SR 12-18-2018 4A
City Council
Report
City Council Meeting: December 18, 2018
Agenda Item: 4.A
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To: Mayor and City Council
From: David Martin, Director, Administration
Subject: Corporate Housing potential goals and policy options
Recommended Action
Staff recommends that the City Council review and discuss potential goals and policy
options to guide an updated corporate housing ordinance.
Executive Summary
As a city with approximately 75% of its residents in rental housing, the City has
maintained a long-standing commitment to protecting tenants and existing housing
stock, particularly in rent-controlled housing. Within the broad context of a statewide
housing shortage and associated impacts on housing affordability, the City has an
interest in ensuring that this valuable resource is retained for permanent housing to the
greatest extent possible. On August 14, 2018, as part of broad direction to examine
statutory renter protections for outdated definitions and compensations, and in light of
rapidly intensifying market pressures on local rents, Council directed staff to study the
definition of what constitutes “corporate housing” or “short-term rentals” – both
prohibited land uses that, if allowed, will erode the stock of true residential units.
Subsequent to this direction, an interdepartmental staff team from City Planning, Code
Enforcement, Building & Safety, Rent Control, Housing, City Manager’s Office, City
Attorney’s Office, and Communications met to determine possible approaches on how
to best study this issue. What became evident through these discussions is a need to
specify the desired policy outcomes in order to identify possible options to address the
corporate housing/short-term rental concerns.
Background
Corporate Housing is a prohibited residential use classification in the zoning ordinance
and was a term that was created with the 2015 Zoning Ordinance Update to
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differentiate from vacation rentals, which are for stays of 30 consecutive days or less.
Corporate housing has a two-part definition as housing that: 1) is designed for use by
individuals who will reside on the property for 30 days or more but who otherwise intend
their occupancy to be temporary; and 2) provides at least two specific amenities such as
maid and linen service and business service centers. As this definition was written
some time ago, housing types and amenities have changed rapidly in response to
market demand for housing that accommodates varying durations of stay whether for
business, education, healthcare, or vacation purposes.
What is Corporate Housing?
A term coined in the 1980s, “corporate housing” has been used to describe units
specifically targeted towards business travelers combining the comfort and convenience
of apartment living with the amenities typically found in hotels. Usually for short-term
work assignments rather than meeting travel. However, it appears from recent
discussions at the Planning Commission, Rent Control Board, and direction from City
Council, this term has now been substantially expanded to encompass furnished or
unfurnished units leased by corporations for their employees, advertising by an entity
that specializes in temporary housing, or leasing of units by persons or corporations that
are not considered to be representative of longer term permanent residents of the city.
The terms “vacation rental”, “short-term rental”, and “corporate housing” have been
used interchangeably. This broad expansion to other activities outside of the existing
corporate housing definition present challenges for crafting regulations to protect the
City’s stock of housing without creating unintended consequences. In order to address
the Council’s interest in ensuring the viability of permanent housing stock, it is important
to consider why this issue is occurring, who this kind of housing serves, and most
importantly, distinguish this issue from that of short-term vacation rentals.
Council’s concerns were precipitated by recent practices that appear to attempt to
divide existing rent-controlled housing units, resulting in illegal increases in allowable
density but not meeting the definition of corporate housing. There has also been
anecdotal evidence that rent-controlled units are being used as temporary housing,
whether for approximately 6-month leases for students or other durations of less than
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one year. This kind of housing typically has a higher monthly price point than typical
annual leases. Rent-controlled housing is a particularly valuable resource in providing
predictability in housing costs for tenants looking to establish ongoing residency,
thereby promoting neighborhood stability.
For newly constructed market-rate units, there have been complaints that units have
been advertised through corporate housing websites including furnishings and
amenities. Activities that affect the price and availability of newly constructed units due
to high turnover also do not align with the City’s goals to address the housing crisis.
Such activities bring into question whether regulatory incentives for housing production
are viable if new units are not being used for their intended purposes as long-term
resident housing.
Anecdotal evidence has also been received regarding landlords that rent units for
several months at a time, perhaps accommodating students and workers on temporary
assignments. While it is recognized that this kind of temporary use of permanent
housing stock removes units from the market that might otherwise be occupied by
residents intending long-term and permanent occupancy, this raises the issue of how
the City would define and distinguish between “permanent” and “temporary” residents or
even regulate length of leases.
