UNFINISHED BUSINESS  

Bill No: SB 1049

Author: Glazer (D), et al.

Amended: 8/25/20

Vote: 21

SENATE GOVERNANCE & FIN. COMMITTEE: 6-1, 5/28/20

AYES: McGuire, Beall, Hertzberg, Hurtado, Nielsen, Wiener

NOES: Moorlach

SENATE FLOOR: 32-8, 6/22/20

AYES: Allen, Archuleta, Atkins, Bates, Beall, Bradford, Caballero, Dahle, Dodd, Durazo, Galgiani, Glazer, Lena Gonzalez, Hertzberg, Hill, Hueso, Hurtado, Jackson, Leyva, McGuire, Mitchell, Monning, Nielsen, Pan, Portantino, Roth, Rubio, Skinner, Stern, Umberg, Wieckowski, Wiener

NOES: Borgeas, Chang, Grove, Jones, Melendez, Moorlach, Morrell, Wilk

ASSEMBLY FLOOR: Not available

SUBJECT: Local ordinances: short-term rentals

SOURCE: Author

DIGEST:

This bill authorizes the legislative body of a city or county, for the violation of a short term rental ordinance that is an infraction, to impose a fine not exceeding $1,500 for a first violation, $3,000 for a 2nd violation of the same ordinance within one year, and $5,000 for each additional violation of the same ordinance within one year of the first violation.

Assembly Amendments

make changes to definitions, specify that fines only applies to public health and safety threats, and create a hardship waiver process for cities and counties.

ANALYSIS:

Existing law:

1. Allows counties and cities to adopt and enforce ordinances that regulate local health, safety, peace, and welfare.
2. Allows, as an alternative to civil and criminal enforcement mechanisms, a local agency’s legislative body to make any violation of any of its ordinances subject to an administrative fine or penalty.
3. Provides that a violation of a city ordinance is a misdemeanor unless by ordinance it is made an infraction. In general, every ordinance violation that is determined to be an infraction is punishable by:
   1. A fine not exceeding $100 for a first violation.
   2. A fine not exceeding $200 for a second violation of the same ordinance within one year.
   3. A fine not exceeding $500 for each additional violation of the same ordinance within one year.
4. Establishes higher limits for a violation of local building and safety codes determined to be an infraction, punishable by:
   1. A fine not exceeding $130 for a first violation.
   2. A fine not exceeding $700 for a second violation of the same ordinance within one year.
   3. A fine not exceeding $1,300 for each additional violation of the same ordinance within one year.
   4. A fine not exceeding two thousand five hundred dollars ($2,500) for each additional violation of the same ordinance within two years of the first violation if the property is a commercial property that has an existing building at the time of the violation and the violation is due to failure by the owner to remove visible refuse or failure to prohibit unauthorized use of the property.
5. Allows cities to impose fines and penalties through civil or criminal proceedings. These fines and penalties are limited to $1,000 per violation and six months of imprisonment.

This bill:

1. Provides that the violation of a short-term rental ordinance that is an infraction is punishable by the following:
   1. A fine not exceeding $1,500 for a first violation;
   2. A fine not exceeding $3,000 for a second violation of the same ordinance within one year; and,
   3. A fine not exceeding $5,000 for each additional violation of the same ordinance within one year of the first violation.
2. Defines “short term rental” as a “residential dwelling”, or any portion of a residential dwelling, that is rented to a person or persons for 30 consecutive days or less.
3. Defines “residential dwelling” as a private structure designed and available for use and occupancy as a residence by one or more individuals. “Residential dwelling” does not include a commercially operated hotel, motel, bed and breakfast inn, or time share property as defined by subdivision (aa) of Section 11212 of the Business and Professions Code.
4. Specifies that the penalty limits set by this bill apply only to infractions that pose a threat to public health and safety, and shall not apply to a first time offense of failure to register or pay a business license fee.
5. Requires a county or city levying a fine to establish a process for granting a hardship waiver to reduce the amount of the fine, as specified.

Background

Short term-rentals. Generally, most of the current short-term rental ordinances include regulations on permitting, tax compliance, noise, parking, and occupancy, as well as host and platform obligations and responsibilities. For instance, most short-term rental ordinances require short-term rentals to limit the number of occupants per bedroom in the residential property and require the host to be physically present to monitor and regulate activity during the short-term rental for a specified number of days. However, short-term rental ordinances’ regulations and requirements vary from jurisdiction to jurisdiction. Violating a short-term rental ordinance usually results in a penalty. Each city and county that has a short-term rental ordinance has different fine amounts and schedules and may or may not specify whether the penalty is imposed on the host, guest, or platform.

Comments

1. Purpose of the bill. According to the author, “according to vacation rental data by AirDNA, in the last three years, the short-term rental market in the U.S. has grown by more than 100%. Though short-term rentals offer a way to improve tourism and earn owners some extra money, their recent proliferation has allowed bad actors to use the platform to advertise and secure homes for large parties, oftentimes in violation of local ordinances. These large gatherings have made some short-term rental properties the sites of underage drinking, brawls, noise complaints, and violence. In the last half of 2019, 42 people were shot inside or just outside a short-term rental property nationwide and 17 people died. In order to improve the safety of our citizens, this bill would increase fines that cities are allowed to impose on short-term rental hosts who violate local property rental laws. SB 1049 would authorize locals to impose fines up to $5,000 for a violation of a short-term ordinance."
2. Root of the problem? Over the past years, some city and county officials have criticized short-term rentals for creating public safety concerns, with some California local jurisdictions creating strict short-term rental ordinances and others outright banning short-term rentals. According to the San Francisco Chronicle, at least 42 people have been shot inside or just outside the short-term rental properties across the United States, with California cities of West Covina, Fair Oaks, Hacienda Heights, Sacramento, and Orinda each experiencing a shooting incident within the months of May 2019 and November 2019. The City of Sacramento recently experienced a shooting in a short-term rental in early August 2020 where a short-term renter threw a house party which resulted in a shooting and three people being injured. However, it is unclear whether creating a new fine violation structure specifically for short-term rentals will deter behavior any more than the current fine violation structure.
   
