Tomorrow, December 3, 2020, the San Diego Planning Commission will consider a proposal to greatly reduce and regulate the short-term rental industry in the city. This item will likely move to the City Council for consideration in 2021.
You can add a comment or sign up to give live testimony via the Planning Commission website. Below is my short comment, opposing the MOU and supporting the many thousands of hosts in the City of San Diego.
The view from a recent Airbnb stay in Northern Wisconsin.
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This amendment / action would reduce the number of short term rentals in San Diego by approx. 65% and harm thousands of property owners during a period of economic turmoil. I urge the Planning Commission to oppose this amendment / action.
I agree with requiring a license number for each unit rented on a short-term basis, and requiring the posting of this license number on any online platform. I also agree with enhanced enforcement of noise and other nuisance laws, including an escalating fine scale for repeat offenders.
Short-term rentals are immensely popular (and have proven to be more resilient than hotels and other accommodations in the current Covid climate). I hope the Planning Commission will embrace short-term rentals and support this long established opportunity for San Diegans for the years to come by opposing this item. Thank you.
So you want to operate a short-term rental for your vacation home, in-law flat, previous home, or other property? Sites like Airbnb and VRBO have made the idea of second home or investment property a reality for many. These sites make the marketing and management of a property much easier than in the past. However, there are a number of additional tools and considerations to take into account.
We recently stayed at an Airbnb in South Lake Tahoe. It was great and a day at Angora Lakes was a highlight of our trip. (Photo is of Fallen Leaf Lake.)
Here a few recommendations for getting your short-term rental up and running smoothly.
Open a Checking Account (and potentially Credit Card) – If you are running a rental property, you are operating a business and will need to report the earnings and expenses on your tax return. Open up a checking account at a minimum to make tracking your net income easier. You may also want to open a credit card to earn rewards or cash back, depending on the amount of activity you have.
Check (And Modify As Needed) Your Insurance Policy – You may need to get an additional or different insurance policy for the property. There are a number of insurance providers that offer policies for short-term rentals, I use Foremost. Additionally, you may want to add an umbrella policy or consider setting up an LLC to address liability exposure.
Utilize Additional Tools – I currently use the following add-on tools for my Airbnb listings.
BeyondPricing – This tool adjusts the nightly rate to account for prices in the area, occupancy rate, seasonal factors, etc. There are a number of similar tools but I’ve been happy with BeyondPricing. The company charges 1% of gross for the service but I’ve found that just being able to pick up higher rates for large events like Comic-Con or conventions pays for itself.
Smartbnb – I really like this tool for managing multiple properties and team members. You can set up automated messages for check-in, check-out, etc. You can also set up text reminders for your housekeeper, manager, or other service providers.
Utilize Service Providers – Depending on your situation and goals, it may be well worth it to hire a property manager for your short-term rental, especially if you don’t live in the area. Guests often need in-person assistance for various needs, repairs, or other reasons. You may also want to consider a housekeeper unless you’re typically in town and have a flexible schedule to clean yourself.
Hosting on Airbnb for over a decade has been a great financial help for my family. I hope these suggestions are helpful to you and if you’re looking for more specific advice please contact me and let me know. Cheers!
Airbnb has collected and remitted Transient Occupancy Taxes (TOT) for hosts in the City of San Diego since July 2015, making collection of these taxes easier for both hosts and the City Treasurer. Per the City TOT FAQs, TOT is charged for the following stays:
“If you are renting a room for less than one calendar month, the rental is subject to the TOT.”
“It is the purpose and intent of the City Council that there shall be imposed a tax on Transients”
And to whom that tax applies in the definition for Transient:
“Transient” means any Person who exercises Occupancy, or is entitled to Occupancy, by reason of concession, permit, right of access, license, or other agreement for a period of less than one (1) month. A month is defined as the period of consecutive days from the first calendar day of Occupancy in any month to the same calendar day in the next month following, or the last day of the next month following if no corresponding calendar day exists.”
