbors, local hotels, and governments.
Hosted Honae Sharing -occurs where the primary resident occupies the dwelling at the same time as the
short-term rental guest. Hosted Home Sharing advertisements are generally listed as Private or Shared
Rooms. Private Room listings allow a short-term rental guest to rent a spate room and Shared Rooms allow
a guest to rent a morn that is shared with another occupant.
Unlaoszed Home Sharing -occurs when a host rents their primary residence to guests but does not occupy the
residence during the guests' stay. These listings are generally for the whole unit, where the guest has the
entire dwelling unit to themselves.
Transient Occupancy Tax
The City of West Covina Municipal Code expressly discusses Transient Occupancy Tax (TOT) in Chapter 21
Article III Section 21-43 through Section 21-59. The Municipal Code states that TOT is charged when an occupant
stays in a "hotel" for a period of less than thirty (30) consecutive calendar days. A "hotel" is defined in Article III
Section 21 below:
Hotel means any structure, or any portion of any structure, which is occupiedor intended or designed, for
occupancy by transients for dwelling, lodging or• sleeping purposes, and includes any hotel, inn, tourist home
or house, motel, studio hotel, bachelor hotel, lodging hoarse, rooming house, apartment house, dormitory,
public or private club, mobile home or house trailer at a fixed location oil other similar structure or portion
thereof all far the temporary use of a transient individual who remains as a guest of such establishment less
than thirty (30) days, but shall not include jails, hospitals, asylums, sanitariums, orphanages, prisons,
detention homes and similar buildings where human beings ar•e housed and detained under a legal restraint.
The West Covina Municipal Code does not specifically use the term "short-term rental" that is commonly used
when referring to rentals booked through websites such as AirBnb, VRBO, FlipKey, HomeAway etc. The
Municipal Code does however list "tourist home or house, rooming house, apartment house, mobile home or house
trailer" when discussing examples of a "hotel" and providing an example of when TOT should be collected for a
stay of less than thirty (30) consecutive days.
Currently, the City of West Covina requites the "registration of hotels" per Section 21-48 with the City and that all
hotels obtain a "transient occupancy registration certificate." The certificate is not considered a permit but rather
compliance with noticing for payment of TOT. It is the responsibility of each hotel operator to remit payment of
TOT monthly to the City of West Covina. Currently, the City utilizes HdL for payment of TOT and business
license fees providing an online web portal for easy payment for businesses in West Covina.
Zoning
Even though the Municipal Code defines a "hotel" to include "tourist home or house, rooming house, apartment
house, mobile home or house trailer" when discussing examples of a "hotel," West Covina Zoning Code Section
26-597 does not currently allow "hotels" in residential areas. To modify the Code to allow short -rentals, the Zoning
Code would need to be modified to allow short-term rentals (or another term) and would specify if short -teem
rentals were allowed, or required some type of discretionary approval or permit.
Business License
Currently, there is no separate business license category for short-term rentals in West Covina and as such anyone
considering operating a short-term rental would fall under the hotel category for business license.
Enforcement
While the most common short-term residential rental websites include AirBnb, VRBO, FlipKey, and HomeAway,
there are at least 15 frequently used short-term rental websiteshnobile apps. Identifying properties that are in
violation can be very difficult. Often, the websites do not list the exact address or any identifying pictures to
confirm the address of a specific property. Most photos of the unit only show the interior of the unit which does
not give staff enough evidence to identify its location. Currently, code enforcement addresses short-term rentals on
a complaint basis.
Additionally, having Code Enforcement staff research website listings on short-term residential rental websites has
not proven to be effective in the enforcement of the Municipal Code or the receipt of TOT funds. Utilizing a
third -party service provider to perform this service, which may retain a portion of the TOT revenue collected, may
be a more cost-effective approach. Should the City Council desire to obtain a third -party vendor for compliance
monitoring, enforcement, and tax collection support, an RFP would be drafted to solicit bids.
Short-term rentals can have significant impacts on residential neighborhoods. Concerns coming from residents
regarding short-term rentals fall largely into three categories:
1. Nuisance activity;
2. Negative impact on the housing inventory; and
3. The relationship of home -sharing to existing building and zoning codes.
Nuisance activities may include instances of loud noise, parties, trash, inconsiderate guests, excessive foot traffic as
well as the commercial use of residential properties. There is also a fear that affordable housing will be removed
from the market and utilized exclusively for short-term rentals. More broadly, some neighbors of short-term
rentals may have concerns that these activities have resulted in the loss of stable residential character as their
long-term neighbors are replaced by short-term rental guests.
Individuals listing their residential home or apartment as a short-term rental must also comply with any applicable
Homeowners Association or Apartment Complex guidelines effecting their home which may explicitly prohibit the
subletting of units or utilizing a home for short-term residential rentals.
OPTIONS:
The City Council has the following options:
1. Direct staff to return with a proposed ordinance that creates a new category of business license in the West
Covina Municipal Code, specifies the application process and operating requirements for short-term
residential rentals, and update the zoning code regarding short-term rentals in residential zones; and direct
staff to develop an RFP for short-term rental enforcement set -vices; or
2. Provide alternative direction.
Prepared by: Jeff Anderson, Community Development Director
CITY COUNCIL GOALS &OBJECTIVES: Enhance Public Safety