Los Angeles City Hall experienced a very “shared” day on Tuesday. After the city council approved plans to allow services like Uber and Lyft to operate at LAX, the planning, land use and management (PLUM) committee opened discussion on a motion for the city to regulate services that share rooms instead of cars.

Advocates raised their hands in support of allowing short-term rentals during a packed hearing in city council chambers on Tuesday. (photo by Gregory Cornfield)

In June, councilmen Mike Bonin, 11th District, and Herb Wesson, 10th District, introduced a motion that would legalize the practice of hosts renting their extra rooms or homes to a visitor. That practice is currently banned in the city, but has been allowed to continue over the past decade because it’s difficult to monitor and enforce.

“The city’s current zoning regulations do not anticipate or effectively govern short-term rentals, and need to be revised so that the city can effectively preserve rental housing and protect the character of residential neighborhoods,” the motion read.

The motion directs the city to authorize a host to rent all or part of their primary residence to short-term visitors. The motion also directs the city to prohibit hosts from renting units that are not primary residences or are units covered by rent stabilization ordinances, which would forbid “speculators” from creating syndicates of short-term rental properties.

PLUM members, in front of a standing-room only chambers, weighed whether short-term rentals are cutting into the city’s affordable housing market, as short-term rentals generate more money for hosts than long-term leases.

“The impacts of the short-term rental industry have been dramatic – in both positive and negative ways,” the motion read. “Tourists who stay in short-term (less than 30 days) rentals relish the opportunity to stay in Los Angeles’ many and diverse neighborhoods, and experience the city as ‘a local.’ Many short-term rental hosts speak glowingly of a ‘sharing economy’ and their ability to make ends meet by renting out a room of their back house.”

Bonin presented the motion to the committee. He said the motion asks the planning commission to come up with rules and regulations to govern short-term rentals in Los Angeles to allow for “genuine” room sharing for people who need the service to make ends meet, but to crack down on real estate speculators’ operation of “rogue” hotels that he said are taking away hundreds, if not thousands, of needed rental units in Los Angeles.

“If we are going to get serious about our affordable housing crisis in Los Angeles, we need to crack down on this aspect,” Bonin told the committee.

Bonin cited a report from the Los Angeles Alliance for a New Economy (LAANE) that estimates that short-term rentals cost Los Angeles 11 units per day, which accounts for 63 percent of all new housing built in the city between 2010 and 2014.

He also explained that a apartment building in Venice with 50 to 60 units that is supposed to be rent-controlled apartments, now has almost every unit listed for short-term rental use.

“It’s worsening an already epidemically bad affordable housing crisis in Los Angeles,” Bonin said.

LAANE reported that 9 percent of hosts on Airbnb were leasing companies, up from 6 percent last year. That 9 percent brought in 37 percent of Airbnb’s revenue in Los Angeles between October 2014 and July 2015.

Last year, LAANE also found that 42 percent of landlords were renting out whole units, as opposed to part of a unit, for 54 percent of Airbnb’s Los Angeles revenue. Just 11 percent of the revenue from Los Angeles came from renting out extra space, or “sharing.”

Of the top 10 revenue areas for Airbnb in Los Angeles, Mid-Wilshire and Los Feliz continue to gain more short-term rentals, where commercial units increased by 78 percent and 60 percent, respectively. Venice, Santa Monica and Hollywood are the top three.

If the city adopts new rules, it doesn’t fix the concerns some residents have that the short-term rental online platforms make regulations difficult to enforce. Services like Airbnb don’t post the addresses of the host’s site for the general public and they don’t provide the information to the city.

“Policing and enforcement is something we want sorted out in this process,” Bonin said. “I outlined the broad parameters of what an ordinance should be. Now the legislative grunt work begins in trying to find out what the details are and how to enforce it.”

The motion also directs the city to collect transient occupancy tax (TOT) from all hosts. Those are taxes the city collects from licensed hotel operators.

“There are several elements of regulation that we’re looking at,” Bonin said. “Right now we know we have thousands of short-term rentals in Los Angeles. In most cases, the city isn’t collecting transient occupancy tax. That’s the tax we put on hotel stays that we use to pay for police, firefighters, paving streets, maintaining parks, and it’s very important that we get that revenue.”

But Bonin said he wants to make sure that the regulation dictates the TOT revenue, and not the other way around.

“I want to make sure we come up with the rules of what we want and what we don’t and let that dictate the kind of revenue we get,” he said.

Robert St. Genis, director of operations for Los Angeles Short-Term Rental Alliance (LASTRA), said the hearing didn’t reveal anything new, but that it went well.

“This is a great opportunity for L.A. to get it right,” he said. “To make short-term rentals a valuable contributor, to increase tourism and to ultimately have the potential to help the city.”

LAFSTRA is against the motion as it stands now, because primary residences don’t cover the short-term rental spectrum, St. Genis said.

“If someone has a beach house that they rent out each year, that shouldn’t be excluded,” he said.

Though he emphasizes that short-term rentals have been happening successfully for years before the online “shared economy” was born, St. Genis said he believes the LAANE statistics are flawed, especially that the 11 units a day being lost can’t mathematically be possible. He said he wants to see police reports from residents who say their neighbors allow people to rent their places short-term and throw parties or cause damage in the neighborhood. He said he also wants to meet people who have been evicted so landlords can start short-term rentals.

“I will confront that landlord myself,” he said. “No responsible manager wants damage done to their property or the activities going on that harm their reputation. Apartments getting trashed doesn’t help your market share. None of that makes sense.”

At the hearing, St. Genis advocated that all TOT should go to affordable housing developments. He suggested Los Angeles negotiate an agreement with short-term rental sites so they collect the TOT and then pay it to the city.

The group Keep Neighborhoods First also had a lot of memebrs in attendance. The group is against affordable units being converted into “de facto” hotels.

Judy Goldman, one of the founders of the group, said they do not oppose legitimate home sharing.

“We want to stop commercialized short-term rental abuse,” she said. “We’re very optimistic. [The committee] heard our concerns. We support the motion to put some teeth into the city’s policing because the lack of enforcement has damaged our housing stock. We strongly support the idea that the platforms should be required to only advertise for people where there is genuine home sharing and the homeowner needs to be on site.”

Goldman said she knows people who were evicted from their homes so the landlord could make more money on short-term rentals.

“The city needs to act now to protect us,” she said.

Committee leaders cautioned the crowded council chambers room that the hearing was the beginning of the process in a series of discussions and stakeholder meetings.

The motion was continued for more committee discussion.