As the terms, “short-term rental” and “corporate housing” have been used
interchangeably, this report seeks to clarify terminology to understand permitted and
prohibited land uses and also identify why there have been enforcement challenges.
For example, the City already regulates home-sharing and vacation rentals through
Chapter 6.20 of the Municipal Code. Vacation rentals are defined as rental of any
dwelling unit to any person for exclusive transient use of 30 consecutive days or less
and are therefore not the subject of this study session. In pursuit of new regulations to
further protect existing rent-controlled housing stock, Council should take into account
the potential impact on tenants who rely on housing options of less than 12 months.
Background
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Overview of Existing Laws
Zoning Ordinance Definition of Corporate Housing
On March 23, 2004, Council adopted Ordinance 2120 establishing the following
definition of “Short-Term Rental Housing” (Attachment A):
Rental housing which has the following attributes:
1. The housing is designed for use by individuals who will reside on the
property for a minimum stay of at least 30 consecutive days, but who
otherwise intend their occupancy to be temporary.
2. The housing is intended for use by persons who will maintain or obtain
a permanent place of residence elsewhere.
3. The housing includes some or all of the following amenities:
a. Maid and linen service
b. Health club, spa, pool, tennis courts, or memberships to area
facilities
c. Business service centers
d. Meeting rooms
e. Fully furnished units including a combination of some but not
necessarily all of the following: furniture, appliances,
housewares, bed linens, towels, artwork, television sets,
stereos, VCRs, CD players, fax machines, and Internet access.
f. Valet parking
This definition was added in response to Council’s concerns about the adverse impacts
of short-term housing on the character of residential neighborhoods. It was also posited
that occupants of short-term rental housing are less likely to participate in civic affairs
and do not have the same level of involvement or community ties as long-term residents
and property owners. There was concern that short-term housing in residential districts
could lead to a deterioration and destabilization of neighborhood character and disrupt
the quality of life for residents adjacent to this type of activity. The transitory nature of
short-term rental housing also has the potential to impact established residential
neighborhoods in terms of increased noise and intensity of use based upon the
operation of short-term rental housing facilities.
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In the 2015 zoning ordinance update, the use classification for “short-term rental
housing” was renamed to “corporate housing” in order to reduce confusion with the
“vacation rental”/ homesharing ordinance regulated by Chapter 6.20 of the Municipal
Code. “Corporate housing” is a residential use classification defined as follows:
Rental housing which has the following attributes:
a. The housing is designed for use by individuals who will
reside on the property for a minimum stay of at least 30
consecutive days, but who otherwise intend their occupancy
to be temporary.
b. The housing is intended for use by persons who will
maintain or obtain a permanent place of residence
elsewhere.
c. The housing includes 2 or more of the following
amenities:
i. Maid and linen service.
ii. Health club, spa, pool, tennis courts, or
memberships to area facilities.
iii. Business service centers.
iv. Meeting rooms.
v. Fully furnished units including a combination of
some but not necessarily all of the following: furniture,
appliances, housewares, bed linens, towels, artwork,
televisions, entertainment systems, and computer
equipment.
vi. Valet parking.
Home-Sharing Ordinance
Prior to the zoning ordinance adoption, Council adopted regulations for home-sharing
and vacation rentals in response to the rapid growth of online hosting platforms and the
reduction of rental units that would otherwise be available for long-term housing. There
was a concern with the trend in many cities of entire apartment buildings converting to
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vacation rentals, introducing essentially lodging uses to residential neighborhoods. The
distinction of vacation rental in Article 6 of the Municipal Code in comparison to
corporate housing in the zoning ordinance was deliberate in order to ensure the
enforceability of the short-term vacation rentals. At the time of the law’s adoption, it was
understood that corporate housing was already a prohibited activity, was not a prevalent
enforcement problem, and thus, was not the subject of discussions.
