SHORT-TERM VACATION RENTAL FOCUS GROUP REPORT AND RECOMMENDATION

FOCUS GROUP The Vacation Rental Focus Group was established to gain feedback from a wide variety of Ojai residents about the consequences of and the approach to regulation of Short Term Vacation rentals within the city limits of Ojai. There was a total of eight participants and two Council members; Bill Weirick and Betsy Clapp. This group was comprised of two vacation rental operators, one affordable housing advocate, one real estate agent, one real estate agent specializing in long term rentals, one Ojai raised young married professional, one citizen at large, one business owner and one hotel owner/operator. Three out of eight participants are renters.

CONSEQUENCES OF SHORT TERM UN-HOSTED VACATION RENTALS Change in City Character The peace, quiet and safety of our neighborhoods is very important to Ojai residents. When rentals are occupied by people with no stake in, or connection with the community or neighborhood, they have little incentive to be “good neighbors”. As a consequence, there is, and will continue to be disruption of the peace and quiet in neighborhoods, disruption of the residential character of neighborhoods, parking problems and a loss of the sense of safety residents enjoy with respect to their children and their property. The likelihood of renter misconduct is exacerbated by the fact that they are “on vacation”, making them more prone to disruptive conduct, including driving under the influence. In addition to its quality of life, Ojai’s prosperity has always been fueled by its attractive “small town” and “artsy” feel. The loss of available housing stock to investors buying homes for vacation rentals erodes this “feeling” by reducing community cohesion and denying many of our residents a place to live.

Loss of resident participation in philanthropic organizations, Ojai Park and Recreation programs as well as community events, like Mexican Fiesta and Fourth of July Parade are inevitable consequences of un-hosted short term vacation rentals. In addition, there are fewer residents enrolling children in both our public and private schools. Availability of Health Care could be effected by the loss of full-time residents. There is a shortage of doctors. Currently, most specialists, due to low demand, are only in town part of each week. If the number of un-hosted vacation rentals is allowed continue to grow there will be little incentive for general practitioners to establish a full time practice here. In addition, emergency services could become over-burdened and understaffed. Loss of community cohesion also affects how well the City government meets residents’ needs. Effective government requires community involvement. As the number of homes being used as vacation rentals increases, the number of people actively participating in local government decreases. Loss of rental housing inventory, affordable or otherwise. The increase in houses being converted to vacation rentals has resulted in the loss of long-term rental housing. This conversion is resulting in sky rocketing rents and evictions of long term-renters throughout our community. The vast majority of Ojai residents and virtually all of its visitors want to preserve Ojai’s small town character. In addition, such preservation is required by the City’s General Plan.

RECOMMENDATION

PROHIBIT UNHOSTED SHORT-TERM VACATION RENTALS Prohibiting un-hosted rentals will prevent investors from buying properties with the intention of renting them out and will restore to the “rental inventory” those units no longer useable as short term rentals. Assuming that real estate agents disclose the prohibition, and/or buyers will otherwise be aware of its likelihood, such sales will stop. Homes will then be sold to people who are going to live in them, thereby avoiding the problems outlined above. Also, the prices of homes will no longer be driven up by investors. ALLOW HOSTED SHORT-TERM VACATION RENTALS At the start of the focus group, several members favored a ban on all “short term vacation rentals”. After extensive discussion, a clear distinction was drawn between the impact of hosted versus un-hosted vacation rentals. Based on the differences, this proposal permits only hosted rentals. The time limits imposed on such rentals is intended to make short term rentals less profitable. A wide variety of judicial decisions, at the Federal and State level, have upheld local governments’ authority to prohibit vacation rentals. The following proposal has no effect on an owner’s right to rent out all or part of a property for more than 30 days at which point landlord tenant law applies. ENFORCEMENT The ability to enforce any vacation rental ordinance has been suggested as a reason to not adopt an ordinance.“Unenforceable” generally means that a governing body does not have sufficient resources to carry out effective enforcement activities. The sufficiency of resources, of course depends on how much “enforcement activity” is required. That in turn depends on how much “voluntary compliance” there is. Ordinances are generally drafted with the goal of encouraging voluntary compliance. Where, as here, compliance is ensured by removing the financial incentives of prohibited rentals, the need for active enforcement is greatly reduced.

