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SR-07-14-2015-13BTo: Mayor and City Council From: Mayor McKeown, Mayor Pro Tern Vazquez and Councilmember Davis Date: July 14, 2015 13 -13: Request of Mayor McKeown, Mayor pro tem Vazquez, and Councilmember Davis that Council support SB593 (McGuire), which has been amended at Santa Monica's suggestion to preserve local control over vacation rental ordinances while requiring internet platforms to share appropriate booking location and price data, and direct City staff to convey Santa Monica's support to state legislators and the Governor. July 14, 2015 GET THE FACTS ON SB 593-9 CAUFOGRNZA MOVING COMMUNXTIES AND SHARING ECONOMY ACS STATE SENATOR MXKE McGUIRE The premise of 513 593 is simple: reinforce local laws already on the hooks. Where vacation rentals are legal, the bill will assist local jurisdictions in their regulation and collection of tourist taxes as more than 430 cities and 56 counties impose a tourist tax. Where vacation rentals are illegal by local ordinance, the bill will prohibit online vacation rental businesses ( "OVRBs ") from making a rental. The Thriving Communities and Sharing Economies Act will empower local control, provide desperately needed funding for parks, local roads, fire and police services,' and prornole safe neighborhoods. SB 593 will require online vacation rental businesses to confidentially disclose information to cities and counties and /or collect tourist tax dollars — projected to be in the hundreds of millions of dollars statewide. BACKGROUND Home - sharing is commonplace and helps countless Californians to pay their bills. Yet, it has evolved from its couch - surfing roots into a multi - billion dollar business. OV4RBs force neighborhoods, cities and counties to bear the costs and burden of their operation, Increased and undisclosed tourist traffic alters neighborhood character. This creates additional demands on public safety while at the same time, cities and counties lose out on significant revenue that could be invested in local services such as parks, roads and public safety. Moreover, the availability of affordable housing stock is being diminished for working families and seniors. PROBLEM Many cities and counties allow short -term residential rentals. '= Most require hosts to register and that tourist taxes be paid. However, registration and } 4 payment of tourist taxes in - these cities and counties Vrv; are based on the owners of the short -term residential units i voluntarily reporting i „I am pleased to endorse... 56593. With their rental activity. 1 this legislation, local government can rest However, there has been a severe under- registration of hosts and underpayment of tourist taxes. There are also many cities that assured that the state supports its ability to protect the r_haracterof theircommunity." — Se�1AYe`8ffi R39P3FdiJE' i'P3635`FC6Fd The League encourages your support of SB S93-.The revenues generated support public services which directly affect local quality of life and the attraction of the community for a visitor. ..--.6FL GUv OF CALIFURMA CET 7E.i prohibit the renting of residences for _......- less than 30 days. However, these local laws are frequently ignored by OVRBs, causing unwanted burden to city services, roads and neighborhood character while reducing tourist tax collection from sanctioned hotels. Rentals facilitated by OVRB's in these cities and counties go against the expressed wishes of the residents. For example, only a small percentage of hosts in San Francisco have followed the city ordinance to register, Sonoma County has had to spend in excess of $200,000 in an attempt to track down those rentals that are not paying the required tourist taxes under the ordinance. And Los Angeles is currently experiencing a rental housing shortage due in part to thousands of residential units being converted to OVRBs. Clearly, cities and counties are unable to obtain this information due to the fact that OVRB's unfairly put the burden of their responsibility on individual home - owners. This lack of oversight and enforcement presents a huge gap in accountability, and as a result, local laws and regulations are not being followed. SOL 90111 SB 593 will respect existing laws by empowering local control. It will provide critical tools to help cities and counties uphold their existing laws. The proposal has two components: SUPPORTERS United States Senator Dianne Feinstein American Federation of State, County, and Municipal Employees American Hotel Lodging Association American Insurance Associations AIDS Housing Alliance Anti - Eviction Mapping Project Asian American Hotel Owner Association Association for Los Angeles Deputy Sheriffs Association of California Insurance Companies Andaz West Hollywood Beazley I-louse Bed & Breakfast Inn Borrego Springs Chamber of Commerce & Visitors' Bureau California Alliance for Retired Americans California Apartment Association California Association of Boutique and Breakfast Inns California Association of Code Enforcement Officers California Association of County Treasurers and Tax Collectors California College and University Police Chiefs Association California Hotel & Lodging Association California Labor Federation