Rent Control Law
On August 9, 2018, the Rent Control Board adopted Regulation 2008, added to Chapter
2 of Board Regulations, to update the definition of the word “person” and the phrase
“rental housing agreement” as used in Charter Section 1801, subdivision (i) (see
Attachment B). The effect of this change was to clarify that by definition, a corporation
cannot occupy a unit. Instead, only a “natural person” can rent the unit. Further, the
Board clarified that it is a violation of rent control law to offer rents in excess of
maximum average rent (MAR) and that there cannot be multiple leases per unit. This
clarification stated that this type of activity has never been allowed and that the Rent
Control Board can bring a civil action if this kind of activity is occurring. It is the Board’s
position, further supported by the Courts, that rent-controlled housing exists in large part
to protect the existing housing supply and is for the provision of long-term, permanent
housing. Per City Charter Section 1803(t), use of rent-controlled housing for a purpose
other than permanent, long-term housing of “persons” would require that the landlord
obtain a removal permit from the Rent Control Board. In adopting the new regulation,
the Board recognized that the Planning Commission and ultimately City Council are
charged with regulating land use in Santa Monica and thus, the Board’s regulation
clarifies an existing process but does not expressly prohibit the practice of business
entities renting controlled units.
What is Currently Illegal Activity?
As explained above, the Municipal Code already regulates vacation rentals and the
Code Enforcement Division actively enforces these violations. Code Enforcement staff
indicate that enforcement cases are typically related to illegal use of dwelling units for
short-term vacation rentals and thus, the City’s efforts have been largely directed
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towards the disruption to residential neighborhoods and housing stock as a result of
short-term vacation rentals, which are not classified as a residential use but are
considered transient lodging.
However, there is a gap in regulations with respect to stays of 31 days or longer, which
are not as clearly defined. These are largely covered under the definition in the Zoning
Ordinance for corporate housing. “Corporate housing” is typically a term used to
describe furnished dwelling units rented out to individuals on a temporary basis as an
alternative to traditional hotels or extended stays. This kind of housing typically attracts
individuals who come into the city for business, education, or healthcare needs and
intend for their stay to be temporary. As a result, a better term for these kinds of units
may be “medium-term rentals” or “temporary housing” since the tenants staying in the
units may not be associated with any corporation.
According to the Corporate Housing Providers Association, a corporate housing industry
group, corporate housing is defined as a furnished dwelling unit for rent on a temporary
basis, primarily for more than 30 days. It is considered both a product and a service
because of renting not only the dwelling unit but also amenities tailored towards specific
customer needs such as provision of fully-furnished units, linens, housewares, and
electronics. This style of housing provides flexibility and convenience at rates that
would be more affordable than staying in hotels. CHPA indicates that demand for
corporate housing remains strong with an estimated 68,000 corporate housing units
utilized in the United States and Canada with an average length of stay of 96 nights.
This kind of housing clearly meets the needs of employees who are relocated and need
temporary places to stay while they seek permanent housing. It could also be used for
employees on temporary assignment.
The other population that may use corporate housing typically revolves around those
who are in the city for healthcare, education or entertainment/media purposes. This
may include visiting researchers, patients visiting for medical care, students, or
individuals visiting for events. Other instances where this style of housing would be
used are temporary accommodations for those displaced by loss of their homes due to
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non-casualty loss. Based on the clientele, length or stay, and amenities, it is not
accurate to suggest that all corporate housing competes with hotels or that hotels would
be a viable substitute to meet the city’s diverse housing needs.
Trends in Co-Living
For the segment of the housing market seeking “medium-term” housing options of
between 31 days and 12 months (including relocated employees, those looking for
interim housing while they search for permanent housing, and those seeking extended
vacations in home-like settings) the zoning ordinance accommodates these kinds of
uses through the “group residential” use classification. This use classification allows for
groups of tenants to rent rooms and/or beds under separate leases and share kitchen
and bathroom facilities while still having their own private space. These kinds of housing
choices have developed largely in response to the lack of housing availability and
affordability options for tenants who are priced out of hotels and permanent housing
options.
Staff has received inquiries from companies that are proposing housing models that are
neither permanent housing nor hotels and as such, the Zoning Ordinance does not
perfectly address the proposed use. These hybrid models are being proposed in
commercial zoning districts (as opposed to residential neighborhoods) and typically
involve persons renting a bed in a large common area with shared kitchens and
bathrooms. The model is an evolution of existing subscription-based extended stay
hotels. Members pay a monthly fee and can choose to stay in any available location for
a few days, a week, or extend to several weeks but it is clear that these models are not
intended for long-term permanent housing. Under the City’s current regulations, stays
of less than 30 days could potentially be considered a violation as the use might be
more akin to lodging or vacation rentals. The companies have shared that the average
length of stay is typically several weeks. These living arrangements do not meet the
definition of a “dwelling unit” because they are not providing independent living facilities
so the closest use classification is “group residential”, which typically requires a Minor
Use Permit. These models have developed in response to a gap for affordable
accommodation choices for persons who are transitioning, whether between permanent
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housing or employment. Operators have indicated that the accommodations have also
occasionally been used by travelers. If there is interest, Council could direct staff to
further explore simplifying the process for this kind of housing model, which could
potentially alleviate some of the pressure for temporary housing in residential
neighborhoods.
