Council hopes to ‘act tactically’ but agrees vacation rental rules need change

Acknowledging that any talk of a moratorium might cause a rush of new applications for short-term vacation rental permits but that changes in rules governing them are needed, the Palm Springs City Council Tuesday evening directed city staff to move forward with community outreach and additional research that could take months. While that work is completed, permits will continue to be processed.

“I think we may need to beef up some of our restrictions on who can purchase a vacation rental in order to better protect individuals who have some stake in the community in terms of planning to live here,” said Mayor Lisa Middleton during a study session on the issue. “We’ve got some broad directions, but we need more data before making specific policy recommendations.”

Of particular concern to Council members is the concentration of vacation rentals in neighborhoods traditionally comprised of middle-class families and the proliferation of permit holders who do not have roots, or plan to have them, in the city.

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Mayor Pro Tem Grace Garner, who grew up in Palm Springs, recalled that Desert Park Estates was once home to most of her classmates’ families, but “It is full of vacation rentals now.” Data provided by city staff, and reviewed by Council members prior to the study session, shows 21% of the homes in the neighborhood off North Sunrise Way are currently licensed short-term vacation rentals.

“It is investors that come in,” Garner said. “It doesn’t seem to be a lot of individuals who are trying to have a small investment because they love Palm Springs and live in Palm Springs part of the time.”

A case in point, Garner said, is a home in Desert Highland Gateway Estates, which sold for $470,000 in 2019 and this month sold for more than $1 million — believed to be the first sale of that magnitude in a neighborhood where comparable homes sell for half that amount. Garner said the home had been used as a vacation rental and not a primary residence, and she suspects the new buyers will continue that use.

Garner threw her support behind imposing a moratorium on vacation rental permits until further studies could be done to determine just how many permits are held by corporations and not individuals who are either full-time or part-time members of the community. Other Council members supported asking for the data, and even exploring ways to prevent corporate ownership of city homes. They did not support a moratorium at this time.

“We need to be at least honest with ourselves that any reduction in vacation rentals means reduction in the availability of people to come to our city,” said Middleton, adding later, “I hope the public takes away from this that we’re trying to act tactically and act in a fashion that is balanced. We’re not trying to make radical change here in any direction.”

Change could be coming in the future, however. City Manager Justin Clifton was instructed to spend time working with stakeholders in real estate and other industries, as well as representatives of neighborhood organizations, to determine how the city might best encourage “real people” to purchase homes used occasionally as vacation rentals and eventually as primary residences. He was also tasked with drafting legislation that discourages homeowners from converting current long-term rental properties to short-term vacation rentals.

“We don’t want people buying lower-priced homes in the city who are never going to use them,” said Councilmember Geoff Kors. Added Councilmember Christy Holstege: “If investors are coming in and making profits off a home and a tenant has nowhere to go, those are impacts we need to measure.”

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