Airbnb ordinance will end decade of bypassing land use regulations, but is it necessary?

Now that the ordinance has been finalized, it can go before City Council for a vote.
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David Dowswell (left) and Dagoberto Fierros (right) use their smartphones to participate in an ongoing poll during the city’s first strategic planning workshop on November 14, 2018. Photo by Matthew Keys

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The City of Winters could begin requiring permits and business licenses to operate short-term vacation rentals like Airbnbs as early as this fall, joining a growing number of cities in a nation-wide trend ending a decade of casual and professional renters bypassing land use policy through online platforms.

At the June 25 meeting, The Winters Planning Commission heard from Airbnb hosts during public comments before resolving outstanding issues and voting 5-1 to finalize an ordinance that is overall less restrictive of Airbnb operations than the original April 23 version, which drew public criticism from the industry before a procedural error delayed it.

Adoption by the City Council would amend the municipal code to include specifications required of Winters residents to participate in the short-term vacation rental market created by internet-based services like Airbnb in 2008. Airbnb hosts will have to comply with city code, maintain a business license and complete an application process to obtain a vacation rental permit—a type of conditional use permit cities use to regulate land use.

The vote marked the end of a year-long process to draft the ordinance.

The ordinance’s key component, the vacation rental permit, will provide an enforcement mechanism to ensure Airbnb operators and their guests comply with city code. After the one-time issuance of a vacation rental permit, which requires the passage of three inspections and payment of associated fees, Airbnb hosts will face little interference from the city unless they fail to adhere to the terms of the permit.

The meeting was a chance to hold a twice-delayed second public hearing on a zoning ordinance—the final step before it could be proposed to the City Council—and City Contract Planner David Dowswell presented the commissioners with a heavily amended version of an ordinance he’d worked closely with Airbnb hosts to simplify since April.

“I state in the staff report that I generally concurred with the changes suggested over various meetings that make the ordinance less cumbersome and easier to understand. I won’t say that 100 percent of the ideas suggested have been incorporated, but I’d say a good percentage—maybe 90 percent—have been added to the ordinance,” Dowswell said.

Still, following the public hearing Dowswell suggested certain items discussed by commissioners, like the noise requirements being those of existing ordinances and removal of a posted rental agreement requirement, could be fine-tuned before going to the City Council. He also questioned the reasoning behind the requirement that Airbnb rentals provide off-street parking to avoid inconveniencing neighboring residents.

“I don’t think the public has a right to the space any more than the guests have a right to the space,” Dowswell said. “Those are changes that all can be done before it goes to the council.”

Some key changes made in the interest of the industry at the meeting included giving authorized agents 24 hours instead of one hour to respond to complaints made at their property, not specifying a maximum number of occupants and allowing the rental agreement be made through the platform, rather than through a signed contract as was originally required.

Part of the ordinance that would have limited the number of permits given for vacation rentals was also removed. There are currently 14 short-term vacation rentals using Airbnb and other services in Winters.

While the ordinance differentiates between requirements for hosted and non-hosted properties—the difference being the property owner resides on the property while renting part of it to transient occupants in a hosted rental and is not in residence while guests are present in a non-hosted rental—critics said regulations will create a barrier to entry that will deter people from joining what’s become a popular market built on flexibility and accessibility, negatively affecting Winters’ tourism industry.

Through the ease of access provided by an online marketplace, property owners have been afforded great flexibility in the hosting of short-term vacation rentals, commonly called Airbnbs, which can be rooms in their own house or entire dedicated investment properties, where guests stay per an arrangement like they would stay in a hotel or traditional bed-and-breakfast.

Abigail Vargas, one of three Airbnb hosts who worked with the city staff to simplify the bill, said adherence to the ordinance meant she’d have to adhere to state laws that were cumbersome to small business operation. Her concerns were about an accessory dwelling unit she hoped to rent out through Airbnb until her family moved in, something prohibited by state laws that allow accessory dwelling units (ADUs) to bypass zoning restrictions, but only for long-term rentals to alleviate the housing crisis.

“I paid a very large sum of money for my property and the rent I’ll have to charge if I turn it into rental property is not an affordable fee for my tenant,” Vargas said.

Benny Dippel, another Airbnb host, challenged the need for the ordinance and said the barrier to entry it creates will cripple many uses of the market.

“It makes it very much either you rent a house out the full time and pay all these fees because you’re going to get it back, or you’re just not going to do it,” Dippel said.

He was also skeptical of the reality of some concerns commissioners had cited as reasons for the ordinance. Dippel cited the lack of complaints about noise, abundant street parking and the fact that Airbnb had already agreed to pay Transient Occupancy Tax in a negotiation with the city.

The City of Winters’ push to regulate the market over concerns of parking, traffic, noise, public safety and taxation began when a city intern brought the idea to city planners last July, inspired by a nation-wide trend of municipalities doing the same.

Commissioners elected to finalize the ordinance with some changes, but certain items, like the exact amount of fees and the question of accessory dwelling units, will be finalized during the City Council’s process, which will also include two public hearings and opportunities for amendment.

Commissioners had originally hoped to hold the second public hearing for the ordinance on April 23, something they’d hoped would see the process completed in the City Council ahead of the summer tourist season, but the city’s attempts were delayed due to a failure to publish a timely public notice. Although the exact nature of the failure’s cause is unknown, some miscommunication between the City Manager’s Office and the Winters Express meant the city would have been in violation of the Brown Act—a California state law that governs the process of public meetings—if it had carried on with the vote.

A major point of debate was the ADU for short-term rental by Winters resident Abigail Vargas.

However, Commissioner Baker said she would not second a motion made by Commissioner Contreras to include an amendment by Commissioner Contreras that would exclude Winters ADUs from short-term rental restrictions established by California state law allowing ADUs bypass zoning ordinances to alleviate the housing shortage.

“I will not agree with the ADU issue considering that the planning commission doesn’t get to consider the approval of ADUs. They were meant to offset the sincerely difficult shortage of housing in the state of California and they get a huge amount of reduction of fees from the city,” Baker said.

Commissioner Contreras was the sole nay vote in the final motion that excluded his ADU amendment.

Baker cited her personal experience of operating a home-based business in response to criticisms over fees associated with obtaining business licenses. She said the operation a business, no matter the size, has to meet regulatory requirements so cities can exercise control over what happens in their communities.

She said the average cost of an Airbnb rental in Winters is $91, which covers the business license fee of $90. Other fees associated with the operation of Airbnbs include the costs of three one-time inspections, each under $100, and an application fee for the vacation rental permit that has yet to be determined.

Chairman Myer said the costs are part of doing business and Airbnb hosts will have to decide if they’re prohibitive.

“You guys just have consider ‘Am I going to make it paying these fees or am I not going to do it?’ I’m a business man and I have to determine if the particular thing I’m doing is making me money and if it’s not I’m going to quit doing it,” Myer said.

Myer also emphasized the importance of having regulations in place because of the way short-term rentals differ from long-term rentals in terms of guaranteeing habitable conditions for guests.

“Part of the difference between a long-term and vacation rental is typically most long-term renters go look at a property, they walk through it, they decide what their going to rent. Very often if the go, ‘Hey, there’s something that needs to be fixed,’ they can have that discussion with a landlord, whereas a short-term rental pays their money, shows up and they’re there for the night,” Myer said.

Currently nothing stands in the way of an Airbnb host renting property in unsafe conditions except rating systems utilized by online platforms.

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