Issues with Enforcement
Corporate housing is not permitted in any zoning district in Santa Monica. However,
enforcement of this prohibition remains a challenge because the City must prove that
the housing is intended for persons who reside elsewhere and that two or more of the
listed amenities are being offered. A simple workaround of the current definition of
corporate housing is to offer no amenities beyond fully-furnished units. For Code
Enforcement staff to effectively enforce the ban, clarifying the intent of this ban and
developing regulations that are complementary to the home-sharing ordinance are
essential. This clarification should include an explicit prohibition against the advertising
of corporate housing so that staff may take enforcement action against those
advertising the activity.
According to information from Code Enforcement staff, there have been very few to no
complaints regarding persons renting units for 3-6 months, typically for a period of
temporary employment. The vast majority of complaints regarding corporate housing
are around stays of slightly longer than 30 days due to the higher than typical turnover
of units and associated noise and disruption to a residential neighborhood. This kind of
activity may be considered more akin to “long-term vacation rentals” instead of
traditional corporate housing. However, because these units are advertised for stays of
slightly over 31 days, they are not regulated by the home-sharing and vacation rental
ordinance even though they can cause the same kind of disruption as vacation rentals
of 30 days or less. In these situations, Code Enforcement staff indicate that these
rentals of entire units where the owner is not present are largely hosted by individuals
instead of corporations. The relatively few complaints that have been received
regarding traditional corporate housing vs. activity that appears to be an extension of
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vacation rentals are instructive in formulating a policy that addresses the root cause of
the problem.
Recent Code Enforcement complaints have highlighted proposals to convert existing
rent-controlled housing to multiple units with the intention of offering the units for rent on
a largely temporary basis for longer than 31 days. From a land use perspective, this is
not permitted without obtaining additional discretionary permits or demonstration that all
tenants are on one lease, and thus, can inform some changes that may be necessary to
ensure enforceability.
Underlying Factors and Data to Understand Scale of the Problem
It is customary to examine the root causes of a problem in order to examine potential
solutions. In the context of a severe local and regional housing affordability crisis, some
considerations may include creative solutions to the housing shortage, trends towards
more temporary work, motivation by landlords to seek additional profits, and simply bad
actors looking to exploit loopholes in existing laws. Santa Monica is a highly desirable
place to live with more demand than supply and more jobs than available housing.
While this opens debate as to whether institutions and business entities could be doing
more to alleviate the housing burden on their employees and contractors, the City’s
general approach to the jobs-housing balance is set forth in the Land Use and
Circulation Element. The LUCE sets forth a strategy that relies on the city producing its
fair share of housing to provide the option for workers to live in Santa Monica but also
relies on regional transportation networks, such as the Expo Line, that make it possible
for workers to make housing choices that are more affordable than Santa Monica. If
newly constructed market-rate housing is skewed heavily towards temporary
accommodations, this does little to address the housing crisis in the long-term.
In order to understand the scale of the problem, staff reviewed data from Code
Enforcement and Rent Control Board. As a point of reference, there are currently
approximately 51,000 housing units in the city, of which approximately 28,000 are rent-
controlled units.
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According to Code Enforcement, there are currently 384 licensed homeshares that have
been registered with the city. From an enforcement perspective, there are currently 164
open vacation rental cases (i.e. violations for stays of less than 30 days) and 4 open
corporate housing cases. As a point of comparison, the vacation rental complaints have
largely been initiated by tenants or the general public due to the quality of life disruption
that this kind of activity can cause. However, the corporate housing cases have not
been initiated by the general public but largely through internal referrals to City staff.
This accounting of corporate housing complaints compared to the total number of
housing units suggests that there are several isolated instances where activity has been
questioned but it is not yet clear whether this a prevalent issue. There have been a
couple of recent complaints regarding the physical modification of existing controlled
units which appear to have been proposed in preparation to convert controlled units into
multiple units for corporate-style housing. Based on the Rent Control Board’s view of
controlled units being reserved for long-term permanent housing, it would seem
appropriate to curtail this kind of activity so that controlled units are not at risk of being
converted to some other use.