California Narcotic Officers Association California Police Chiefs Association California Professional Firefighters California State Association of Counties California Teamsters Public Affairs Council Chelsea Garden Inn City of Berkeley City of Big Bear Lake City of Thousand Oaks City of West Hollywood Coalition for Better Housing Council of Community Housing organizations County of Mendocino Comity of Mono County of Sonoma County of Tuolumne Courtyard Marriott Lang Beach Downtown Donner Lake Inn Bed & Breakfast Ferndale Chamber of Commerce Groveland Hotel Harmony Inns of Monterey Headlands Inn B &B Hilton Los Angeles Universal City Hotel Housing Rights Committee Hotel Council of San Francisco Hotel Council of Los Angeles Humboldt County Convention & Visitors Bureau Humboldt Lodging Association Keep Neighborhoods First later ational Faith Based Coalition LAANE League of California Cities Long Beach Firefighters Los Angeles Police Protective League Los Angeles City Council President Herb Wesson, Jr. Los Angeles City Councilmember Bob Blumenfield 'I. Assist local laws regarding OVRBs. This bill will reinforce local ordinances by requiring OVRB's to confidentially disclose information of the home business (address of host rental, amount of nights stayed, and amount paid by the visitor) to the cities and counties - similar to the way hotels currently report their tourist taxes. This information will allow cities and counties to ensure their laws are being followed. Local jurisdictions may also choose to have OVRBs collect the taxes and remit them.. 2. Enforce local bans against short -term residential rentals. SB 593 will prohibit OVRBs from facilitating a residential rental if the transaction would violate a local law. This will reinforce local Control- Additionally, cities and counties will have the ability to opt into the new state law in order to participate. Los Angeles City Councilmember Mike Bonin Los Angeles City Councilmember Joe Buscaino Los Angeles City Councilmember Gilbert Cedilla Los Angeles City Councilmember Paul Karatz Los Angeles City Councilmember Mitch O'Farrell Malin County Councilor Mayors and Cinf cilroembers Monterey County Hospitality Association National Association of Mutual Insurance Companies Neighbors for Overnight Oversight North Lake Tahoe Chamber7CVB/ Resort Assoo`dtion Pacific Association of Domestic Insurance Companies Pacific Palms Hotel and Conference Center Professional Association of Innkeepers International Redwood Suites Riverside Sheriffs Association Rural County Representatives of California Sacramento Hotel Association San Diego County Hotel -Motel Association San Franciscans for Reasonable Growth San Francisco Apartment Association San Francisco Information Clearinghouse San Francisco Tenants Union San Mateo Central Labor Council Santa Cruz County Conference & Visitors Council Senior & Disabled Action Service Employees International Union ShamBeltcr San Francisco The Sebastopol Inn Town of Mammoth Lakes Treasurer -Tax Collector, County of Contra Costa Treasurer -Tax Collector, County of El Dorado Treasurer -Tax Collector, County of Mendocino Treasurer -Tax Collector, County of San Luis Obispo Treasurer -Tax Collector, County of Siskiyou Treasurer -Tax Collector, County of Sierra Treasurer -Tax Collector, County ofSonama Treasurer -Tax Collector, County of Tulare Treasurer -Tax Collector, County of Tuolumne United Firefighters of Los Angeles City UNITE -HERE UNITE -HERE, Local 2 West of Twin Peaks Council West Hollywood Mayor Lindsey Horvath (faartiailgO COWITAC1 Chris Nielsen, Office of Senator McGuire (916) 651.4002 Christopher. Niel .en @sen.ca.gov AMENDED IN SENATE NNE 10, 2015 AMENDED IN SENATE MAY 6, 2015 AMENDED IN SENATE APRIL 29, 2015 AMENDED IN SENATE APRIL 6, 2015 SENATE BILL No. 593 Introduced by Senator McGuire (Coauthor: Senator Leno) February 27, 2015 An act to add Article 12 (commencing with Section 53170) to Chapter I of Part 1 of Division 2 of Title 5 of the Government Code, relating to local government. LEGISLATIVE COUNSEL'S DIGEST SB 593, as amended, McGuire. Residential units for tourist or transient use: transient residential hosting platforms. 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 lan, also authorizes a cio} couny) or city and county to impose a transient occupancy tax upon occupancies of lodgings of no more than 30 days. NOW 95 SB 593 —2— airi��o�u�afWMIN- This bill would authorize a city, county, or Cny ana currruy lu uuup, an ordinance that would require a transient residential hostingplatform, 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 hunsient occupancy tax andzoning administration. The bill would also authorize a city, couny) 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 cif), 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 lanowing violation of this provision. This bill would also require the operator of a transient residential hosttngplatform 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 nnalce legislative findings to that effect. 