WeHo Formalizes Its Ban on Short-Term Rentals

The West Hollywood City Council has adopted an amendment to the city’s zoning text to clarify that short-term residential rentals are illegal.

The Council’s decision last night comes after months of study of the impact of such rentals, offered by services such as Airbnb, on the local economy and quality of life. The existing zoning law bans rental of residential properties for 30 days or less. But a task force appointed by the Council in February 2014 recommended the zoning ordinance make clearer that the ban applies to property rented through so-called “shared economy” services such as Airbnb, VRBO and Housetrip‎.

Issues raised by opponents of short-term rentals include disruptive behavior by vacationers and the fact that the services have led some property owners to take rental units off the long-term rental market, a major issue in West Hollywood given the city’s high rents and shortage of available housing. A study by the Los Angeles Alliance for a New Economy (LAANE), released in March, argued that that the “shared economy” business has a negative impact on the availability of affordable housing and on hotel revenue. The study said West Hollywood is one of the top 10 revenue-generating neighborhoods for Airbnb in greater Los Angeles. The LAANE study also said that while Airbnb markets itself as a way for homeowners and apartment renters to share their homes with tourists, the bulk of its revenue actually comes from rental of “whole units,” which are apartments and houses where the renter or owner is not present. Such “whole unit” rentals accounted for $3.7 million (88 percent) of Airbnb’s $4.2 million in revenue from West Hollywood rentals in 2014 according to the LAANE study. If the city’s 12.5 percent hotel room occupancy tax were applied to that revenue, it would generate $463,000.

Supporters of short-term rentals argue that they provide an extra source of revenue for renters or home owners who otherwise would struggle to pay their housing costs and that they make it possible for people who otherwise can’t afford hotel room rates to visit WeHo. Several of the more than 30 speakers at tonight’s City Council meeting who supported short-term rentals said they wouldn’t be able to afford to live in WeHo without the extra revenue provided by renting out their apartments or houses. One renter, Rebecca Ewing, said she began renting out a room in her West Hollywood apartment after she lost her job for a year. Ewing said she wanted the city to allow residents to rent out rooms while they were present but agreed that entire apartments should not be rented and thus taken off the long-term rental market.

Ray Artuhur, another West Hollywood renter, said he used the money he received from renting his apartment on Airbnb to start a tech company and hire two people. Another supporter of short-term rentals, Gregory Marcel, said he uses Airbnb to house people who come to Los Angeles to work with his small film production company. “It would completely bankrupt my company if I had to put people up in a hotel for three weeks at a time,” he said.

Most Council members expressed some support for short-term rentals of rooms within an apartment or home occupied by its renter or owner as a way to provide an affordable option for visitors who can’t afford the city’s hotels and as a source of revenue for city residents. But they also said that regulating such rentals would be difficult. “The problem in West Hollywood is the systems we have aren’t adequate to regulate the shared economy,” said Councilmember John Duran. Duran noted that the city now enforces the ban on short-term rentals only when it receives an actual complaint about one and doesn’t have the resources to research what local housing units are being offered for rent online. Councilmember Lauren Meister said that while the short-term rental concept makes sense for home owners, “in practice rooms are being rented out with no owner on site.”

Councilmember John D’Amico, however, opposed a blanket policy of making short-term rentals illegal, arguing that the practice is a part of new wave of on-demand services such as taxi rides by Uber and is inevitable. “We can stand on the shore and yell at the waves as much as we want, and they are still going to crash over us,” he said. D’Amico said it was clear from the number of local residents who showed up to oppose the ban that “we can regulate the hell out of it and you’re still going to do it.” D’Amico said statistics he has seen indicate that only one quarter of one percent of the city’s housing units are offered as short-term rentals. “This is actually not affecting our affordable housing…. In fact I would actually argue that the people who are renting out their units have said that this makes their housing affordable.”

In its vote, the Council accepted a proposal by Councilmember John Heilman that city staffers come back in six months with data about complaints of illegal short-term rentals and recommendations for ways to enforce the ordinance. Heilman also asked the staff to determine what sort of revenue would be generated by an occupancy tax on short-term rentals if the Council were to approve them. The Council also asked city staffers to consider a recommendation by Mayor Lindsey Horvath that short-term rentals be allowed for Halloween and Gay Pride, two major events that attracts thousands of visitors to West Hollywood.

Several speakers at last night’s meeting said they believe that apartments in the Dylan and Huxley buildings, new apartment projects on La Brea Avenue on the city’s Eastside, are being exclusively rented out to visitors. However Maribel Louie, the city’s Arts and Economic Development manager, said those units are being rented as corporate housing with stays of more than 30 days, which complies with city law.