This definition does not rely on a strict number of days to qualify as a month – it is dependent on the number of days in each month. A stay of 28 days (or 29 or 30) in February (of a non Leap Year) are not subject to TOT but a stay of those durations in July would have TOT since July has 31 days.
The City of San Diego TOT is 10.5% for small short-term rental operators, those with less than 70 rooms. An additional TMD assessment used to apply to small operators but now applies to large operators only, effective September 1, 2016. Rates and additional information available on City website for TOT.
Airbnb has not correctly implemented the definition of a calendar month in collecting the TOT in San Diego and instead is applying the tax to any stays of 30 days or less. Per an email from Airbnb this week the company is collecting “10.5% of the listing price including any cleaning fee for reservations 30 nights and shorter”.
The Airbnb site can be used to see how the TOT calculation is being applied by entering dates and then clicking a property to see the reservations details, where the TOT is listed as a separate line as “Occupancy taxes and fees”. Below are a few sample results showing the TOT being charged when it should not be. The erroneous TOT charges are for hundreds of dollars each. I also called the TOT help phone number at the City (619-615-1530) to confirm that TOT should not be applied to these specific date scenarios.
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I’m a big fan of Airbnb both as a host and as a guest. Having the company collect and remit TOT for hosts is a nice convenience, as previously short-term rental hosts on the platform had to complete and file a monthly return to report TOT. The incorrect application of the TOT rules and resulting overcharging of customers is not right and needs to be corrected. I’ve reached out to the company a number of times requesting this and either due to a difference of understanding or other reasons a correction has not been made. I’m hopeful that this article may result in corrective action being taken.
The City of San Diego continues to discuss options for regulations and rules around short-term rentals on sites like Airbnb. Short-term rentals are rentals for less than a full calendar month and have been the topic of discussion at a number of City Council and committee hearings over the last few years.
I recently received an inquiry from a San Diego resident that would like to rent out one or two bedrooms in the home they live in – sharing a room or home with guests is often referred to as “home-sharing”. Home-sharing is frequently brought up in the short-term rental debate with both sides typically saying there is no issue with this type of activity. (However, home-sharing is the only type of short-term rental I’m aware of that the City of San Diego took to court, and ultimately the judge decided that this type of activity is not allowed under current rules and issued a fine to that host.)
The prospective host in this case was looking to do the right thing and get clarity from the City before hosting on Airbnb. They contacted several City departments regarding how to fill out the right information for the Transient Occupancy Registration Certificate( “TORC”), if a Business Tax Certificate is required, what taxes they need to pay, and if there are other regulations they need to follow for lawfully renting out rooms via platforms such as Airbnb.
On the response to the prospective host, the city was clear and straight-forward in providing the process to register for the TORC, what kind of taxes the host would need to pay, etc. The Transient Occupancy Tax (i.e. hotel tax) is not part of the debate and proposed short-term rental rules – it is already in place and collected (and in the case of Airbnb remitted for all hosts on the platform each month by the platform itself).
However, in regard to other requirements for operating an Airbnb, the prospective host was directed to consult the Development Services Department (in charge of Land Use and Development). Surprisingly, when the host reached out to Development Services they were told that since there are no official regulations or rules around short-term rentals, this kind of activity is currently not allowed in San Diego. That’s when the host reached out to me, as part of my efforts with the Short-Term Rental Alliance of San Diego (STRASD) – seeking clarity the city couldn’t provide and how they should proceed.
The contradiction between the responses from different City departments is confusing but accurate. Yes – you can register and pay the taxes for this sort of activity. No – you can not engage in this type of activity in the first place. This is the current status of short-term rentals in San Diego, at least for home-sharing situations. It still seems that whole-home short-term rentals may be on firmer ground, although the current City Attorney has declared all short-term rentals illegal. [Note: the previous two City Attorneys held a different position, that short-term rentals were not illegal.]
