.Committee Torn Over Airbnb Rental Issues

The Tony Hill Room at the Santa Cruz Civic Auditorium was standing room only as the final scheduled meeting of the Short-Term Vacation Rental Subcommittee got underway. Roughly four dozen community members—most of whom were there for the first time—jammed in to hear what recommendations the group would submit to the Santa Cruz Planning Commission.

Usually when a months-long subcommittee process like this draws to a close, it provides an opportunity for people to say how much they learned from people they disagree with. This March 7 meeting was a little short on “kumbaya” moments, though.

Instead, frustrations ran high, with only one committee member saying they were fully satisfied with the suggestions they planned to submit. Some members of the subcommittee felt it had done a poor job representing the community. Some felt they hadn’t properly answered the questions staff had asked them. Everyone agreed the issue was much more complicated than what could be covered in six meetings, and they’ve decided they need more time to collect and analyze all of the appropriate data.

“That was supposed to be the last meeting,” says David Foster, committee member and director for the Habitat For Humanity’s Monterey Bay chapter. “But obviously, nobody was happy with the conclusions that were drafted.”  

The subcommittee is requesting two more three-hour sessions from the City Council, and suggesting that the short-term rental moratorium, which was scheduled to end May 31, be extended a second time.

The City Council formed the subcommittee last year, in response to the growing trend of rental listings on airbnb.com and similar sites, and tasked the group with exploring two main issues. One was how to preserve rental housing in Santa Cruz, and the other was how to protect the character of Santa Cruz’s neighborhoods.

Airbnb is an online marketplace that allows people to rent out their room or their whole house to people on vacation. In heated discussions that have played out the past two years in Santa Cruz and around the world, critics have worried that vacation rentals eat into valuable housing stock, sending rent and home prices up, while supporters see the service as a uniquely 21st-century shift in the economy that offers a better vacation experience to consumers and lets people supplement their incomes.

Caroline Kao, who moved to Santa Cruz five years ago to attend UCSC for her Ph.D. in cultural anthropology, knew she wanted to be on the subcommittee because she cares deeply about rental availability. “I moved from New York, and I thought that was the worst a rental market could get. So I was very surprised when I moved to a small city that somehow rent is still an exorbitant rate,” remembers Kao, who believes vacation rentals cripple the rental market.

Once landlords know they can rake in bigger bucks out of a short-term rental, she says, it not only takes those units off the market, but it raises the property values for the whole neighborhood.

Kao feels that in order for the 11-member committee—put together last fall by Councilmember Cynthia Mathews, then-City-Councilmember Don Lane and then-City-Councilmember Pamela Comstock—to better represent the community, she wishes it had included more tenants. Just three members currently rent in Santa Cruz, whereas 56 percent of city residents are renters. “If it was truly representative of the population, we’d have six members [who rent],” she says.

One committee member at last week’s meeting did make a point of reminding everyone that, even though many subcommittee members might now own homes, they still remember what it’s like to be renters.

As of December, the finance department reported that 291 short-term rentals were registered, accounting for about 1 percent of available rentals, although the actual number of operating vacation rentals appears to be higher. In April 2016, the San Francisco Chronicle reported that roughly 76 percent of Airbnb listings were unregistered with the city.

“We know the registered number is not the complete list,” says Brion Sprinsock, who serves on the committee. By cross-referencing short-term rental sites over the course of five months, he came up with a very different number: 577.

“The most frightening statistic is [that] out of the 291 registered with the city, all but 45 registered within the last three years,” he says. “Nothing else in the city is growing at this rate. Not heroin use, not traffic, not crime. It’s mind-boggling.”

Although the city requires landlords with short-term rentals to pay transient occupancy tax (TOT)—a tax paid by all 60 local hotel and lodging businesses—not everyone ponies up. And Airbnb has anonymity protection, allowing it to hide information on who is renting what units in any given city around the world, making enforcement difficult.

Sprinsock owns 18 rental units, which he rents to 48 tenants. He also owns two extended-stay places in Santa Cruz—the Adobe on Green Street and the Hinds House, but he says his concerns about Airbnb have nothing to do with any competition they pose to his inns. Most of his income, he notes, comes from his homes. And he could make more money if he expanded his hospitality business, switching to all vacation rentals.

“Don’t make it easier for me to kick out my 48 tenants and triple my income,” he says.

For what he sees as a worst-case scenario in the approach to vacation rentals, Sprinsock points to Venice Beach. With data from InsideAirbnb.com—a watchdog site for the service—he’s found there are 1,900 vacation rentals in the 1.5-square-mile city.

In a position that may sound extreme to some people, he and Kao both suggest the city could see every short-term rental in residential areas as a zoning violation.

Timerie Gordon and her husband Christian Nielsen have roots in Santa Cruz. Since 2007, Gordon and her husband have owned and operated Nielsen Studios, and they own their home. Until this year, they rented a long-term with a shared wall attached to their home. They recently switched it to a vacation rental in order to keep the availability open for when family or friends decide to visit, while still making some money in the meantime. She notes they have not—as of yet—made as much as they did with a long-term rental, and even if they do in the future, the money isn’t what’s important to her. She believes the committee members who operate short-term vacation rentals were able to put aside their personal interests because they still have a vested interest in Santa Cruz.

“There is a quality-of-the-neighborhood issue,” she says. “There are signs all over that if [vacation rentals are] undiscussed, things can get out of hand.”