Based on data from Rent Control, it appears that a segment of the market particularly
vulnerable to abuse are units that have been “Ellised” under the State law that allows
the removal of rental units from the market. In addition to the 28,125 rent-controlled
units, there are currently an additional 1,300 units on 2- and 3-unit properties that have
a use exemption based on the owner occupying the property. A further 1,100 units
have other use exemptions (i.e. non-rental since 1979, commercial, benevolent
institutions). If those uses ever cease, the use exemptions will lapse and the units will
again become controlled. While a small subset of the total number of housing units in
the city, there are also insufficient resources to effectively monitor these units for
compliance since Rent Control officers do not regularly visit these properties unless a
complaint is received.
Of the new market-rate units that have been constructed or are in the pipeline, staff has
received indications from one developer of the intention to operate the newly
constructed housing not as long-term permanent housing. Specifically, statements
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have been made that the units are intended to be fully furnished and largely for
temporary rentals of 31 days or more. It is important to note that statements of intent do
not equate to violations or even actual manifestation of illegal activity. However, it has
caused some alarm that development incentives such as increased height and floor-
area ratio and a streamlined process intended to produce housing are not necessarily
being used to increase the availability of long-term housing for permanent residents.
While corporate housing is already a prohibited use, the Planning Commission has
nonetheless imposed conditions prohibiting use of housing units for corporate housing
and applicants have been amenable to these conditions.
To round out the full picture of accommodation choices, there are also approximately
4,149 hotel rooms in the city, some of which are lower-cost and some of which are in
the luxury tier. Based on 2017 data from Santa Monica Travel & Tourism, the
occupancy rate of Santa Monica hotels has exceeded 85% for the past five years and is
forecasted to remain in that range for the next couple of years. The data also shows
that hotel visitors’ average length of stay to be approximately 3 days. This indicates that
hotel rooms are largely occupied for very short durations, which is not the same market
that temporary housing is intended to address. This suggests that temporary housing
and hotels are not in direct competition and that there is potential for other
accommodation types to fill the need for extended stays that hotels cannot
accommodate.
Peer Cities’ Approach to Corporate Housing
Staff attempted to research ordinances from other cities to understand other possible
approaches to corporate housing. However, the vast majority of ordinances regulate
vacation rentals (i.e. stays of 30 days or less) but are largely silent on the matter of
regulating “medium-term” rental housing. A local exception is the City of West
Hollywood which has historically shared Santa Monica’s commitment to safeguarding
the availability and affordability of rental housing stock for community residents. West
Hollywood has adopted a provision (Attachment C), which defines corporate housing as
follows:
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“the temporary occupancy of any dwelling unit, by any person (1) who
does not intend to use it as their domicile, or who has not entered into a
written rental or lease agreement to occupy the unit for at least one year;
and (2) for which the dwelling unit is owned, leased, guaranteed or made
available by a business entity for occupancy by the entity’s officers,
employees, consultants, vendors, or contractors.”
Part of this definition is somewhat similar to the City’s existing definition and thus, poses
challenges to enforcement due to the inability to enforce a person’s intent. However,
another portion of the definition may be instructive in creating a two-part test to define
“corporate housing”. The West Hollywood definition requires that the unit be leased by
a business entity and that the person occupying the unit does not intend to use it as
their principal residence or who has not entered into a lease of less than one year. The
Rent Control Board’s recent regulations similarly distinguish between natural persons
and business entities. The combination of prohibiting a business entity from renting a
unit solely for the purpose of housing their own staff and that the tenant has not entered
into a lease would potentially curtail the practice of business entities renting units
resulting in housing stock being occupied on a semi-permanent basis.
However, staff has concerns about the enforceability of regulations that solely target
lease terms, without the qualifier of a business entity leasing the unit. While the City
Attorney’s Office has indicated that regulating lease terms could lawfully be explored,
staff is concerned that such an unbalanced approach could result in unintended
consequences. For example, it is not unusual for long-term residents to be in month-to-
month leases to provide flexibility to accommodate varying life situations and transitions
where hotels would be cost prohibitive. Further, lease terms are difficult to enforce as
there is the potential for several workarounds in lease language and it is unclear to what
extent the City could enforce specificity in the language of a lease.