Without an ordinance on the books, there is nothing with which a person can “voluntarily comply”. Enforcement happens in two ways: 1. Voluntary compliance (includes following the rules AND not renting short term at all. 2. Fines and penalties (administrative, civil and criminal) sufficient to deter violations. PROPOSAL SUPPORTS VOLUNTARY COMPLIANCE BY: 1. Making owners financially “responsible” for renters’ behavior. 2. Informing owners of potential exposure to ADA and FHA regulations and penalties ($75,000 for first offense; $150,000 for second violations) should preclude most, if not all violations. 3. Requiring owners to post license number on hosting platforms. (unlicensed won’t be able to use the sites thereby discouraging rental activity). 4. Licensing requirements (up to code; insurance; inspection, etc.) will deter many from becoming “absentee hosts”. 5. Making enforcement activities public (assuming City Council authorizes fines with deterrence value) 6. Time limits make short term rentals less profitable than long term.

SUGGESTED TERMS AND CONDITIONS FOR ORDINANCE 1. Ordinance applies to all legal dwelling units in all zones within the city limits of Ojai, including any and all units used as a short term vacation rental prior to the adoption of this ordinance. Units made legal through issuance of nonconforming permits under the city’s second unit compliance program do not qualify. Definitions: “dwelling unit” means one or more rooms designed, occupied or intended for occupancy as separate living quarters. No apartments or condos will be considered a dwelling under the conditions of this ordinance. “legal” is defined as a dwelling that is fully permitted under all applicable City of Ojai ordinances. Dwellings permitted under the second unit compliance program will be considered legal within the context of this ordinance.

2. Short Term Vacation rentals shall be allowed only under the following conditions: a. Vacation rentals must be hosted. A vacation rental shall only occur in the domicile of the owner. Renting tenants may not host vacation rentals. Corporations or trusts may not host vacation rentals. b. Rental shall be for 30 days or less c. One vacation rental license per parcel allowed (multiple transient rental units/parcel not allowed) d. Must have a valid City business license e. Proper insurance coverage for vacation rental use f. Dwelling must be permitted under Ojai Municipal Code requirements. g. Limited to specific calendar days defined by specific legacy events per year. Initial examples include the Music Festival, the Tennis Tournament, the Film Festival and the OSA Tour. h. Complies with all regulations set forth in this ordinance i. If any of these provisions conflicts with any provision of the City zoning ordinances, the terms of this ordinance shall prevail.

3. Prohibitions: a. Use is limited to dwelling purposes only, i.e. Weddings, Events, etc. are not permitted uses. b. No hosting platform or person shall undertake, maintain, authorize, aid, facilitate or advertise any rental activity that does not comply with this ordinance. c. No advertising on the exterior of the primary unit and any accessory dwelling or anywhere on the property. d. Guests exceeding 2 guests per room prohibited.

4. Hosting Responsibilities: a. Must collect and remit TOT b. Takes financial responsibility for any damages caused by the renters and actively prevents refers from becoming a nuisance to neighbors. c. Complies with all applicable laws, including ADA (Americans with Disabilities Act) and FHA (Federal Housing Authority), where applicable and health, safety, building and fire protection. d. Obtains and maintains current City business license. e. Operates in compliance with all permit conditions established by City Council via resolution. Because Short-term Vacation regulations are a moving target, resolutions allow for a more rapid response to changes needed in the ordinance.