This sort of lack of clarity is harmful to potential hosts like the one highlighted in this post – a San Diego resident seeking to improve their economic position and do so in a straight-forward and compliant manner in the type of short-term rental that is roundly approved of and supported. We need clarity to support residents like this and should encourage this type of widespread entrepreneurial opportunity to give citizens more options and ability to chart their own desired course. Hopefully in the months ahead we will see clarity that gives certainty to current and potential hosts and guests and that supports the opportunity that platforms like Airbnb and others gives to many thousands of San Diegans.
A screen shot of some home-sharing options currently available on Airbnb (taken 4-19-2018)
I was recently included on two podcast I regularly listen to, both on the topic of short-term rentals. I have been using platforms like Airbnb for about 8 years to welcome people to San Diego and have had a great experience. As with many other cities around the globe, San Diego has been debating the proper place for short-term rentals (rentals of less than 30 days or a calendar month) in recent years. I’ve become involved in that political debate locally and follow the issue broadly as well.
The Voice of San Diego podcast is a great resource if you’re interested in local issues and longer interviews with people that make an impact here. I was part of a four person panel discussing potential new rules for short-term rentals in San Diego. The podcast was held shortly before a full City Council hearing on the topic which was expected to result in new rules for the city. Instead, the all day hearing resulted in nothing new and the issue remains up in the air.
Check out the Voice of San Diego podcast on short-term rentals here:
I was also recently on Get Paid for Your Pad – a podcast focused on short-term rentals with news and interviews of hosts from around the world. This show is a great resource if you are a current host, considering hosting, or just interested in the topic. Host Jasper Ribbens, from The Netherlands, does a great job of including perspectives from hosts from different cities and nations and covering a wide variety of news items from technology to new rules that impact the short-term rental industry.
Last month a press conference was held to release a study done on the economic impact of short-term rentals in San Diego for HomeAway / Expedia by Xpera Group. The report follows a similar study commissioned by Airbnb and done by National University in October 2015. Both full reports are included on this post for anyone interested in this issue.
A few highlights from the new study:
Total of $500M of impact in City of San Diego ($300M direct spending, $200 induced and indirect spending)
3,00 jobs in City of San Diego
Transient Occupancy Tax (TOT or “hotel tax”) estimated to be $19M or more in 2017, a 200% increase over 2015 when the TOT from short-term rentals total $9.6M
In 2016, City of San Diego TOT was $202.8M of which $15.6M was from short-term rentals, a 7.7% share.
“Short term lodging guests tend to be much younger than hotel guests and have a higher percentage of females than hotels.”
Short-term guests typically stay longer than hotel guests, “roughly half of short term lodging room nights coming from trips of seven days or longer”
7,436 total short-term lodging listings in City of San Diego, estimated (as of June 2017). 11,530 estimated for San Diego County.
In 2016 San Diego County had 30.4 million visitors, 17.4 million overnight visitors. That would be an average of 47,671 overnight guests per night in the County.
The short-term rental issue continues to be a hot topic in San Diego and a good explainer for the current status can be found here on Voice of San Diego (from Nov 1, 2017). A full City Council hearing is expected to be held on December 12 although a recent hearing was cancelled on short notice in October so we’ll see how the December hearing plays out.
I’ve been thinking about vacant housing units in San Diego for some time and recently was reading about the issue in Vancouver, Canada. The data provided was much more thorough than anything I found locally so I wanted to use it to estimate what the numbers might be in San Diego. Following is my take and links to the underlying information from Vancouver. If you have information on this topic I’d love to connect or hear your input.
This article from the Vancouver Sun from February 2017 lays out some good information about vacant housing units in that city, which in recent years has been often in the news for quickly rising housing prices. Included is the following:
The figures from “2016 show there were 25,502 unoccupied or empty housing units in the City of Vancouver” (below graph from article shows the growth in this number from 1986 to 2016, a period during which Vancouver real estate prices skyrocketed)
This figure is for the City of Vancouver, not the region, and represents 8.2 per cent of total housing units
Per City of Vancouver, there were 309,418 total dwelling units in the municipality as of 2016. This total supports the above calculations (309,418 x 8.2% yields 25,372 or roughly the same amount as show in bullet one)
In response to the high housing prices in Vancouver, the city levied a 1% property tax surcharge on vacant units to push owners to add the units to the housing supply for renters or other owners.