3. Paid in full. Excessive fines can weigh heavily on people with limited means, while having a limited deterrent effect on those with deeper pockets. SB 1049 would allow cities and counties to pursue fines for violations of short-term rental ordinances in an effort to encourage greater compliance, but city and county officials may seek the maximum fines for other reasons, without regard for the deterrent effect or the effect on the person or entity responsible for the violation. Over the past several decades, city budgets have been squeezed by ballot measures such as Proposition 13 and Proposition 218 and new mandates from the state policymakers. Most recently, the COVID-19 pandemic has strained local government budgets. Local government revenue sources are often constrained to specific purposes, leaving cities with fewer general fund resources. Fine revenues are one remaining source of funds for general activities. As such, cities and counties may be tempted to maximize revenue from fines. However, the bill does provide a hardship waiver process to reduce the amount of the fine by a responsible party that they have made a bona fide effort to comply after the first violation, and that payment of the full amount of the fine would impose an undue financial burden on the responsible party.

FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No

SUPPORT: (Verified 8/31/20)

California Travel Association

City of Cupertino

City of Lafayette

City of Murrieta

City of Orinda

City of Santa Monica

Community Associations Institute's California Legislative Action Committee California Hotel & Lodging Association

Expedia

San Diego City Attorney’s Office

Southern California Rental Housing Association

OPPOSITION: (Verified 8/31/20)

None received

Prepared by: Gustavo Medrano / GOV. & F. / (916) 651-4119

8/31/20 18:01:58

**** END ****

SENATE THIRD READING

STR Bill Id:SB 1049

Author:(Glazer)

As Amended Ver:August 25, 2020

Majority vote

SUMMARY:

Establishes enhanced fines for violations of short-term rental ordinances.

Major Provisions

Provides that the violation of a short-term rental ordinance that is an infraction is punishable by the following:

1. A fine not exceeding $1,500 for a first violation;
2. A fine not exceeding $3,000 for a second violation of the same ordinance within one year; and,
3. A fine not exceeding $5,000 for each additional violation of the same ordinance within one year of the first violation.

Specifies that the penalty limits set by this bill apply only to infractions that pose a threat to public health and safety, and shall not apply to a first time offense of failure to register or pay a business license fee.

Requires a county or city levying a fine pursuant to this bill to establish a process for granting a hardship waiver to reduce the amount of the fine, as specified.

COMMENTS:

Background. Current law allows counties and cities to establish ordinances, and makes violations of ordinances misdemeanors, unless by ordinance the county or city makes them infractions. The violation of an ordinance may be prosecuted by county or city authorities in the name of the people of the State of California, or redressed by civil action. Current law outlines the following fine structure for ordinance violations, and for building and safety code violations, that are determined to be infractions:

For building and safety code violations that are infractions, there is an enhanced fine of $2,500 for each additional violation of the same ordinance within two years of the first violation if the property is a commercial property that has an existing building at the time of the violation and the violation is due to failure by the owner to remove visible refuse or failure to prohibit unauthorized use of the property.

In addition to the fines outlined above, counties (not cities) may assess fines specifically for a violation of an event permit requirement that is an infraction. These fines are capped at $150 for a first violation, $700 for a second occurrence of the same violation by the same owner or operator within three years of the first violation, and $2,500 for each additional occurrence of the same violation by the same owner or operator within three years of the first violation.

Short-term Rentals. California has seen a rise in the home sharing industry with companies such as Airbnb, Expedia, and Vacation Rentals by Owner (VRBO) gaining popularity due to their short-term rental practice. Short-term rentals, also known as vacation-rentals, are usually an individual's residential property, such as a home, room, apartment, or condominium that is rented out to a visitor for fewer than 30 consecutive days. Generally, the home sharing industry involves three primary participants: 1) the home sharing platforms, such as Airbnb, that advertise residential property offered for temporary rental and facilitates connecting renters with hosts for a fee, 2) the consumer who is often referred to as the "renter," "guest," or "visitor" of the residential property, and 3) the supplier, owner, operator, or "host" of the residential property. Short-term rentals are not a new practice, but the development of online hosting platforms, bookings, advertisements, and payments has increased the level and popularity of short-term rental usage.

By some reports, there were 1.8 million short-term rental listings in the United States in 2018. California's 235,000 short-term rental listings are second in the nation (Florida being first). Short-term rentals can present local elected officials with a new set of challenges such as parking, trash, and safety concerns. As local agencies struggle with the impacts from the growing popularity of short-term rentals, cities and counties are adopting ordinances to regulate or to prohibit short-term rentals.

Short-term Rental Ordinances. Most of the current short-term rental ordinances include regulations on permitting, tax compliance, noise, parking, and occupancy, as well as host and platform obligations and responsibilities. For instance, most short-term rental ordinances require short-term rentals to limit the number of occupants per bedroom in the residential property and require the host to be physically present to monitor and regulate activity during the short-term rental for a specified number of days. However, short-term rental ordinances' regulations and requirements vary from jurisdiction to jurisdiction. Violating a short-term rental ordinance usually results in a penalty. However, each city and county that has a short-term rental ordinance has different fine amounts and schedules and may or may not specify whether the penalty is imposed on the host, guest, or platform.

According to the Author:

"According to vacation rental data by AirDNA, in the last three years, the short-term rental market in the U.S. has grown by more than 100%. Though short-term rentals offer a way to improve tourism and earn owners some extra money, their recent proliferation has allowed bad actors to use the platform to advertise and secure homes for large parties, oftentimes in violation of local ordinances.

