Short-term rental bill advances, despite disinformation campaign from opponents

By Ben Triffo, Revenue and Taxation Legislative Advocate

A bill that would make it easier for cities to collect taxes from short-term rentals unanimously passed its final committee hurdle last Tuesday amid an all-out lobbying blitz from the opposition.

Sponsored by Cal Cities, SB 346 (Durazo) would require short-term rental platforms, at the request of a city, to provide the address of short-term rentals listed for rent on the platform. It would also give cities audit authority over transient occupancy taxes collected by the platforms.

“It’s a privilege to do business within a city,” Asm. Diane Papan said bluntly during the Assembly Judiciary Committee hearing. “I know of no other model that operates by which it is a sort of catch me if you can.”

The vote came just days before the city of Los Angeles filed a lawsuit against Airbnb, alleging that the platform allowed price gouging and unverified hosts and addresses at more than 2,000 properties following January’s wildfires. The lawsuit also mentions instances where properties were located miles away from the advertised location, sometimes in a different city. Both the city and Mayor Karen Bass recently announced their support for SB 346.

Why it matters

Cities need more tools to ensure short-term rental platforms adhere to local laws. By having the addresses of short-term rentals, cities can identify those operating without a local license and therefore not providing the required transient occupancy taxes.

Unfortunately, short-term rental platforms are misleading the public about the impact of the bill. These platforms have long resisted disclosing the information required under SB 346, with an ever-changing list of reasons why they can’t or shouldn’t provide it, all while local laws are bypassed and bad actors are incentivized.

“This isn’t about punishing short-term rentals,” Santa Barbara Mayor Pro Tempore Eric Friedman told Cal Cities. “We just want them to play by the same rules as everyone else.”  

Santa Barbara, like many communities, has challenges identifying properties that are vacation rentals and enforcing local policies. While the city is updating its ordinances, deficiencies in state regulations often lead to an under-collection of transit occupancy taxes. Friedman says SB 346 would give cities like his tools to address these issues and promote good neighborhood relationships. 

What else is in play?

Cal Cities has advocated on several other measures this session, including SB 86 (McNerney), a measure that extends a sales and use tax exclusion for clean energy companies. Previous versions of the bill indefinitely extended the exclusion and increased the amount to $300 million. Cal Cities removed its opposition after the author reduced the exclusion from $300 million to $100 million (the existing statutory amount) and added a five-year sunset date to the exclusion. 

To learn more about the remaining big bills for city leaders this year, sign up for Cal Cities’ legislative briefing on July 29.