City Hall puts a lid on short-term luxury rentals
Jeremy Smith, a television commercial producer in his mid-thirties, is living in an oceanfront one-bedroom apartment in downtown Santa Monica for $2,500 a month while he’s on location here. However, if some city officials have their way, people like Smith won’t be staying downtown much longer.
At issue is a three-year-old debate over what opponents call “mini-hotels,” luxury units ranging from $2,000 to $6,000 a month that offer hotel-like amenities to short-term renters.
Utilized primarily by entertainment-industry executives, consultants and other freelance workers, many of the short-term properties have on-site gyms, office space, valet parking and maid service. The apartments are fully furnished and also typically have small kitchens.
Officials said the operations are a nuisance to their residential neighbors, and are instead pushing for more affordable housing and fewer short-time tenants. They also think renters should be required to pay the 12 percent bed tax regular downtown hotels do.
Meanwhile, tenants and landlords don’t know what all the fuss is about, questioning why City Hall wants to charge them for what they contend is essentially sub-letting.
The debate over the short-term rentals became such an issue that in May of 2001 the City Council imposed an interim ordinance preventing the formulation of any new “mini-hotels.” With the restriction set to expire early next year, staffers at City Hall are gathering information on how to formalize the law and ban any new short-term rentals from opening in Santa Monica once and for all.
“The council’s been very concerned that it displaces affordable rentals, competes unfairly with normal hotels, and creates all the impacts that hotel uses do — of people coming and going — without generating a (hotel bed) tax,” said City Councilman Kevin McKeown.
“The council’s been very concerned that it displaces affordable rentals, competes unfairly with normal hotels, and creates all the impacts that hotel uses do — of people coming and going — without generating a (hotel bed) tax.” — — KEVIN McKEOWN City Councilman
The Planning Commission in September considered the issue and sent city staffers back to gather more information. Once it drafts the desired language, the commission will forward the issue to the City Council, probably early next year, associate planner Tony Kim said.
Kim didn’t know how many short-term rentals there are in the city, but said that’s one of the things his group is researching. Also on the to-do list: A survey of properties that could potentially be converted to short-term rentals, a review of any possible concerns of the Rent Control Board and a consideration of whether a maximum stay should apply to existing operations.
“It’s a ridiculous thing.” — — DAVID WEISS
Without a maximum stay, Kim said some corporate clients will take out a unit in their name and give it to different employees on a nightly or weekly basis, creating a revolving door effect.
While officials consider how to limit the business, some landlords said they don’t understand what all the fuss is about. They said the units are used for an average of six months.
“I’m just providing month-to-month apartments that are furnished,” said Mike Zaroudny, 31, owner of 107 Luxury Suites, a collection of 12 units in the building at Ocean Avenue and Broadway. “I’m mom-and pop. I don’t know what would make me any different from somebody who would rent a single room under sublet.com or through a newspaper.”
David Weiss, owner of Lone Wolf Cigars on Broadway and the previous owner of 107 Luxury Suites, said he sold the business because profits dipped when the economy worsened. Weiss blamed City Hall for making business difficult for short-term rental providers.
“It’s a ridiculous thing,” Weiss said. “Don’t we get taxes from property taxes? Leave the people alone, they’re helping the city.”
Meanwhile, many of the short-term renters are unaware of the controversy surrounding them. Smith’s unit was arranged for by Venice-based Blink USA Inc., a production company that works on commercials and music videos. They are paying for the unit at 107 Luxury Apartments while Smith is in town.
“It’s just so much more convenient than trying to find someone a house or apartment,” said Liz Jarvis, a Blink USA worker. “It’s almost like staying in a hotel. It’s so much easier.”
Another local short-term rental provider is Citrus Suites. Originally built by downtown developer Howard Jacobs, Citrus Suites tailors to high-end clientele and runs an extensive marketing campaign for its three locations and 90-plus units. The monthly cost to live in a Citrus Suites unit can be as little as $2,000 for a studio and as much as $6,000 for a two-bedroom suite.
Kathleen Rawson, executive director for the Bayside District Corp., the nonprofit that runs downtown, said it’s a problem that City Hall doesn’t collect a bed tax on the units. But Rawson added that the developments have a positive impact on downtown.
“Any place where we can increase our pedestrian base — whether that’s with residential or that’s with the transient visitor market — that’s good for downtown,” she said. “We like to see those rooms filled.”
And residents said having the short-term units have simplified their lives.
“I think it’s awesome,” said one tenant, 30, a former actress who asked not to be named. “I’ve been doing it forever. It’s easy. It’s non-committal.”
Originally published in the Santa Monica Daily Press print edition on November 7, 2003. Read the original PDF.