Palm Springs feels the strain as neighboring cities place more restrictions on vacation rentals

As other Coachella Valley cities enact stricter rules or outright bans on short-term vacation rentals, the pressure on Palm Springs continues to mount.

On Thursday, Rancho Mirage, which earlier banned short-term vacation rentals outside of private neighborhoods, elected to ban all short-term vacation rentals. That city joins many others in the Valley, including Cathedral City, Palm Desert, and La Quinta, in moving to restrict or forbid short-term rentals.

In 2018, Palm Springs voters overwhelmingly defeated Measure C, which would have phased out short-term rentals here. Since then, the number of licensed rental units has grown 26 percent. In the past year alone, despite the ongoing battle with COVID-19, the total number of registered vacation rentals in the city increased nine percent.

Palm Springs currently has no cap on the number of vacation rental licenses it can approve and elected officials have not formally proposed enacting a moratorium. Of the 36,500 housing units here, city data shows just over six percent are licensed as short-term vacation rentals. There is no available data on occupancy rates for licensed vacation rentals, and there is no guarantee that any licensed property is being used as a rental.

A map of all 2,254 actively licensed short-term vacation rentals in the city, compiled by The Post and available here, shows there are only a few neighborhoods in the city without sizable clusters of licensed short-term vacation rentals. Data supplied by the city also shows the following:

  • Of the more than three dozen individual neighborhoods listed as having licensed short-term vacation rentals, the majority — 288 — are in Racquet Club Estates and Racquet Club West.
  • The Movie Colony (179), Tahquitz River Estates (126), Sunrise Park (121), and Vista Norte (110) neighborhoods also show triple-digit vacation rental licenses.
  • Single-family residences comprise 83 percent of the licenses. In a city where homes available for purchase are in short supply, and the median home sale price was most recently listed as $924,000, that figure represents 1,875 homes not available for long-term rental or purchase.

Owners of short-term vacation rentals point to a need for options for a growing number of city visitors eager to have a sun-splashed, Instagram-worthy weekend. The opportunity to have more space and privacy, despite costs that run into the thousands per night, is also appealing, especially when rooms fill fast at hotels and motels.

“Vacation rentals have been a positive part of Palm Springs since the 1950s,” wrote David Feltman, one of the founders of Vacation Rental Owners and Neighbors of Palm Springs (VRON-PS), in a news release earlier this year touting the success of regulations in the city. “Palm Springs got it right with smart, enforceable rules that balances the needs of visitors with the economic impact on the City and with the necessary security and safety concerns of those who live, work and own homes in Palm Springs.”

Some city residents, however, say the replacement of their neighbors with weekend warriors has ruined their sense of community and made home ownership in Palm Springs an impossible dream.

That point was made abundantly clear during a series of listening sessions conducted by city planners earlier this year. The meetings were designed to seek input about the city’s General Plan. Many residents who attended those meetings urged city staff and elected officials to do something, anything, to put an end to the conversion of homes to what they labeled as “mini motels.”

“There are whole parts of the city where kids are not on those blocks,” said Naomi Soto, a Sonora Sunrise resident, explaining how homes used as vacation rentals have negatively affected Palm Springs. “It has completely changed the vibe of what our neighborhoods feel like.”

Data from the California Department of Education appears to back some of Soto’s observations. A decline in school enrollment, an indication of the flight of families, is present in most city schools. Total enrollment in the Palm Springs Unified School District schools in the city dropped by three percent from 2014 through 2021. The district’s overall enrollment fell seven percent during that time, from 23,332 to 21,705.

At Cahuilla Elementary, which draws students from homes in South Palm Springs, enrollment dropped by 107 students. There are currently 650 registered vacation rentals in the adjacent neighborhoods. Katherine Finchy Elementary has 45 fewer students now than it did in 2014. There are 250 registered vacation rentals in that school’s adjacent neighborhoods. Palm Springs High School and Raymond Cree Middle School each lost 200 students over the course of the past seven years, a sign that fewer children are being raised here through their teen years.

Palm Springs City Manager Justin Clifton was not immediately available for comment. But in 2019, while serving as city manager in Sedona, Arizona, he appeared to sympathize with the plight of neighbors who feel a sense of loss.

“When you walk down the street and you’re not seeing neighbors who you can establish some kind of relationship and a sense of place, that’s a real threat,” he told the Arizona Republic.

“At what point are the community’s residents so outnumbered that there’s no real community left?”

Whether that point ever comes in Palm Springs, what is left for the community by those who rent the homes is money in the form of taxes charged to them and the goods and services they consume while staying in the city.

Only part of the Transient Occupancy Tax (TOT) collected in the city comes from vacation rentals. Most comes from guests staying at hotel and motels. Still, high occupancy rates at properties listed on airBNB and other vacation rental sites during the past year, especially during months when hotels and motels were closed, helped pump up the local economy.

It was predicted that TOT would plummet 61 percent, to $14.1 million, during the battle with COVID-19. Instead, figures from the city’s most recently adopted budget show an estimated $29.8 million in TOT was collected in the fiscal year that ended on June 30 — an 18 percent jump from the prior year.

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