Airbnb and similar companies have been a boon for many homeowners looking to earn a little extra money on the side, and they have benefited from the absence of any city regulations or taxes for nearly a decade. For nearly four years, city officials have been pondering how to strike the right balance when imposing regulations on the no-longer nascent industry.
While city officials said they wanted to encourage the business, their chief concern was to prevent the industry from subverting Mountain View's residential stock by transforming long-term housing into de facto hotels. This has been a major problem that has exacerbated housing shortages in destination cities like San Francisco and Los Angeles.
The new ordinance approved last week would create a mandatory citywide registry of all short-term rentals. As part of that registration, hosts would be required to pay the $165 annual fee and comply with city rules. In particular, a rental unit not occupied by a host would be prohibited from being rented out for more than 60 days per year. City staff had initially suggested stipulating a 90-day limit, but Mayor Lenny Siegel and other council members thought it wasn't enough to discourage homeowners from taking housing off the market.
"The idea that someone would be gone for a while and they're going to have a series of rentals, that just doesn't appeal to me," Siegel said. "If someone is going to be gone for three months, they can do a long-term lease."
If hosts are living at the property while taking in guests — say, by renting out one room in their house — then they will be allowed to operate as many days as they want. Council members stipulated last week that this exception should include homes with accessory units — that is, separate domiciles built on the property of a single family home. As long as the host is staying on site, then the extra unit can be rented out with no limits.
Perhaps more importantly, services like Airbnb will have to start paying transient-occupancy taxes, a 10-percent fee on bookings at hotels and other traditional lodgings. Based on estimated 2017 revenues from short-term rentals, city officials believe Mountain View will receive at least $1.26 million a year in additional tax revenue. Over the coming months, city officials say the will be negotiating an arrangement with Airbnb to have the company collect taxes on their behalf.
Hosts will also be required to pay a $165 annual registration fee that is intended to offset the city's costs for administering the program. Mountain View officials say they expect to spend about $150,000, about half of which will pay for a third-party vendor to handle enforcement and compliance of the new rules. The remainder of the revenues will go toward hiring a city accounting clerk to manage the program.
On top of that, all short-term rental operators will be required to register and pay fees for business licenses. The city currently charges hotels a modest license fee of $6 plus $2 per guest room. If approved by voters next month, Measure P would increase this license cost to a flat $75 fee that would increase based on the number of workers at each business. Any businesses earning less than $5,000 per year would be exempt.
On an annual basis, each Airbnb operator would likely pay around $250 in city fees, not counting any taxes, estimated Councilwoman Pat Showalter. She said was nervous about the city suddenly going for broke with these fees: What if Airbnb hosts decide it is easier to just skirt the system?
"I'm concerned that this fee will essentially function as a deterrent," she said. "It will lose us money rather than gain us money."
Officials in San Francisco encountered a similar problem when they first tried to regulate Airbnb in 2015. The city launched a similar registry for short-term rentals, but fewer than one in four Airbnb hosts signed up, even though it was mandatory. By this year, San Francisco officials had issued more than $1 million in fines, and they had to wage a legal battle to compel Airbnb and other companies to delist hosts who weren't following the city's rules.
At this point, the city won't be pushing for aggressive enforcement, and instead will focus on educating hosts on how to comply with the new regulations, said Mountain View management analyst Melvin Gaines, who designed the new rules. Under the new rules, short-term rental hosts are supposed to comply with parking requirements and zoning rules for their neighborhoods. This means that large dormitory-style rentals that pack in large numbers of people could come under scrutiny. If the city receives complaints about a particular rental listing, it will be reviewed on a "case-by-case" basis, Gaines said.
"Obviously, our desire is to start with education and warnings," he said. "If it escalates, then there's a number of compliance steps that the city could take, whether issuing fines or citations. There's a number of tools that we have."
The City Council approved introducing the ordinance on short-term rentals in a unanimous vote. A second reading of the ordinance is scheduled for Oct. 23. If adopted, city staff estimates it will take six to nine months to implement the new rules.
This story contains 964 words.
Stories older than 90 days are available only to subscribing members. Please help sustain quality local journalism by becoming a subscribing member today.
If you are already a subscriber, please log in so you can continue to enjoy unlimited access to stories and archives. Subscriptions start at $5 per month and may be cancelled at any time.