Newport Beach shuts down 78 unpermitted vacation homes; more are under scrutiny

July 6, 2017
Newport Beach, CA

By Hillary Davis | Contact Reporter

Newport Beach’s new short-term rental monitor has helped the city close the door on nearly 80 unpermitted vacation rental homes in the past month, with dozens more under review, the city says.

Based on about five weeks of data from Host Compliance, a company that combs 22 online platforms such as Airbnb and HomeAway to see who’s advertising their homes for vacation rental without proper local clearance, Newport has shut down 78 rentals and has about 50 more to review, Kim Brandt, Newport Beach’s community development director, told the City Council on Tuesday.

Residential properties offering short-term rentals — defined as less than 30 days — have long been part of the local culture, with zoning, lodging permits and business licenses to regulate them. But the recent popularity of online short-term rental platforms that don’t have a physical presence here has made it difficult for Newport Beach to regulate such rentals, Brandt said.

Newport currently has about 1,300 active short-term lodging permits. The city doesn’t keep track of how the properties are advertised, such as through online platforms or a traditional property management firm, but it does collect a 10% occupancy tax, also called a bed tax, as it would for a hotel room. Short-term rentals generated about $2.7 million in revenue last year, accounting for 10% of the bed tax total.

Most of the permitted short-term rentals are at the Balboa Peninsula, Balboa Island and Corona del Mar. The vast majority are in neighborhoods zoned to allow multifamily housing. In 2004, the city banned vacation rentals in areas zoned only for single-family homes.

Much of the recent crackdown has been in single-family-only neighborhoods, where only 120 properties operating before the ban were “grandfathered.” This is where all of the 78 homes that have ceased offering vacation rentals are located.

Those property owners will have to pay the city back taxes and get a permit if they intend to continue offering short-term rentals. But Brandt said they may be cooperative.

“Believe it or not, people can be very forthright in giving that information to us,” she said. “We can also look at their listings and we can get a sense of the time the property’s been advertised, and perhaps we can get some cooperation with the online hosting company too.”

Brandt said HomeAway sent Newport a letter this week agreeing to share its listing information and require its hosts to put their permit numbers in their listings. She said the city would follow up with Airbnb.

The two major platforms agreed in May to share their host information with San Francisco, where vacation rentals have been a pressing topic.

Host Compliance compares addresses in Newport Beach’s database of permitted hosts with listings on vacation home websites. Newport is one of the company’s roughly 50 clients worldwide and one of 15 in California. The city has a one-year contract with the monitor.

Brandt plans to update the City Council with additional results later this year.

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