"These large gatherings have made some short-term rental properties the sites of underage drinking, brawls, noise complaints, and violence. In the last half of 2019, 42 people were shot inside or just outside a short-term rental property nationwide and 17 people died. In order to improve the safety of our citizens, this bill would increase fines that cities are allowed to impose on short-term rental hosts who violate local property rental laws. SB 1049 would authorize locals to impose fines up to $5,000 for a violation of a short-term ordinance."

Arguments in Support:

The City of Orinda, in support, writes, "When short-term rental hosting platforms came into existence, many cities in California chose to ban them completely. In Orinda, we chose a more moderate approach to permit them and adopted an ordinance that clearly outlined the rules. That included no rentals for large parties and the requirement that short-term rentals register their properties.

"Since the adoption of our ordinance, staff has worked with property owners and neighbors to address concerns and complaints. This requires extensive staff resources, but it also requires the administrative tools to do effective enforcement. However, the greatest challenge that we face is the ability to enforce the rules in the face of serious violations. The compliance of short-term rental properties with local zoning ordinances is the responsibility of both the property owner and the short-term rental platform. Having an adequate fine structure is the only way we will be able to effectively manage and enforce these reasonable ordinances. Orinda, like many cities in California, is a general law city, and the State Legislature sets the statutory limits for fines. This bill would provide a much-needed tool for cities in California to enforce their short-term rental ordinances."

Arguments in Opposition:

None on file.

FISCAL COMMENTS:

None.

VOTES:

SENATE FLOOR: 32-8-0

YES: Allen, Archuleta, Atkins, Bates, Beall, Bradford, Caballero, Dahle, Dodd, Durazo, Galgiani, Glazer, Lena Gonzalez, Hertzberg, Hill, Hueso, Hurtado, Jackson, Leyva, McGuire, Mitchell, Monning, Nielsen, Pan, Portantino, Roth, Rubio, Skinner, Stern, Umberg, Wieckowski, Wiener

NO: Borgeas, Chang, Grove, Jones, Melendez, Moorlach, Morrell, Wilk

ASM LOCAL GOVERNMENT: 7-0-1

YES: Aguiar-Curry, Lackey, Bloom, Boerner Horvath, Ramos, Luz Rivas, Robert Rivas

ABS, ABST OR NV: Voepel

UPDATED:

VERSION: August 25, 2020

CONSULTANT: Angela Mapp / L. GOV. / (916) 319-3958 FN: 0003318

SENATE THIRD READING

STR Bill Id:SB 1049

Author:(Glazer)

As Amended Ver:August 3, 2020

Majority vote

SUMMARY:

Establishes enhanced fines for violations of short-term rental ordinances.

Major Provisions

Provides that the violation of a short-term rental ordinance that is an infraction is punishable by the following:

1. A fine not exceeding $1,500 for a first violation;
2. A fine not exceeding $3,000 for a second violation of the same ordinance within one year; and,
3. A fine not exceeding $5,000 for each additional violation of the same ordinance within one year of the first violation.

Specifies that the penalty limits set by this bill apply only to infractions that pose a threat to public health and safety, and shall not apply to a first time offense of failure to register or pay a business license fee.

Requires a county or city levying a fine pursuant to this bill to establish a process for granting a hardship waiver to reduce the amount of the fine, as specified.

COMMENTS:

Background. Current law allows counties and cities to establish ordinances, and makes violations of ordinances misdemeanors, unless by ordinance the county or city makes them infractions. The violation of an ordinance may be prosecuted by county or city authorities in the name of the people of the State of California, or redressed by civil action. Current law outlines the following fine structure for ordinance violations, and for building and safety code violations, that are determined to be infractions:

For building and safety code violations that are infractions, there is an enhanced fine of $2,500 for each additional violation of the same ordinance within two years of the first violation if the property is a commercial property that has an existing building at the time of the violation and the violation is due to failure by the owner to remove visible refuse or failure to prohibit unauthorized use of the property.

In addition to the fines outlined above, counties (not cities) may assess fines specifically for a violation of an event permit requirement that is an infraction. These fines are capped at $150 for a first violation, $700 for a second occurrence of the same violation by the same owner or operator within three years of the first violation, and $2,500 for each additional occurrence of the same violation by the same owner or operator within three years of the first violation.

Short-term Rentals. California has seen a rise in the home sharing industry with companies such as Airbnb, Expedia, and Vacation Rentals by Owner (VRBO) gaining popularity due to their short-term rental practice. Short-term rentals, also known as vacation-rentals, are usually an individual's residential property, such as a home, room, apartment, or condominium that is rented out to a visitor for fewer than 30 consecutive days. Generally, the home sharing industry involves three primary participants: 1) the home sharing platforms, such as Airbnb, that advertise residential property offered for temporary rental and facilitates connecting renters with hosts for a fee, 2) the consumer who is often referred to as the "renter," "guest," or "visitor" of the residential property, and 3) the supplier, owner, operator, or "host" of the residential property. Short-term rentals are not a new practice, but the development of online hosting platforms, bookings, advertisements, and payments has increased the level and popularity of short-term rental usage.

By some reports, there were 1.8 million short-term rental listings in the United States in 2018. California's 235,000 short-term rental listings are second in the nation (Florida being first). Short-term rentals can present local elected officials with a new set of challenges such as parking, trash, and safety concerns. As local agencies struggle with the impacts from the growing popularity of short-term rentals, cities and counties are adopting ordinances to regulate or to prohibit short-term rentals.

Short-term Rental Ordinances. Most of the current short-term rental ordinances include regulations on permitting, tax compliance, noise, parking, and occupancy, as well as host and platform obligations and responsibilities. For instance, most short-term rental ordinances require short-term rentals to limit the number of occupants per bedroom in the residential property and require the host to be physically present to monitor and regulate activity during the short-term rental for a specified number of days. However, short-term rental ordinances' regulations and requirements vary from jurisdiction to jurisdiction. Violating a short-term rental ordinance usually results in a penalty. However, each city and county that has a short-term rental ordinance has different fine amounts and schedules and may or may not specify whether the penalty is imposed on the host, guest, or platform.

