Malibu to crack down on short-term rentals via Airbnb, other websites

Tiled steps lead up a sloped lawn to a three-bedroom Midcentury Modern house near the end of a cul-de-sac in Malibu’s upper Broad Beach area.

Although modest by Malibu standards, the dwelling on Cottontail Lane has for the last two years provided a handsome return for its owner, who leases it out for hundreds of dollars a night through the Airbnb website.

One neighbor grew so annoyed by the frequent comings and goings of guests in vrooming BMWs that he posted a sign in his own yard: Bates Motel. Only Bates is crossed out and replaced with the last name of the homeowner.

“The guests don’t give a damn about the street or the neighbors,” said Bill Sampson, who posted the sign.

Malibu, like many cities, is grappling with how to regulate short-term rentals like those promoted by fast-growing online newcomers such as Airbnb and Vacation Rentals by Owner and established giants such as Craigslist.

Some residents of the beachside community grumble that they feel besieged by this new digital “sharing economy,” and the city plans to take a hard line to tackle the issue.

The City Council voted this month to authorize officials to issue subpoenas to more than 60 websites that advertise short-term leases. Malibu wants to learn how many short-term rentals are being offered and to make sure the city is getting what could be hundreds of thousands of dollars in uncollected hotel taxes.

“Some neighborhoods … have turned into hotel zones,” said Councilwoman Laura Rosenthal, who has registered her house with the city and occasionally rents it out.

With its 20-plus miles of coastline, Malibu has long been a sought-after destination for quick getaways, lavish private weddings and spring break bacchanals. With the escalation of short-term rentals for vacations and corporate retreats, many locals have begun complaining loudly about the annoyances caused by interlopers invading their once-peaceful seaside enclaves.

Malibu allows short-term renting as long as property owners register with the city and pay the same 12% transient occupancy tax that hotels are required to remit.

About 50 properties are registered as short-term rentals with the city, but Malibu officials said they recently found more than 400 ads for Malibu rentals online. The registered private properties pay taxes to the city totaling about $225,000 annually, the city said. Malibu plans to use the subpoenas to help it learn the addresses of properties being rented so that it can go after unpaid taxes.

Officials emphasized that the city is not yet proposing to stop the practice of short-term rentals but rather to cut down on the “party house” atmosphere that has disrupted some neighborhoods.

“I don’t think this is a hostile act of war that will preclude working together” with the websites, City Atty. Christi Hogin said. “I do think we have tried to send a clear message to the industry that we are serious about making sure that every visitor accommodation plays by the same rules. That’s just fair.”

Online platforms such as Airbnb didn’t even exist a decade ago, and experts say cities everywhere are largely unprepared to deal with the changes they have caused. Proponents contend that short-term renting provides a financial salvation for homeowners suffering from the sluggish economy and a homey alternative to hotels for travelers.

Los Angeles, where short-term rentals have stirred up trouble in Venice and Silver Lake, is starting to grapple with the issue. A motion submitted by Councilman Mike Bonin and Council President Herb Wesson proposes that the city study the sharing economy and how the city might benefit.

In San Francisco, a supervisor has introduced legislation that would create a system similar to Malibu’s in which property owners would be required to register homes and to pay that city’s 14% transient occupancy tax. Property owners in the housing-starved city would not be allowed to convert rental units into year-round, short-term rentals.

Airbnb has reached agreements with San Francisco and Portland to collect hotel-type taxes from hosts and remit them to the cities, starting this summer.

New York’s attorney general issued a subpoena to Airbnb, which fought back in court and online, where the company called the move an “over-broad, government-sponsored fishing expedition.” A judge recently agreed, blocking the subpoena as too broad.

On Thursday, Airbnb agreed to share information about its hosts in New York City but will omit names. The New York attorney general will have a year to use the data to identify hosts who rent in violation of local laws. If he spots suspicious activity, Airbnb will then be required to identify the hosts.

Hogin contended that California law specifically allows cities to issue legislative subpoenas for fact-finding and added that she expects the rental companies to comply.

Airbnb spokesman Nick Papas declined to comment about any possible subpoenas from Malibu but said the company wants to work “constructively and proactively with cities.”

“We are a growing company in a new economy,” he said in a statement. “We believe home-sharing can make cities better places to live, work and visit, and we want to work with cities to address their concerns.”

Arun Sundararajan, a New York University professor who specializes in the digital economy, questioned the use of subpoenas to deal with transactions that fall somewhere between a “full-fledged business [and] lending your apartment to a friend for some money.”

“Let’s not take what used to be applied to the old hotel business and apply it to the new one,” he said. “The rules don’t fit well.”

Malibu has been grappling with property rentals for years. In 2008, officials passed an ordinance regulating the use of large houses for parties. About a year later, the city began enforcement of laws governing short-term rentals, alerting affected property owners of the need to register with the city and collect the tax. But frustrated neighbors continue to gripe.

Laura Buff, who has lived in the “bunny” streets of upper Broad Beach for 14 years, said frequent short-term rentals by her neighbor Terence Davis, owner of the property near the end of the Cottontail cul-de-sac, have become a nuisance.

“There are a lot of cars and partying,” she said, noting that one group of tenants had six vehicles among them. “He has a right to rent [out] his house,” she added, “but we have a right to keep our neighborhood the way it is.”

Davis, who charges as much as $650 a night, said he has registered the property, pays the requisite taxes and strives to ensure that occupants behave.

“I screen my tenants very well,” he said. “Nothing but wonderful people are renting.”

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