I’ve been trying to find vacant number estimates or similar studies in San Diego and have asked various reporters, housing industry experts, random Twitter users, and other avenues to seek this information. The answers I have received have been all anecdotal but mostly consistent – there are a lot of Downtown condos and probably a fair share of other units that are mostly vacant but it’s hard to ballpark the percentage.
Vancouver is a relatively similar city to San Diego, located on the west coast of North America and with high housing prices and demand. Below are some basic demographic and economic factors – San Diego is larger but in the same ballpark, a large regional hub in a developed country.
Poplulation (metro) – Vancouver = 2.3M, San Diego = 3.3M
Poplation (city) – Vancouver = 647,520, San Diego = 1.4M
Housing units (city) – Vancouver = 309,418, San Diego = 526,663 (1/1/2015)
Since I can’t find a good local estimate for vacant units I thought Vancouver would be a reasonable estimate, or at least a starting point for conversation and hopefully the SD City Council, EDC, Chamber of Commerce, or other party could commission a study to quantify this aspect of housing stock in San Diego. (I would guess the amount would be higher in San Diego than Vancouver given the long history as a vacation destination, the warmer weather, and the presence of large population centers nearby – Los Angeles, Phoenix, Las Vegas, etc.)
The above San Diego housing unit number from SANDAG estimates the number of vacant units in San Diego at 27,386 (based on provided vacancy rate of 5.2%)
The SANDAG numbers may best reflect the number of vacant units, but it’s worth looking at a portion of the above referenced Vancouver Sun article which notes that the private study produced a vacancy rate more than double existing city estimates.
“The census numbers of unoccupied units are more than double an estimate released by city hall last year because a completely different set of criteria and data were used.
Assessing the extent of empty or underused homes can differ depending on “your measurement tools,” said Yan.
While the census might count a greater number of folks who are, say, on extended vacation during the census period, the city’s estimate was criticized for likely missing the number of units used for only short, seasonal periods, perhaps one or two months in the summer, but then are left vacant for the rest of the year.”
So, based on SANDAG’s vacancy rate of 5.2% we would have 27,386 vacant units in San Diego. Using the Vancouver vacancy rate of 8.2% would estimate 43,186 vacant units here. And if we thought that the government estimates are off by half due to sampling methodology, as they were in Vancouver, we could use a rate of 10.4%, yielding 54,773 vacant units in San Diego.
Given the large impact that property tax rules in California can have on homes held for long periods (Prop 13 being most prominent) I would think the vacancy number in San Diego would be at the high end of the above numbers, probably 50,000 or higher, maybe much higher. Prop 13, over time, can result in incredibly low property tax burdens for long-time owners. Prop 13 allows properties like the amazing home below, currently for sale for $1.7M, to pay a total of $136.97 in total taxes a year – a rate of .008% rather than the approx 1.05%, $17,850 a year, if taxes were applied on market value at existing property tax rates. When holding costs are essentially nothing, there’s greatly decreased incentive to sell and little cost to holding an empty property. It’s probably a large part of the reason the house across the street from me in desirable North Park, which is worth around $750k, has sat completely empty for the 4 years I’ve been in the neighborhood.
I’m not advocating for an empty house tax as Vancouver did, but seeking to get an estimate of vacant units in San Diego to consider a similar or other action. Being involved in the short-term rental (aka Airbnb) debate here the impact of short-term rentals on housing availability and prices frequently comes up. It’s undeniable that increased demand has an upward effect on housing prices. However, short-term rentals produce economic activity for owners, businesses, and the city whereas empty units do none of those things. Upper estimates of short-term rental units in San Diego are around 15,000 (I would guess it’s around half that number) – likely far dwarfed by empty units in our city. We would be much better served putting vacant units on the market rather than reducing economic activity, entrepreneurial opportunity, and property rights by greatly restricting short-term rentals.