According to the Author:

"According to vacation rental data by AirDNA, in the last three years, the short-term rental market in the U.S. has grown by more than 100%. Though short-term rentals offer a way to improve tourism and earn owners some extra money, their recent proliferation has allowed bad actors to use the platform to advertise and secure homes for large parties, oftentimes in violation of local ordinances.

"These large gatherings have made some short-term rental properties the sites of underage drinking, brawls, noise complaints, and violence. In the last half of 2019, 42 people were shot inside or just outside a short-term rental property nationwide and 17 people died. In order to improve the safety of our citizens, this bill would increase fines that cities are allowed to impose on short-term rental hosts who violate local property rental laws. SB 1049 would authorize locals to impose fines up to $5,000 for a violation of a short-term ordinance."

Arguments in Support:

The City of Orinda, in support, writes, "When short-term rental hosting platforms came into existence, many cities in California chose to ban them completely. In Orinda, we chose a more moderate approach to permit them and adopted an ordinance that clearly outlined the rules. That included no rentals for large parties and the requirement that short-term rentals register their properties.

"Since the adoption of our ordinance, staff has worked with property owners and neighbors to address concerns and complaints. This requires extensive staff resources, but it also requires the administrative tools to do effective enforcement. However, the greatest challenge that we face is the ability to enforce the rules in the face of serious violations. The compliance of short-term rental properties with local zoning ordinances is the responsibility of both the property owner and the short-term rental platform. Having an adequate fine structure is the only way we will be able to effectively manage and enforce these reasonable ordinances. Orinda, like many cities in California, is a general law city, and the State Legislature sets the statutory limits for fines. This bill would provide a much-needed tool for cities in California to enforce their short-term rental ordinances."

Arguments in Opposition:

None on file.

FISCAL COMMENTS:

None.

VOTES:

SENATE FLOOR: 32-8-0

YES: Allen, Archuleta, Atkins, Bates, Beall, Bradford, Caballero, Dahle, Dodd, Durazo, Galgiani, Glazer, Lena Gonzalez, Hertzberg, Hill, Hueso, Hurtado, Jackson, Leyva, McGuire, Mitchell, Monning, Nielsen, Pan, Portantino, Roth, Rubio, Skinner, Stern, Umberg, Wieckowski, Wiener

NO: Borgeas, Chang, Grove, Jones, Melendez, Moorlach, Morrell, Wilk

ASM LOCAL GOVERNMENT: 7-0-1

YES: Aguiar-Curry, Lackey, Bloom, Boerner Horvath, Ramos, Luz Rivas, Robert Rivas

ABS, ABST OR NV: Voepel

UPDATED:

VERSION: August 3, 2020

CONSULTANT: Angela Mapp / L. GOV. / (916) 319-3958 FN: 0003191

Date of Hearing: August 11, 2020

ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT

Cecilia Aguiar-Curry, Chair

SBPCA Bill Id:SB 1049

Author:(Glazer) – As Amended Ver:August 3, 2020

SENATE VOTE: 32-8

SUBJECT: Cities and counties: ordinances: short-term rentals.

SUMMARY: Establishes enhanced fines for violations of short-term rental ordinances. Specifically, this bill:

1. Provides that the violation of a short-term rental ordinance that is an infraction is punishable by the following:
   1. A fine not exceeding $1,500 for a first violation;
   2. A fine not exceeding $3,000 for a second violation of the same ordinance within one year; and,
   3. A fine not exceeding $5,000 for each additional violation of the same ordinance within one year of the first violation.
2. Specifies that the penalty limits set by this bill apply only to infractions that pose a threat to public health and safety, and shall not apply to a first time offense of failure to register or pay a business license fee.
3. Clarifies that nothing in this bill limits the authority of a county, city, or city and county to establish lower penalties for specific violations by ordinance.
4. Requires a county or city levying a fine pursuant to this bill to establish a process for granting a hardship waiver to reduce the amount of the fine upon a showing by a responsible party that the responsible party has made a bona fide effort to comply after the first violation, and that payment of the full amount of the fine would impose an undue financial burden on the responsible party.
5. Provides the following definitions for the purposes of this bill:
   1. “Short-term rental” means a residential dwelling, or any portion of a residential dwelling, that is rented to a person or persons for 30 consecutive days or less; and,
   2. “Residential dwelling” means a private structure designed and available, pursuant to applicable law, for use and occupancy as a residence by one or more individuals. “Residential dwelling” does not include a commercially operated hotel, motel, bed and breakfast inn, or time share property as defined pursuant to existing law, as specified.

FISCAL EFFECT: None

COMMENTS:

1. Background. A county or city may make and enforce within its limits all local, police, sanitary, and other ordinances and regulations not in conflict with general laws. This "police power" provides the right to adopt and enforce zoning regulations, as long as they do not conflict with state laws.

Current law allows counties and cities to establish ordinances, and makes violations of ordinances misdemeanors, unless by ordinance the county or city makes them infractions. The violation of an ordinance may be prosecuted by county or city authorities in the name of the people of the State of California, or redressed by civil action. Current law outlines the following fine structure for ordinance violations, and for building and safety code violations, that are determined to be infractions:

For building and safety code violations that are infractions, there is an enhanced fine of $2,500 for each additional violation of the same ordinance within two years of the first violation if the property is a commercial property that has an existing building at the time of the violation and the violation is due to failure by the owner to remove visible refuse or failure to prohibit unauthorized use of the property.

In addition to the fines outlined above, counties (not cities) may assess fines specifically for a violation of an event permit requirement that is an infraction. These fines are capped at $150 for a first violation, $700 for a second occurrence of the same violation by the same owner or operator within three years of the first violation, and $2,500 for each additional occurrence of the same violation by the same owner or operator within three years of the first violation.

