HomeMy WebLinkAboutStaff Report 5409
CITY OF PALO ALTO OFFICE OF THE CITY CLERK
December 15, 2014
The Honorable City Council
Palo Alto, California
Colleagues Memo From Vice Mayor Kniss and Council Members
Holman, Klein and Price Regarding Regulation of Short-term Rentals in
Residential Neighborhoods (e.g., Airbnb and Related Businesses)
Requested Action: Direct staff to conduct a study session with Council no later
than March 31, 2015, on the various questions posed by businesses that facilitate
short-term rentals of rooms, apartments or houses in residential neighborhoods
(e.g., Airbnb, VRBO, etc.), what actions the City has taken, and what actions, if
any, the City should take.
Discussion: “Sharing economy” websites such as Airbnb, VRBO, and others
provide applications that allow owners of residential property to rent some or a
portion of their properties to travelers seeking such accommodations. Airbnb, for
example, is only four years old but it is already a world wide business with a multi-
billion dollar valuation. These businesses are also controversial.
Among the Palo Alto issues posed by the se businesses are: the collection of the
transient occupancy tax on rentals and whether our zoning regulations should
allow such rentals in residential neighborhoods. Other cities are finding other
problems with the Airbnb model such as its impact on the availability and cost of
housing (San Francisco) and potential traffic and parking impacts in the
neighborhoods.
Another concern raised by community members is one of safety. Without some
form of registration, as a hotel would have, or some means of notification,
residents have no way of knowing who is taking up residence, albeit on a short
term basis, next door to them.
Palo Alto presently has about three to four hundred Airbnb listings per night,
about the same as San Jose (see S.J. Mercury News of Dec. 8, 2014). San Jose,
with a 10% TOT estimates that they have been losing $150,000 per year in taxes.
With our 14% TOT our calendar 2015 equivalent number is $210,000.
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San Jose, San Francisco and a few other larger cities have been negotiating
agreements with Airbnb and other similar businesses on taxation and other
matters. Our situation may be different than these larger cities in some respects,
but we believe it’s time for us to review what has been done and consider what
additional steps Palo Alto should take.
We have provided an advance copy of this memo to the Manager and Attorney
per our protocols.
Resource Impact
Existing staff (Planning, ASD and the City Attorney’s Office) will collaborate on
preparation of background material to support an initial study session. Follow up
tasks, such as community outreach and preparation of potential zoning
amendments, broad enforcement efforts or initiation of legal action, may require
substantial additional staff resources in Planning, Code Enforcement,
Communications and Legal. Reprioritization of other work and/or supplemental
outside resources may be required. These are factors that will need to be
considered, subsequent to the study session, if Council decides to make changes
in our ordinances and practice.
Department Head: Beth Minor, Acting City Clerk
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