City leaders preparing to wade back into issue of short-term vacation rentals

Five years after adopting strict regulations for short-term vacation rentals in Palm Springs, and nearly four years after voters rejected banning them, city leaders are hoping to explore what’s working and what’s not. That has proponents and opponents lined up for a familiar fight.

The exploration will come in the form of a study session on a date yet to be determined. When that date arrives, the Palm Springs City Council will be armed with data on the volume and concentration of short-term vacation rentals in the city, the number of complaints the city receives, and the number of citations issued by code enforcement officers overseen by the city’s police department.

What they’re not looking for, at this time, is more debate or an opportunity to change any current regulations. Exploring the issue is simply one of more than 50 priorities identified in a recent 21-page strategic plan that outlines what work the Council will undertake in the coming months. City Manager Justin Clifton plans to discuss what to include in the study session at a March 10 Council meeting.

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Vacation rentals have been a divisive issue in the city and throughout the Coachella Valley for years. Supporters argue they are a vital component of the city’s tourist industry, providing millions in tax revenue to city coffers. Opponents say their presence, often in large clusters as seen in this map prepared by The Post last fall, degrade neighborhoods by turning homes into “mini motels.”

In 2018, Palm Springs voters rejected a ballot measure that would have seen a ban on short-term vacation rentals in the city. In neighboring communities, however, the story isn’t the same. La Quinta, Rancho Mirage, Palm Desert, and Cathedral City have all moved to phase out or more strictly regulate short-term rentals in their communities. The town of Yucca Valley recently voted to cap vacation rentals at 10% of the housing stock.

Available data shows roughly 36,500 housing units in Palm Springs, including single-family homes, apartments, mobile homes, condominiums, and townhomes. Of those, about 25,000 are occupied full-time. Many units not occupied full-time are second homes and long-term vacation rentals (often occupied in winter months by snowbirds). The rest — approximately 6.3% of the housing stock — are currently licensed as short-term rentals.

As of the last available report, there were 2,317 licensed short-term vacation rentals in Palm Springs. If a 10% cap is imposed, the city would reach its limit after issuing 1,233 more licenses.

Points on this map of a section of the city show licensed short-term vacation rentals as of last October.

A cap, as well as strict limits on vacation rentals in specific neighborhoods, would be a welcome compromise for some of the city’s most vocal vacation rental critics.

“The biggest problem with vacation rentals in Palm Springs is their unchecked growth,” wrote Hank Plante, a city resident who has voiced his concerns on the issue in social media posts and newspaper editorials. “The result here is entire streets becoming a majority of mini-motels filled with weekend partiers. The Post’s interactive map of STRs clearly shows their oversaturation block-by-block. 

“The solution is to immediately freeze any new STR permits from being issued, and then to cut back on their number as San Diego and other cities are doing.”

While the volume of short-term rentals in the city may be alarming to some, data on the volume of code enforcement complaints and citations indicates that the city’s regulations are working.

The most recent data shows the city received 202 calls to its vacation rental hotline during the last three months of 2021, and that 75 required a response. Of those, the city issued only nine citations to licensed vacation rentals (primarily for loud music) and found four rentals operating without a license.

That data is inline with historical records which show 94% of the registered vacation rental properties in the city have never been cited or visited by code enforcement.

That point will likely be one of several similar points brought up by Bruce Hoban and members of Vacation Rental Owners and Neighbors of Palm Springs (VRON-PS). The group mounted the campaign against the vacation rental ban in 2018, drawing support from throughout the community, including current City Council members Christy Holstege and Geoff Kors, as well as current Mayor Lisa Middleton. Nearly 70% of voters rejected the ban.

“VRON-PS totally supports the City Council discussion this Thursday on what types of data need to be collected and we will be contributing to the list from the initial set of the City’s written recommendations,” Hoban wrote in an email Friday evening. “We  know this data will show that vacation rentals subject to the city’s strong enforcement are working.”

Hoban’s organization pointed out then — and is pointing out again now in a series of ads running on social media — that vacation rentals contribute millions of dollars in transit occupancy tax (TOT) to the city budget and that visitors staying in the rentals contribute millions of dollars more to local businesses.

Data shows that during the last fiscal year, which ended on June 30, 2021, the city collected $34.6 million in TOT. Of that, $15.4 million — or roughly 45% — was from vacation rental stays. So far this fiscal year, as the tourism economy shifts back toward where it was prior to COVID-19, vacation rental TOT is about 35% of the $25.7 million that has been collected.

City leaders routinely acknowledge the contributions of short-term rentals to the tourist economy, and there is no indication that a ban or a moratorium will be on the table. But there are indications some at City Hall recognize the larger issues at hand.

In a December 2021 letter to Pacaso, a company offering shared ownership of vacation homes, City Attorney Jeff Ballinger asked that the company cease operations in Palm Springs. Ballinger claimed Pacaso’s business model created timeshares, which are allowed only in certain areas of the city.

Ballinger went a step further, however, arguing that housing stock made unavailable to potential full-time residents “feeds the affordability crisis, making the remaining houses within the City more costly.”

Pacaso has denied Ballinger’s claims, stating that its business model actually helps maintain affordable housing in cities by targeting high-end homes and not “homes at lower price points needed by the local workforce.”

Issues with Pacaso will also be discussed by the Council at its March 10 meeting as Ballinger and City Manager Justin Clifton seek direction about what, if any, different approach the City Council would like to take with regard to the company’s business model.


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