Vacation Rental Ordinance A Remarkable Experiment in Self-Contradiction

In 2018, the City of Los Angeles adopted its home-sharing ordinance, requiring a short-term rental to be a primary residence. Or put another way, the home sharing ordinance prohibits shortterm rentals in non-primary residences. With the city’s goal being to limit short-term rentals to protect long-term housing and neighborhoods, limiting short-term rentals to just primary residences is important, and makes sense.

What does not make sense, and what has housing advocates concerned, is the city’s subsequent move to propose the so-called Vacation Rental Ordinance.

The first page of the Vacation Rental Ordinance states that it creates clear rules and regulations to control the growth of the [vacation rental] industry, protect long-term housing supply, prevent citywide and geographic over-concentration, address community concerns about abuses, and compliment the Home-Sharing Ordinance.

And how will the Vacation Rental Ordinance achieve these goals? The answer is in the very same sentence that lists the goals — and the answer is unbelievable.

The Vacation Rental Ordinance states on the very first page that by legalizing and regulating short-term rentals in non-primary residences all of the great things listed above will happen.

The Vacation Rental Ordinance claims that by legalizing short-term rentals in non-primary residences growth of the industry will be control[led], long term housing supply will be protect[ed], citywide and geographic over-concentration will be prevent[ed], community concerns about abuses will be address[ed], and the Home-Sharing Ordinance will be compliment[ed].

This is obviously wrong. The truth is that the

opposite will occur. The Vacation Rental Ordinance opens the floodgates for short-term rentals. If the city legalizes short-term rentals in non-primary residences by adopting the Vacation Rental Ordinance, growth of the industry will expand, long-term housing supply will be under attack, citywide and geographic over-concentration will proliferate, community concerns about abuses will be lost in the sheer volume of new short-term rentals, and the Home-Sharing Ordinance will be forever compromised and effectively eliminated.

When you legalize an industry, it grows. To claim otherwise defies logic. Proponents of the Vacation Rental Ordinance owe Angelenos answers to the following questions:

• How does legalizing short-term rentals in non-primary residences control growth of the industry?

• How does such legalization protect longterm housing supply?

• How does legalization prevent citywide and geographic over-concentration?

• How does legalization address community concerns about abuses?

• And how does legalization of short-term rentals in non-primary residences compliment the Home Sharing Ordinance that expressly prohibits short-term rentals in non-primary residences?

The true effect of the Vacation Rental Ordinance is the opposite of its stated intent, and the result could be a $7 billion loss of available long-term housing stock. When it comes to the homelessness crisis in Los Angeles, one thing the city must protect is our affordable housing stock. And the City Attorney’s office currently has very few ways to protect it.

But one way is through enforcement of the city’s Home Sharing Ordinance. So the last thing we want to do is interfere with our ability to enforce the Home Sharing Ordinance. Unfortunately, the Vacation Rental Ordinance interferes with our two most effective enforcement tools in the Home Sharing Ordinance.

First, there is a requirement that short-term rentals must be a primary residence. The Vacation Rental Ordinance harms this restriction because it allows properties other than primary residences to be listed as short-term rentals. So it is creating a loophole in this critical part of the Home Sharing Ordinance.

Second, there is a prohibition of listing rent stabilized units as short-term rentals. The Vacation Rental Ordinance hurts this restriction because it adds a whole new level of investigations on potentially thousands of new listings when the City Attorney’s office and city departments are already severely understaffed for enforcement of the Home Sharing Ordinance.

The Vacation Rental Ordinance ends up being an invitation for hosts and commercial operators to continue to ignore the Home Sharing Ordinance because the city will now have several thousand more of these listings to try and keep up with.

So while the proponents of the Vacation Rental Ordinance may be well-intentioned, passage of this ordinance actually could result in an acceleration of our low-income and affordable housing crisis.

There is a reasonable ball park figure on what this Vacation Rental Ordinance will cost the City of Los Angeles in lost housing stock. Just by taking the 14,700 units the Vacation Rental Ordinance permits and then multiplying that number by a reasonable average value-perunit in Los Angeles of $500,000 — you get a total of over $7 billion dollars. That is what we are facing here.

One could call the Vacation Rental Ordinance the $7 billion dollar blow out to longterm housing stock in Los Angeles.