Planning Commission Study Session Summary
On August 15, 2018, the Planning Commission held a study session to discuss
corporate housing. The Commission discussed two key goals:
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Reduce the impact on existing rent-controlled housing and prevent conversion to
corporate housing
Stop high-turnover units with high-end furnishings and amenities with no intent to
have long-term tenants for permanent housing.
The Commission held a wide-ranging discussion and gave the following
recommendations for Council’s consideration:
Explore changing the definition of corporate housing to address current
enforcement challenges
Consider changing use classification for corporate housing to a commercial use
Study the possibility of carving out situations from enforcement, such as
temporary housing for healthcare and educational purposes and consider
locations that may be beneficial to the community
Consider new regulations that do not unduly restrict design of units that suggest
co-housing or closing the door to new housing models
Review Rent Control Board’s recent actions to distinguish “natural person” from
business entity
Review available data to determine whether Santa Monica has the number of
units that makes sense for a city of Santa Monica’s size and character
Explore available legal tools to ensure that 2-bedroom units and larger are
protected for families and not subdividable, especially based on emergency
conditions (e.g. low vacancy rate)
Consider possibility to bring back quick changes that would allow for immediate
enforcement on corporate housing
The Commission’s recommendations guided much of the research and data presented
in this report and also informed staff’s recommendation to pursue a multi-pronged
approach that has facets of immediate changes coupled with policy changes. However,
as discussed earlier in this report, in reviewing the possibility for immediate changes,
staff determined that simply changing definitions would not result in fully addressing the
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problem and potential approaches required a clearer understanding of Council’s
direction and desired outcomes.
Discussion
Defining the Problem – What is the Goal of New Policy?
Council has indicated that the issue of greatest importance is to protect the stock of
permanent housing units and ensure that these dwelling units are being rented to long-
term residents. As noted above, while regulations regarding lease length could
potentially be created, there is no practical way to enforce a resident’s intent to be a
long-term or temporary resident of the city. It is also important to note that there is no
existing definition of “long-term” versus “temporary” residents. As a result, in order to
craft a policy to protect the City’s permanent housing stock, it is important to explore the
diversity of housing needs in the city. Santa Monica is a popular tourist destination with
a diverse economy with thriving tech/entertainment/media businesses and other
commercial uses that foster a mobile workforce. The city also is home to two major
hospitals and Santa Monica College with an enrollment of approximately 30,000
students. UCLA is also only three miles away from Santa Monica’s city limits. All of
these qualities contribute to a demand for a diversity of housing choices that provide for
stays of varying duration and flexibility in lease terms.
That demand must be balanced against the potential erosion of long-term residential
units replaced by more profitable medium-term rentals. It should be borne in mind, that
just as all long-term demand for rental housing cannot be accommodated within the
City’s 8.3 square miles, not all the demand for legitimate medium-term housing can be
accommodated here either. Given the competing demands, the Council may wish to
give preference to long-term residential uses to offset the higher returns from shorter
term uses.
It is not clear that the scale of the problem of housing displacement from medium-term
rentals is currently as prevalent as short-term vacation rentals promulgated by online
hosting platforms. However, for the purposes of this study session, staff acknowledges
that the legitimate demand for housing options for people who are in the city for stays of
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less than 12 months but more than 31 days combined with the temptation for real estate
interests to seek higher returns by substituting short-term occupants for long-term
tenants makes this a difficult arena to offer equitable and enforceable legislative
remedies.
Policy Options
In providing policy options for discussion, staff considered the Planning Commission’s
recommendations and key questions raised in this report including:
How do we define “short-term” compared to medium- or long-term?
How should we define “permanent resident”, if at all? Is this enforceable?
These policy options also seek to address the following general goals:
Protect the stock of permanent housing
Curb abuse of permanent housing stock for stays slightly longer than vacation
rentals
Continue to accommodate a diversity of housing needs in Santa Monica
Policy solutions to be considered include: requiring minimum tenancy terms, restricting
tenancies by business entities, limiting furnished units, and/or establishing different
regulations for rent-controlled versus market-rate housing units.
These parameters have led to several options for Council’s discussion intended to
increase the enforceability of corporate-style housing depending on the outcomes that
are desired to be achieved.
