Cal Cities’ short-term rental bill draws bipartisan praise
By Brian Hendershot, Cal Cities Advocate managing editor
A bill that would help cities better enforce local ordinances related to short-term rentals — including collecting and remitting transient occupancy taxes — sailed out of its first committee last Wednesday with bipartisan support.
Sponsored by Cal Cities, SB 346 (Durazo) would also give cities more information about unlicensed short-term rentals operating in their communities.
“Rarely do I ever see a bill that has [been] crafted to help people who are already following the rules to follow the rules,” said Sen. Kelly Seyarto. “The only privacy concern is [that] you want to get away with something and damn it, now you can’t.”
Why it matters
Many cities have ordinances limiting or banning the number of short-term rentals. These properties can create excessive noise, traffic, and public safety issues, as well as decrease available housing stock.
However, actually enforcing these ordinances is often onerous to the point of impractical. Short-term rental platforms do not display the addresses of properties on their listings, making it nearly impossible to tell if a unit is legally licensed or to verify whether platforms are collecting and remitting the correct transient occupancy taxes (TOT).
Some cities enter into voluntary collection agreements with platforms. But these agreements usually bar cities from accessing the property’s address or location. If cities want to audit short-term rental TOT, they usually need to file a subpoena. But as Sen. Scott Wiener noted in the hearing, most cities cannot afford to go to court with large, multibillion-dollar companies.
“This is not how oversight of public dollars should work,” argued Cal Cities Legislative Advocate Ben Triffo.
It’s not just cities that are in the dark either. Some short-term rental hosts may be unaware of the requirements to collect TOT. The committee analysis noted uncollected TOT created an estimated $20.75 million annual revenue loss for the median state. The loss is likely far higher for California, which is a major tourism destination.
What else did lawmakers say?
Many senators called SB 346 a necessary, common-sense measure. “For me, this is not a symbolic vote to say, ‘Let’s shut down all these short-term rentals,’” said Sen. Christopher L. Cabaldon. “That’s not my position. But this seems like a very reasonable approach that you would undertake in any other sector, physical or virtual, in order to ensure that the legally due tax receipts are received.”
Sen. Jesse Arreguín, a former Berkeley mayor, described how short-term rentals have negatively impacted local housing stock in some communities. “What we are seeing is whole apartment buildings that are being taken off the market and being illegally converted to hotels,” he said. “That is a problem.”
New York has already passed a similar measure. This begs the question: If the short-term rental facilitators can do this and more elsewhere, why not across California?
What’s next?
The bill is set to go to the Senate Judiciary Committee in the coming weeks. To learn how to get involved, contact your regional public affairs manager.