Workgroup recommends city cap vacation rentals at 2,500, limit neighborhood density to 10%

At their meeting next Thursday, elected officials will likely ask city staff to make changes to regulations governing short-term vacation rentals that the public can weigh in on — and they can vote on — in the near future.
In some Palm Springs neighborhoods, more than 30% of the homes are registered as vacation rentals. A citizen workgroup considered that fact as it mulled recommended changes to the city’s vacation rental ordinance.

A citizen workgroup formed to address issues surrounding the city’s thriving vacation rental industry is out with its recommendations, trying to strike a balance between the needs of visitors, residents, owners of the rentals, and the revenue benefits the city receives.

The news: The 11-member workgroup, comprised partially of key stakeholders on both sides of the debate over vacation rentals, has been meeting since July. The Palm Springs City Council will discuss its recommendations at its next meeting on Sept. 29.

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  • In a 32-page staff report up for Council review, made available Thursday evening, workgroup members recommend the city cap the number of short-term rental permits at 2,500 and limit the density of rentals to 10% of any single neighborhood.

  • As of May, there were 2,374 registered short-term vacation rentals in the city — primarily single-family homes. Nearly two dozen neighborhoods currently have more than 10% of their homes registered as rentals.

At issue: Palm Springs has always been a hotspot for vacationers and weekend visitors. But as more and more homes turn into “mini motels” and sell for millions of dollars, some claim their neighborhoods are losing their character. Worse yet, studies show increases in vacation rentals lead to decreases in housing affordability.

But wait: All those visitors need places to stay, and short-term rentals available on sites like Airbnb help meet their needs. They are also responsible for pumping millions in transient occupancy taxes (TOT) into city coffers, and those who stay in them spend millions more at local businesses.

  • The city expects to collect $48 million in TOT in the current fiscal year. If history repeats itself, nearly half of that will be generated by short-term vacation rentals.

Looking back: In 2018, Palm Springs voters rejected a ballot measure that would have seen a city ban on short-term vacation rentals. 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.

Up next: Elected officials have expressed interest in exploring caps and eagerly await the workgroup’s recommendations. At their meeting next Thursday, they will likely ask city staff to make changes to regulations governing short-term vacation rentals that the public can weigh in on —and they can vote on — in the near future.

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