1. Short-term Rentals. California has seen a rise in the home sharing industry with companies such as Airbnb, Expedia, and Vacation Rentals by Owner (VRBO) gaining popularity due to their short-term rental practice. Short-term rentals, also known as vacation-rentals, are usually an individual’s residential property, such as a home, room, apartment, or condominium that is rented out to a visitor for fewer than 30 consecutive days. Generally, the home sharing industry involves three primary participants: (1) the home sharing platforms, such as Airbnb, that advertise residential property offered for temporary rental and facilitates connecting renters with hosts for a fee, (2) the consumer who is often referred to as the “renter,” “guest,” or “visitor” of the residential property, and (3) the supplier, owner, operator, or “host” of the residential property. Short-term rentals are not a new practice, but the development of online hosting platforms, bookings, advertisements, and payments has increased the level and popularity of short-term rentals usage.

By some reports, there were 1.8 million short-term rental listings in the United States in 2018. California’s 235,000 short-term rental listings are second in the nation (Florida being first). The popularity of short-term rentals could be attributed to its tourist and economic benefits. Homeowners utilizing online home sharing platforms, like Airbnb, can provide an opportunity to earn additional income to offset the cost of maintaining their residential property. For travelers, online rental platforms provides an online streamlined approach to obtaining booking as opposed to traditional booking of motels or hotels.

However, short-term rentals also present local elected officials with a new set of challenges with short-term renters creating parking, trash, and safety concerns. As local agencies struggle with the impacts from the growing popularity of short-term rentals, cities and counties are adopting ordinances to regulate or to prohibit short-term rentals.

1. Short-term Rental Ordinances. Generally, most of the current short-term rental ordinances include regulations on permitting, tax compliance, noise, parking, and occupancy, as well as host and platform obligations and responsibilities. For instance, most short-term rental ordinances require short-term rentals to limit the number of occupants per bedroom in the residential property and require the host to be physically present to monitor and regulate activity during the short-term rental for a specified number of days. However, short-term rental ordinances’ regulations and requirements vary from jurisdiction to jurisdiction.

For example, in the City of Orinda, the maximum occupancy when a property is being used for a short-term rental is limited to two people per bedroom, plus three other people, and a requirement for the host to be physically present during a short-term rental usage, including meeting the guests upon arrival. This regulation slightly differs from the regulations of the City of Santa Monica. The City of Santa Monica’s short-term rental ordinance limits the occupancy of short-term rental to (1) 10 people or less; (2) one person per 200 square feet of the dwelling unit; or, (3) two persons, excluding minor children, per bedroom. The host must be present in the short-term rental throughout the visitor’s stay.

Violating a short-term rental ordinance usually results in a penalty. However, each city and county that has a short-term rental ordinance has different fine amounts and schedules and may or may not specify whether the penalty is imposed on the host, guest, or platform. For example, the City of Santa Monica’s short-term rental ordinance describes that any host or any person other than a hosting platform who facilitates or attempts to facilitate a violation is subject to a fine. So, if the host or any other person were to violate the occupancy limit of short-term rentals, they would be subject to a fine. If a hosting platform, such as Airbnb or VRBO, violates its obligations described in the ordinance, such as furnishing required information to the city, they are also subject to a fine. The City of Orinda, on the other hand, imposes numerous requirements on hosts, including that the host be present at the home, that it is the host’s primary residence, and that stays are no less than two nights. Violations of Orinda’s short-term rental ordinance can result in a maximum fine of up to $1,000 per day.

1. Author’s Statement. According to the author, “According to vacation rental data by AirDNA, in the last three years, the short-term rental market in the U.S. has grown by more than 100%. Though short-term rentals offer a way to improve tourism and earn owners some extra money, their recent proliferation has allowed bad actors to use the platform to advertise and secure homes for large parties, oftentimes in violation of local ordinances.

“These large gatherings have made some short-term rental properties the sites of underage drinking, brawls, noise complaints, and violence. In the last half of 2019, 42 people were shot inside or just outside a short-term rental property nationwide and 17 people died. In order to improve the safety of our citizens, this bill would increase fines that cities are allowed to impose on short-term rental hosts who violate local property rental laws.
SB 1049 would authorize locals to impose fines up to $5,000 for a violation of a short-term ordinance.”

1. Bill Summary. This bill establishes enhanced fines for violations of short-term rental ordinances that are determined to be infractions, as follows:
   1. A fine not exceeding $1,500 for a first violation;
   2. A fine not exceeding $3,000 for a second violation of the same ordinance within one year; and,
   3. A fine not exceeding $5,000 for each additional violation of the same ordinance within one year of the first violation.

These fines apply only to infractions that pose a threat to public health and safety, and do not apply to a first time offense of failure to register or pay a business license fee.

A county or city levying a fine pursuant to this bill must establish a process for granting a hardship waiver to reduce the amount of the fine upon a showing by a responsible party that the responsible party has made a bona fide effort to comply after the first violation, and that payment of the full amount of the fine would impose an undue financial burden on the responsible party.

This bill is sponsored by the author.

1. Previous Legislation. AB 2598 (Quirk), Chapter 970, Statutes of 2018, increased the fine amounts that counties and cities may assess for violations of their building and safety codes, and created a new fine for specified violations of building and safety codes on commercial property.

AB 556 (Limón), Chapter 405, Statutes of 2017, allowed counties to assess increased fines for a violation of an event permit requirement that is an infraction as follows: a fine not exceeding $150 for the first violation; a fine not exceeding $700 for a second occurrence of the same violation by the same owner or operator within three years of the first violation; and, a fine not exceeding $2,500 for each additional occurrence of the same violation by the same owner or operator within three years of the first violation.