5. Licensing requirements: a. Proof of insurance and signed indemnification statement required, all advertising must include license # (require on internet ads, contracts, all marketing. Insurance requirements TBD) b. Legally permitted dwelling c. In cases of any fines or penalties for ADA or FHA violations, applicants must show proof of satisfaction along with proof that the necessary modifications to the property have been made.

d. License applications include requirement of a submitted schematic floor plan, annual inspection to confirm, # of bedrooms, parking adequacy, health and safety compliance, low flow appliances, etc. (License fees should be scaled to fund cost of inspections and processing) d. Owner will post license in the rental unit

6. Enforcement: a. Penalties for violations to be determined by Council. b. Any interested person may seek an injunction or other relief to prevent and remedy violations of the ordinance. The prevailing party in such an action shall be entitled to recover reasonable costs and attorney’s fees. (This removes argument of inability to enforce the ordinance.) c. Fines and license pays for enforcement d. Hot line e. Compliance officer will conduct routine review of one line VR platforms as well as responding to citizen complaints. f. Violations subject to revocation of permit/license g. Violations are punishable with all applicable fines established by City Council. h. Any legal or other costs incurred by the City due to violations or enforce will be paid by the violating party

6. Regulations: a. The City Council may enact through regulations which may include but not limited to permit conditions, reporting requirements, inspection frequencies, enforcement procedures, advertising restrictions, disclosure requirements or i insurance requirements. No person shall fail to comply with any such regulations. b. Good neighbor policies will be stipulated, augmenting (4), to be agreed to as a condition of getting a license and required to be part of every contract with a transient renter. Licenses can be revoked for violations of good neighbor policies.

7. Fees: City Council may establish by resolution all fees and charges as may be necessary to effectuate the purpose of this ordinance. 8. Hosting platform requirements TBD Note: This is an example of changing conditions which argues for details of licensing requirements and enforcement protocol to be stipulated by resolution. The following is the draft language in proposed Senate Bill 593 The California Constitution authorizes a county or city to make and enforce within its limits all local, police, sanitary, and other ordinances and regulations not in conflict with general laws. Existing law also authorizes a city, county, or city and county to impose a transient occupancy tax upon occupancies of lodgings of no more than 30 days. This bill would require an operator of a hosting platform, as defined, to report specified information quarterly to the city, county, or city and county. The bill would authorize a city, county, or city and county, by ordinance, to opt out from receiving reports and to subsequently opt back in, with 90 days’ advance notice of that ordinance to the operator of a hosting platform and to impose a fine or penalty on an operator that fails to provide the report, as specified. The bill would prohibit an operator of a hosting platform from facilitating the rental of a residential unit offered for occupancy for tourist or transient use, if such a use of that residential unit, or the offering of that residential unit for such a use, is prohibited by an ordinance of the city, county, or city and county in which that residential unit is located. The bill would authorize a city, county, or city and county, by ordinance, to establish a fine or penalty on an operator of a hosting platform, as specified, for a knowing violation of this provision. The bill would authorize a city, county, or city and county to require an operator of a hosting platform to collect and remit applicable local transient occupancy tax. This bill would authorize a city, county, or city and county to adopt an ordinance that would require a transient residential hosting platform, as defined, to report specified information quarterly to the city, county, or city and county, and to establish, by ordinance, a fine or penalty on a transient residential hosting platform for failure to provide the report. The bill would make the information in the report confidential and require that it not be disclosed. The bill would authorize the city, county, or city and county receiving the report to use the report solely for transient occupancy tax and zoning administration. The bill would also authorize a city, county, or city and county to require a transient residential hosting platform to collect and remit applicable transient occupancy tax. The bill, where a specified ordinance has been adopted, would prohibit a transient residential hosting platform from facilitating

occupancy of a residential unit offered for tourist or transient use in violation of any ordinance, regulation, or law of the city, county, or city and county, and would authorize a city, county, or city and county, by ordinance, to establish a civil fine or penalty on an operator of a transient residential hosting platform for a knowing violation of this provision. This bill would also require the operator of a transient residential hosting platform to disclose specified information regarding insurance coverage in the transient residential hosting platform agreement with an offeror of a residential unit. Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest. This bill would make legislative findings to that effect.

ADDITIONAL RECOMMENDATIONS 1. Have contained in “Host” packet, as well as on the City website, regulations for establishing a Bed and Breakfast. In what zones they are allowed in, etc. 2. Review Bed and Breakfast requirements to make sure they are easily understood and easy to navigate so as to encourage legal opportunities for someone to enter the hospitality industry. 3. Work with Ventura County to encourage a similar ordinance in the County. 4. Explore ways to make the development of “boutique” hotels easily understood and easy to navigate.