Law Limiting medium-term Rentals: The Latest Battle in Santa Monica's War on AirBNB
Corporations in particular seen as a threat to the City's rent controlled housing stock
December 26, 2018
In an effort to preserve true, rent-controlled housing, the Santa Monica City Council directed staff on Tuesday, December 18, to draft a law that would restrict the ability to sublet units to corporations or for periods less than a year.
Currently, Santa Monica only allows AirBnB-type rentals if the owner of the unit is present during the visitor's stay and only for visits of less than 31 days. To date, the city has no legislation that bars tenants from subletting units for more than 31 days.
However, such subleases allow rent-controlled apartments to be rented out for rates far above the rent-controlled limit. When these units are rented out in a serial fashion for months at a time, it basically takes them out of the pool of rent-controlled apartments available in the city.
Corporations can desire purchasing such leases in order to house temporary workers.
Santa Monica does not allow "corporate housing" anywhere in the city. This term usually refers to "furnished dwellings rented out to individuals on a temporary basis as an alternative to traditional hotels or extended stays," according to city staff. However, enforcement of this provision is very difficult. The city would have to prove that the unit was intended for someone who actually resides elsewhere.
Accordingly, the city council directed staff to draft an ordinance that would restrict lessees to individuals rather than corporations. Leases would be required to be for at least 12 months. To aid in enforcement, fines and penalties would be high for those who would violate the new law, allegedly vacant units would be taxed, and advertisement of illegal rentals would be forbidden.
The intense pressure for housing, some of it medium-term, and the money to be made from it, will make voluntary cooperation with any proposed law unlikely. The council directed staff, therefore, to make the enforceability of the proposed ordinance a top priority.
Meanwhile, the council acknowledged the market demand for medium-term housing and the desire to provide some possibility of same, perhaps in commercial zones.
Subleases provide large financial benefits to the base tenant while reducing the effects of rent-control laws. They reflect the true market value of the unit rather than the value city officials have for allowing poorer people to live in the highly desirable area of Santa Monica.
On the other hand, short- and medium-term residents do not have the same stake in the community that long-term residents have and do not contribute their resources to the betterment of the neighborhoods, schools, and long-term goals of the city.