95 MM SB 593 The California Constitution requires local agencies, for the purpose of ensuring public access to the meetings of public bodies and the writings of public officials and agencies, to comply with a statutory enactment that amends or enacts laws relating to public records or open meetings and contains findings demonstrating that the enactment furthers the constitutional requirements relating to this purpose. This bill would nnake legislative findings to that effect. Vote: majority. Appropriation: no. Fiscal committee: no. State- mandated local program: no. The people of the State of California do enact as follows 1 SECTION 1. Article 12 (commencing with Section 53170) is 2 added to Chapter 1 of Part 1 of Division 2 of Title 5 of the 3 Govermnent Code, to read: 4 5 Article 12. Thriving Communities and Sharing Economy Act 6 7 53170. (a) This article shall be known, and may be cited, as 8 the Thriving Communities and Sharing Economy Act. 9 (b) The Legislature ' and declares that transient residential 10 hosting platforms are doing business in California by facilitating 11 the occupancy ofproperty located in California. 12 53171. (a) —For purposes of this article: 13> 14 (a) (1) Transient residential hosting platform" means —a 15 rattr-ketpijee that is created 16 a person or entity that facilitates the rental of a residential unit 17 offered for occupancy for tourist or transient use for compensation 18 to the offeror of that unit, and the --epe transient 19 residential hosting platform derives revenues, including booking r .., 20 fees fees, subscription charges, or advertising- nv�ines —� =�, 21 " revenues. 22 "Facilitate" includes, but is not limited to, the act of allowing the 23 offeror of the residential unit to offer or advertise the residential 24 unit on the Internet Web site provided or maintained by the 25 operator. 26 (2) "Transient residential hosting platform" does not include 27 anyone licensed to practice real estate as defined in Section 10130 28 of the Business and professions Code. 95 SB 593 1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 —4— (2 (h) "Offeror" itiekides an ..' _ ._ of lessee means the owner, lessee, or other person or entity with the legal right to occupy or authorize the occupancy of a residential unit. (-3) (c) "Residential unit' means a dwelling unit in a private residence, including a single - family residence, an apartment or other leased premises, a residential condominium unit, or any other residential real estate improvement. "Residential unit' does not include individual guest fooms, eondo-ittiti' tmits timeshare guests rooms in a hotel, inn, or similar transient lodging establishment operated by an innkeeper, as defined in subdivision (a) of Section 1865 of the Civil Code. (d) "Touirist or transient vise" inemns 30 days or fewer: (e) "Operator" includes any corporation, partnership, or individual thatprovides or maintains a transient residential hosting 53172. ' All of the following shall apply only within the jurisdiction of a city, county, or cio, and county that adopts an ordinance applying this section within its jurisdiction: (a) A transient residential hosting platform shall report quarterly to the city, county, or city and county all of the following information: (1) The address of each residential unit that was -ffio , � occupiedfor tourist or transient use during that quarterly period. (B) (2) The total number of nights that the residential unit was occupied for tourist or transient use. (G (3) The amounts paid for the occupancy of that residential turih unit for tourist or transient use. 95 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 -5— SB 593 f� (b) A city, county, or city and county may, by ordinance, establish a fine or penalty on-an eperarore&-a a transient residential hosting platform that fails to provide a report required pursuant to this stibdivisiox section not to exceed the amount of one thousand dollars ($1,000) for the first failure, two thousand dollars ($2,000) for the second failure, and five thousand dollars ($5,000) for a thud or subsequent failure, to be imposed after the city, county, or city and county has provided written notice to the operator of the failure, has given the operator transient residential hosting platform an opportunity to provide the report within 30 days of receiving the written notice, and theaperator transient residential hosting platform failed to provide the report within that period. (c) Any civil fines or penalties shall be paid to the city, county, or city and county that established the fine or penalty. (d) (1) Notwithstanding any other lau; including the California Public Records Act, as set forth in Chapter 3.5 (commencing with Section 6250) ofDivision 7 of Title 1, the information in the report required pursuant to this subdivision is confidential and shall not be disclosed. (2) The city, county, or city and county receiving the repot shall use the information in the report solely for the administration of transient occupancy tax and zoning. (e) The city, count), or city and county may require a transient residential hostingplatforrn to collect the transient occupancy tax imposed by that local agencj, and to remit that tax to that agency. The authority granted by this subdivision is in addition to any otherprovision ofstate or local law that authorizes a city, county, or city and county to require a transient residential hosting platform or any otherperson or enth)r to collect