1. Arguments in Support. The City of Orinda, in support, writes, “When short-term rental hosting platforms came into existence, many cities in California chose to ban them completely. In Orinda, we chose a more moderate approach to permit them and adopted an ordinance that clearly outlined the rules. That included no rentals for large parties and the requirement that short-term rentals register their properties.

“Since the adoption of our ordinance, staff has worked with property owners and neighbors to address concerns and complaints. This requires extensive staff resources, but it also requires the administrative tools to do effective enforcement. However, the greatest challenge that we face is the ability to enforce the rules in the face of serious violations. The compliance of short-term rental properties with local zoning ordinances is the responsibility of both the property owner and the short-term rental platform. Having an adequate fine structure is the only way we will be able to effectively manage and enforce these reasonable ordinances.

“Orinda, like many cities in California, is a general law city, and the State Legislature sets the statutory limits for fines. This bill would provide a much-needed tool for cities in California to enforce their short-term rental ordinances.”

1. Arguments in Opposition. None on file.

REGISTERED SUPPORT / OPPOSITION:

Support

Cities of Cupertino, Lafayette, Orinda, and Santa Monica
Expedia
Southern California Rental Housing Association

California Hotel & Lodging Association

Opposition

None on file

Analysis Prepared by: Angela Mapp / L. GOV. / (916) 319-3958

 THIRD READING  

Bill No: SB 1049

Author: Glazer (D), et al.

Amended: 5/29/20

Vote: 21

SENATE GOVERNANCE & FIN. COMMITTEE: 6-1, 5/28/20

AYES: McGuire, Beall, Hertzberg, Hurtado, Nielsen, Wiener

NOES: Moorlach

SUBJECT: Cities and counties: ordinances: short-term rentals

SOURCE: Author

DIGEST:

This bill increases the administrative penalties that local agencies may impose for violations of short-term rental ordinances.

ANALYSIS:

Existing law:

1. Allows counties and cities to adopt and enforce ordinances that regulate local health, safety, peace, and welfare.
2. Allows, as an alternative to civil and criminal enforcement mechanisms, a local agency’s legislative body to make any violation of any of its ordinances subject to an administrative fine or penalty.
3. Provides that a violation of a city ordinance is a misdemeanor unless by ordinance it is made an infraction. In general, every ordinance violation that is determined to be an infraction is punishable by:
   1. A fine not exceeding $100 for a first violation.
   2. A fine not exceeding $200 for a second violation of the same ordinance within one year.
   3. A fine not exceeding $500 for each additional violation of the same ordinance within one year.
4. Establishes higher limits for a violation of local building and safety codes determined to be an infraction, punishable by:
   1. A fine not exceeding $130 for a first violation.
   2. A fine not exceeding $700 for a second violation of the same ordinance within one year.
   3. A fine not exceeding $1,300 for each additional violation of the same ordinance within one year.
   4. A fine not exceeding two thousand five hundred dollars ($2,500) for each additional violation of the same ordinance within two years of the first violation if the property is a commercial property that has an existing building at the time of the violation and the violation is due to failure by the owner to remove visible refuse or failure to prohibit unauthorized use of the property.
5. Allows cities to impose fines and penalties through civil or criminal proceedings. These fines and penalties are limited to $1,000 per violation and six months of imprisonment.

This bill:

1. Allows both cities and counties to enact administrative penalties for violations of short-term rental ordinances with the following fine amounts:
   1. A fine not exceeding $1,500 for a first violation.
      
   2. A fine not exceeding $3,000 for a second violation of the same ordinance within one year.
      
   3. A fine not exceeding $5,000 for each additional violation of the same ordinance within one year.
2. Defines short-term rental as a residential property that is not a hotel or motel that is rented to a visitor for fewer than 30 consecutive days or less.
3. Requires a city levying any fines for a second or subsequent violation of any short-term rental ordinance to establish a process for granting a hardship waiver to reduce the amount of the fine upon a showing by the responsible party that they have made a bona fide effort to comply after the first violation and that payment of the full amount of the fine would impose an undue financial burden.

Background

1. Purpose of the bill. According to the author, “Short-term rentals have exploded in popularity over the last decade with the rise of hosting platforms such as Airbnb, HomeAway, and VRBO. Airbnb alone now lists short-term rentals in 81,000 cities and 191 countries. Though short-term rentals offer a way to improve tourism and earn owners some extra money, their recent proliferation has allowed bad actors to use the platform to advertise and secure homes for large parties. With social media to amplify the reach of a party ad, a short-term rental property can quickly become the site of underage drinking, brawls, noise complaints, and – in some instances – violence. In the last half of 2019 alone, 42 people were shot inside or just outside short-term rental properties across the United States and 17 died. Many homes on these platforms rent for $1,000, $2,000, $3,000, or more dollars per night. In these instances, a maximum fine of $1,000 per violation is not enough to deter bad actors from trying to make a quick profit.”
2. Root of the problem? Over the past years, some city and county officials have criticized short-term rentals for creating public safety concerns, with some California local jurisdictions creating strict short-term rental ordinances and others outright banning short-term rentals. According to the San Francisco Chronicle, between May 2019 and November 2019, at least 42 people have been shot inside or just outside the short-term rental properties across the United States, including in the California cities of West Covina, Fair Oaks, Hacienda Heights, Sacramento, and Orinda. However, it is unclear whether creating a new fine violation structure specifically for short-term rentals will deter behavior any more than the current fine violation structure. Does creating a new fine structure specifically for short-term rentals address the problem occurring in short-term rentals or would additional regulation to ensure platforms better oversee listings and guest generate better results?
3. Paid in full. Excessive fines can weigh heavily on people with limited means, while having a limited deterrent effect on those with deeper pockets. SB 1049 allows cities and counties to pursue fines for violations of short-term rental ordinances in an effort to encourage greater compliance, but city and county officials may seek the maximum fines for other reasons, without regard for the deterrent effect or the effect on the person or entity responsible for the violation. Over the past several decades, city budgets have been squeezed by ballot measures such as Proposition 13 and Proposition 218 and new mandates from the state policymakers. Most recently, the COVID-19 pandemic has strained local government budgets. Local government revenue sources are often constrained to specific purposes, leaving local governments with fewer general fund resources. Fine revenues are one remaining source of funds for general activities. As such, local governments may be tempted to maximize revenue from fines.

FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No

SUPPORT: (Verified 6/22/20)

California Hotel and Lodging Association

City of Orinda

Expedia Group

Southern California Rental Housing Association

OPPOSITION: (Verified 6/22/20)

None received

Prepared by: Gustavo Medrano / GOV. & F. / (916) 651-4119

6/22/20 11:52:23

**** END ****

SENATE COMMITTEE ON GOVERNANCE AND FINANCE

Senator Mike McGuire, Chair

2019 - 2020 Regular

Local ordinances: short-term rentals

Allows cities to impose a fine of up to five thousand dollars ($5,000) for each violation of a short-term rental ordinance.

Background

Local Ordinances. Current state law already provides that a city or county legislative body, such as a city council or county board of supervisors, can impose fines, penalties, and forfeitures for violations of local ordinances. In general, every ordinance violation that is determined to be an infraction is punishable by:

• A fine not more than $100 for a first violation.
• A fine not more than $200 for a second violation of the same ordinance within one year.
• A fine not more than $500 for each additional violation of the same ordinance within one year.

As an exception to the general limits on fines for infractions, a violation of local building and safety codes determined to be an infraction is punishable by:

• A fine not more than $130 for a first violation.
• A fine not more than $700 for a second violation of the same ordinance within one year.
• A fine not more than $1,300 for each additional violation of the same ordinance within one year.
• A fine not exceeding $2,500 for each additional violation of the same ordinance within two years of the first violation if the property is a commercial property that has an existing building at the time of the violation and the violation is due to failure by the owner to remove visible refuse or failure to prohibit unauthorized use of the property.

A local agency's legislative body can make any violation of any of its ordinances subject to an administrative fine or penalty (SB 814, Alquist, 1995). Cities’ administrative fines and penalties are subject to the same maximum fine limits that state law generally applies for ordinance violations determined to be an infraction. The local agency must adopt an ordinance specifying the administrative procedures that govern the imposition, enforcement, collection, and administrative review of the fines or penalties. The administrative procedures must grant a reasonable time to remedy a continuing violation before the imposition of administrative fines or penalties when the violation pertains to building, plumbing, electrical, or other similar structural

and zoning issues that do not create an immediate danger to health or safety. Within 20 days after service of a final administrative order or decision regarding administrative fines or penalties, a person contesting that final administrative order or decision may appeal in Superior Court. Local agencies must go through a civil court proceeding to collect unpaid fines and penalties. Cities may also impose fines and penalties through civil or criminal proceedings. These fines and penalties are limited to $1,000 per violation and six months of imprisonment.

Short-term rentals. California has seen a rise in the home sharing industry with companies such as Airbnb, Expedia, and Vacation Rentals by Owner (VRBO) gaining popularity due to their short-term rental practice. Short-term rentals, also known as vacation-rentals, are usually an individual’s residential property, such as a home, room, apartment, or condominium that is rented out to a visitor for fewer than 30 consecutive days. Generally, the home sharing industry involves three primary participants: (1) the home sharing platforms, such as Airbnb, that ,advertises residential property offered for temporary rental and facilitates connecting renters with hosts for a fee, (2) the consumer who is often referred as the “renter” “guest,” or “visitor” of the residential property, and (3) the supplier, owner, operator, or “host” of the residential property. Short-term rentals are not a new practice, but the development of online hosting platforms, bookings, advertisements, and payments has increased the level and popularity of short-term rentals usage.

By some reports, in 2018, there were 1.8 million short-term rental listings in the United States.^[1] California’s 235,000 short-term rental listings are second in the nation (Florida being first). The popularity of short-term rentals could be attributed to its tourist and economic benefits. Homeowners utilizing online home sharing platforms, like Airbnb, can provide an opportunity to earn additional income to offset the cost of maintaining their residential property. For travelers, online rental platforms provides an online streamlined approach to obtaining booking as opposed to traditional booking of motels or hotels.

However, short-term rentals also present local elected officials with a new set of challenges with short-term renters creating parking, trash, and safety concerns. As local agencies struggle with the impacts from the growing popularity of short-term rentals, cities and counties are adopting ordinances to regulate or to prohibit short-term rentals.

Short-term rental ordinances. Generally, most of the current short-term rental ordinances include regulations on permitting, tax compliance, noise, parking, and occupancy, as well as host and platform obligations and responsibilities. For instance, most short-term rental ordinances require short-term rentals to limit the number of occupants per bedroom in the residential property and require the host to be physically present to monitor and regulate activity during the short-term rental for a specified number of days. However, short-term rental ordinances’ regulations and requirements vary from jurisdiction to jurisdiction. For example, in the City of Orinda, the maximum occupancy when a property is being used for a short-term rental is limited to two people per bedroom, plus three other people, and a requirement for the host to be physically present during a short-term rental usage, including meeting the guests upon arrival. This regulation slightly differs from the regulations of the City of Santa Monica. The City of Santa Monica’s short-term rental ordinance limits the occupancy of short-term rental to (1) 10 people or less; (2) one person per 200 square feet of the dwelling unit; or (3) two persons, excluding minor children, per bedroom. The host must be present in the short-term rental throughout the visitor’s stay.