This morning a number of media outlets are reporting on a new proposal by four San Diego City Councilmembers regarding short-term rentals. Below is a copy of the memo released that was included in the Voice of San Diego Morning Report today. I wanted to share as I received a few messages about this today – I haven’t had time to read through yet but with the City Council likely to have a hearing on this issue in October or November it sounds like another option that will be on the table for discussion.
I’ll try to do a summary post in the next day or two but wanted to put up the full document for the meantime.
I’ve been using custom online guidebooks from Hostfully for about a year to share recommendations and property information with our guests in San Diego. I really like the platform and functionality, especially the ability to send a PDF, print, or link to the guidebook for easy guest use.
Hostfully recently started a regular series of articles featuring hosts using the platform – the “Hostfully Host Spotlight” and this week they decided to feature our property in North Park and some favorite recommendations in San Diego.
You can check out the profile article at the below link. Cheers!
(If you’re an Airbnb or VRBO host in San Diego and interested in Hostfully please feel free to drop me a line and we can chat.)
New Airbnb Feature Likely To Be A Boon For The Platform
Airbnb has a feature currently only available in a number of cities around the world – Co-Hosting. The current list, below, includes 25 cities although additional cities are being rolled out per my conversation with an Airbnb representative this week.
Cities currently offering Co-Hosting on Airbnb – San Diego’s on the list!
So what is the Co-Host program about? Basically, it’s a way for a property owner (a “Host” in Airbnb parlance) to add another Host (the “Co-Host”) to a listing. You can tap a friend, relative, neighbor, or experienced Airbnb huser to manage your property for you. This is a huge growth opportunity for the platform and one I’m surprised is not getting more publicity. I’d guess this is because they’re currently in test mode and working out any bugs in the program. In addition to assigning management rights to an Airbnb listing, the Co-Host option allows users to set fees (management fees as a percentage of gross earnings or fixed fee, cleaning fees, etc.) and the platform will automatically split earnings and distribute to both the Host and Co-Host per the Co-Host settings.
There are a number of reasons why someone might want a co-host for their property. The hassle of managing a property isn’t for everyone and to be able to hand off some or all of that responsibility will be attractive to some. For others, travel schedules or work demands might necessitate a co-host for short periods of time or seasonally. I can see myself wanting to add one of my children as a co-host to our listings in the future and giving them limited management rights to gradually give them control and responsibility for their own business.
In addition to existing Airbnb Hosts it’s easy to see how the Co-Hosting option could enable landlords to allow long-term tenants to utilize Airbnb in a monitored and responsible way. Between landlords, existing hosts, and the growth in the number of hosts in general I see a lot of growth potential for co-hosting. It should also allow Airbnb to retain hosts as there’s an option to avoid the hassles of managing a listing but still have the earnings, flexibility of schedule, and other benefits the platform provides. Airbnb has built a huge user base complete with reviews and other data and strengthening that base and building on it will be a competitive edge for the platform against the many competitors in the field.
I recently became a Co-Host here in San Diego and am excited for the opportunity. As one of the most experienced SuperHosts in the area I’m comfortable with taking on another listing to manage and hopefully the Host will see a benefit from the reduced workload for the property. If you are considering a Co-Host in San Diego you can find my profile at the below link. I’d be happy to talk with you about co-hosting and my experience and expertise.
The current co-host options that are on offer, as of 4-28-2017.
Wondering if Airbnb offers Co-Hosting in Your Area? You can find out by logging in, and checking at the bottom of the menu bar. If Co-Hosting is an option for you, there will be a section labeled “Management” with a sub-section “Co-hosts” on your menu bar. You can directly invite someone you already know as a Co-Host or use the “Find a co-host” option to search by location for experienced hosts.