and remit transient occupancy tax. 53173. (a) A transient residential hosting platform shall not facilitate the rental occupancy of a residential unit offered for occupancy for tourist or transient use if suth a ttse of that residential tutit, of the offering of that residential unit for such a 95 SB S93 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 —6— use, is pfoltibited by an ordinanee the occupancy will violate any ordinance, regulation, or law of the city, county, or city and- eetmty count), in which that residential unit is loeated. located, that has applied Section 53172 within its jurisdiction. (b) A city, county, or city and county that has applied Section 53172 within its jurisdiction may, by ordinance, establish a civil fine or penalty on an operator of a transient residential hosting platform that knowingly violates this -`QOdi-94sioti section not to exceed the amount of one thousand dollars ($1,000) per day for the first violation, two thousand dollars ($2,000) per day for a second violation, and five thousand dollars ($5,000) per day for a third or subscouent viol o anerator of a liosti__ _444) - i period. 4�tiled to eense within that violation to be unposed after the city; count), or city and county has provided written notice to the operator of a transient residential hosting platform of the failure to abide by the respective ordinance, has given the operator of the transient residential hosting platform an opportunity to correct the violation within 30 days of receiving the written notice, and the operator of the transient residential hosting platform failed to correct the violation within that period (c) Any civil fines or penalties shall be paid to the city, county, or city and county that established the fine or penalty. 53174. An operator of a transient residential hostingplatform shall disclose the following in the transient residential hosting platfornn agreement with an offeror: 95 — 7 — SB 593 1 (a) That an offeror should review his or her home or renter's 2 insurance policy to ensure that there is appropriate insurance 3 coverage in the event that a person sustains an injury or loss on 4 the offerors property, a person damages or causes loss to an 5 offerors personal or real property, or a clainn or lawsuit is made 6 against the offeror or otherwise arises out of activities related to 7 the transient residential hosting plafornn. 8 (b) If the operator of the transient residential hosting platform 9 provides insurance coverage, that the insurance coverage is 10 provided and the limits of liability. If the insurance provided by 11 the operator of the transient residential hosting pla for °rn is excess, 12 secondary, or contingent upon an offeror's home or rental 13 insurance, the operator ofthe transient residential hosti ngplatforna 14 shall explicitly explain to the offeror when the offerors insurance 15 is prhuaty or first in line to cover liabilities wising out of the 16 activities relating to the transient residential hosting pla form. 17 53175. Nothing in this article shall be construed to preempt a 18 city, county, or city and county law regulating operators of 19 transient residential hosting platforms. 20 SEC. 2. The Legislature finds and declares that Section 1 of 21 this act, which adds Section 53172 to the Government Code, 22 imposes a limitation on the public's right ofaccess to the meetings 23 of public bodies or the writings of public officials and agencies 24 within the meaning of Section 3 of Article I of the California 25 Constitution. Pursuant to that constitutional provision, the 26 Legislature makes the folloivirngfindings to demonstrate the interest 27 protected by this limitation and the need for protecting that 28 interest: 29 Where a city; county, or city and county adopts an ordinance 30 applying Section 53172 of the Government Code within its 31 jurisdiction, in order to ensure that the information disclosed to 32 local public agencies in the reports required by Section 53172 of 33 the Government Code is not used for purposes other than the 34 limited public pun poses specified in that section, it is necessary to 35 lunit the disclosure of those reports. 36 SEC. 3. The Legislature finds and declares that Section I of 37 this act, which adds Section 53172 to the Government Code, 38 furthers, within the meaning ofparagraph (7) of subdivision (b) 39 ofSection 3 ofArticle I oftl7e California Constitution, the purposes 40 of that constitutional section as it relates to the right of public 95 SB 593 —8— 1 access to the meetings of local public bodies or the writings of 2 local public offrcials and local agencies. Pursuant to paragraph 3 (7) of subdivision (b) of Section 3 of Article I of the Calijornia 4 Constitution, the Legislature makes the following fandhngs: 5 #'a city, count; or city and county adopts an ordinance applying 6 Section 53172 of the Government Code within its jurisdiction, 7 limiting disclosure of a record obtained by the local public agency 8 forpurposesoj'taxandzoningadministrationfurthersthepurposes 9 of Section 3 of Article I of the California Constitution by 10 appropriately balancing the interest un public disclosure with 11 ensuring that this information is not used for improper purposes. m 95