Violating a short-term rental ordinance usually results in a penalty. However, each city and county that has a short-term rental ordinance has different fine amounts and schedules and may or may not specify whether the penalty is imposed on the host, guest, or platform. For example, the City of Santa Monica’s short-term rental ordinance describes that any host or any person other than a hosting platform who facilitates or attempts to facilitate a violation is subject to a fine. So, if the host or any other person were to violate the occupancy limit of short-term rentals, they would be subject to a fine. If a hosting platform, such as Airbnb or VRBO, violates its obligations described in the ordinance, such as furnishing required information to the city, they are also subject to a fine. The City of Orinda, on the other hand, imposes numerous requirements on hosts, including that the host be present at the home, that it is the host’s primary residence, and that stays are no less than two nights. Violations of Orinda’s short-term rental ordinance can result in a maximum fine of up to $1,000 per day.

The author wants to give cities the ability to initiate fines for violations of short-term rentals to deter the public safety concerns surrounding short-term rentals.

Proposed Law

Senate Bill 1049 allows cities to impose a fine of up to five thousand dollars ($5,000) for each violation of a short-term rental ordinance. The bill defines short-term rental as a residential property that is rented to a visitor for fewer than 30 days through a centralized online platform where the rental is advertised and payments for the rental are securely processed.

State Revenue Impact

No estimate.

Comments

1. Purpose of the bill. According to the author, “Short-term rentals have exploded in popularity over the last decade with the rise of hosting platforms such as AirBnB, HomeAway, and VRBO. AirBnB alone now lists short-term rentals in 81,000 cities and 191 countries. Though short-term rentals offer a way to improve tourism and earn owners some extra money, their recent proliferation has allowed bad actors to use the platform to advertise and secure homes for large parties. With social media to amplify the reach of a party ad, a short-term rental property can quickly become the site of underage drinking, brawls, noise complaints, and – in some instances – violence. In the last half of 2019 alone, 42 people were shot inside or just outside short-term rental properties across the United States and 17 died. Many homes on these platforms rent for $1,000, $2,000, $3,000, or more dollars per night. In these instances, a maximum fine of $1,000 per violation is not enough to deter bad actors from trying to make a quick profit. This bill would allow general law city legislative bodies to impose fines of up to $5,000 for a violation of a short-term rental ordinance.”

2. Root of the problem? Over the past years, some city and county officials have criticized short-term rentals for creating public safety concerns, with some California local jurisdictions creating strict short-term rental ordinances and others outright banning short-term rentals. According to the San Francisco Chronicle^[2], at least 42 people have been shot inside or just outside the short-term rental properties across the United States, with California cities of West Covina, Fair Oaks, Hacienda Heights, Sacramento, and Orinda each experiencing a shooting incident within the months of May 2019 and November 2019. However, it is unclear whether creating a new fine violation structure specifically for short-term rentals will deter behavior any more than the current fine violation structure. The Committee may wish to consider if SB 1049 addresses the problem, or whether additional regulation to ensure that platforms better oversee listings and guests may generate better results.

3. Fair and just. Violations of local building and safety codes, which can pose a direct risk to people and property, are capped at $1,300 per violation after the 3^rd violation. SB 1049 allows a city to impose a fine of up to five thousand dollars ($5,000) for each violation of a short-term rental ordinance. Such a large fine amount may not be commensurate to the harm caused by accidental violations or violations that, while intentional, do not endanger the public health and safety. For instance, the City of Orinda’s short-term rental ordinance requires the property owner and operator to be jointly responsible for compliance with all City regulations including those regarding noise. If a guest of a short-term rental, who may not be aware of the City’s regulation, accidently plays music too loud, they could be subject to a fine up to $5,000 under the bill without any recourse to reduce the fine amount. The Committee may wish to consider establishing a lower fine amount and a tiered system to ensure that accidental violations are not unfairly punished.

4. Paid in full. Excessive fines can weigh heavily on people with limited means, while having a limited deterrent effect on those with deeper pockets. SB 1049 would allow cities and counties to pursue fines for violations of short-term rental ordinances in an effort to encourage greater compliance, but city and county officials may seek the maximum fines for other reasons, without regard for the deterrent effect or the effect on the person or entity responsible for the violation. Over the past several decades, city budgets have been squeezed by ballot measures such as Proposition 13 and Proposition 218 and new mandates from the state policymakers. Most recently, the COVID-19 pandemic has strained local government budgets. Local government revenue sources are often constrained to specific purposes, leaving cities with fewer general fund resources. Fine revenues are one remaining source of funds for general activities. As such, cities may be tempted to maximize revenue from fines. The committee may wish to consider if the fines are truly necessary to deter problematic short-term rentals.

5. Let’s get technical. The committee may also wish to consider the following amendments:

• SB 1049 currently only applies to cities.  SB 1049 should extend the same authority to both cities and counties.
• SB 1049 creates an entirely new section (Government Code § 36902); by creating a new section, the city would not be able to administratively impose the fine because only the fines stated within Government Code § 36900 can be imposed administratively. Otherwise, the city has to take to person who violated the short-term rental ordinance to court. SB 1049 should instead amend the existing Government Code § 36900 to ensure the fines are imposed administratively.
• SB 1049’s definition of short-term rental could unintentionally capture online platforms that are not necessarily short-term rental platforms (e.g. Craigslist or Facebook). SB 1049 should be amended to remove “through a centralized online platform where the rental is advertised and payments for the rental are securely processed.”
• SB 1049’s provisions could be interpreted to apply to hotels or motels.  SB 1049 should specify that “short-term rental” does not refer or apply to hotels or motels.

Support and Opposition (5/26/20)

Support: Unknown

Opposition: Unknown

-- END --

1. https://www.cacities.org/Resources-Documents/Education-and-Events-Section/Annual-Conference/2019-Session-Materials/The-Secret-to-Effective-Short-Term-Rental-Regu-(1) ↑

2. https://www.sfchronicle.com/crime/article/Orinda-Airbnb-violence-fits-pattern-at-least-14815970.php ↑