Enforcement Intensive Approach
In order to address the immediate challenges in enforcing the Zoning Ordinance’s
current definition of corporate housing, the definition could be amended to establish
clear boundaries of illegal activity. For example, the definition could be amended to
require that lease terms for dwelling units must be at least one year. Further, instead of
trying to react to rapidly changing amenities that are typically offered in corporate
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housing, the definition could require that dwelling units only be unfurnished. These
concepts are offered for discussion and not indicative of how effective such regulations
would be absent a significant commitment of additional resources. Moreover, this
approach would likely adversely impact the range of housing available to meet the
legitimate demand for medium-term housing discussed in this report.
A Multi-Pronged Approach
In order to address the Council’s general policy direction to protect permanent housing
stock, the staff believes there are more nuanced approaches to meet the Council’s
goals of protecting rental stock. This is based on three general areas to explore:
Amending the definition of corporate housing to prohibit leasing by business
entities as tenants and considering using different terminology to
acknowledge that temporary housing is not only being used by corporate
entities; and
Enacting stricter regulations for use of controlled rental units, consistent with
the City’s view of these units for long-term, permanent housing; and
Consider geographic restrictions on where temporary housing or other kinds
of housing models could be allowed.
Amending the definition could include taking a similar approach to West Hollywood,
which eliminates the ability for business entities to rent dwelling units for the sole
purpose of housing their employees. However, there is evidence that there are
business entities that are renting controlled units and renting individual rooms to
tenants, thus collecting more than the lawful controlled rent. As a result, Council could
consider not limiting the definition to all business entities and not just those that offer
housing to employees or contractors. This would not prohibit businesses from offering
housing stipends to their employees to assist with housing costs but would address
situations where business entities pay rent on units to “reserve” them for occasional use
by employees or contractors leading to units being placed in a semi-occupied status but
usually not by the same tenant. Per the Planning Commission’s recommendation,
Council may also be interested in exploring whether exceptions could be made for
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healthcare and educational uses, although it is unclear how such an exception might be
crafted. Similarly, staff could also consider the ramifications of potentially reclassifying
corporate housing to commercial instead of residential use. It appears that the intent of
making such a change would be to prohibit commercial activity in residential zones,
which are largely occupied by rent-controlled units. However, staff believes that the
protection of existing rent-controlled units could potentially be accomplished in other
ways. Staff could also explore utilizing a different name for the use classification to
acknowledge that this kind of temporary housing is not just for “corporate” purposes.
Protection of controlled rental units would be a second part of this approach and would
establish a clear dividing line between existing controlled housing stock and newly
constructed market rate units. This would be consistent with the Rent Control Board’s
view of controlled rental units as long-term, permanent housing and would be
complementary to the Board’s action to clarify that use of controlled units for anything
other than long-term permanent housing requires a removal permit.
Council’s support of different regulations for controlled rental units could be mitigated by
a relief valve to meet the demand for a diversity of housing choices in the city. This
leads to the third consideration, which would be to explore the possibility of establishing
certain areas of the city, potentially based on existing zoning districts, where temporary
housing could be a permitted use. This would allow broader exploration of how to better
ensure that new market-rate housing units that are being produced are being used as
long-term, permanent housing, especially since existing development standards require
the production of larger two- and three-bedroom units. If this were an area of interest
for Council, consideration could be given to exploring minimum lease terms, allowing
temporary housing for only a percentage of units, and increased affordability to offset
use of units for temporary housing. One consideration in allowing temporary housing in
some areas of the city is that due to the scarcity of available sites for housing
production, it would likely increase speculation at those locations at the cost of
permanent housing opportunities and 100% affordable housing. Also, as discussed
earlier in this report and consistent with the Planning Commission’s recommendations,
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this review could also involve expanding the definition of the “group residential” use
classification to accommodate new shared housing models.
Remedies
Regardless of the regulatory policy choice ultimately chosen, it is equally important to
further buttress available remedies to ensure that violations are appropriately deterred.
While a significant set of remedies are currently available for violations of the Zoning
Ordinance, each remedy has its limitations. Currently, violations of the Zoning
Ordinance are subject to all of the following remedies:
1. Administrative Enforcement by Citations (SMMC Chapter 1.09) or Compliance
Order (SMMC Chapoter 1.10).
2. Criminal Prosecution, with a maximum fine of $500 and/or imprisonment of up to
6 months for each violation.
3. Permit Suspension or Revocation.
4. Civil Lawsuit to enjoin the violation.
Historically, the City has principally relied upon Administrative and Criminal enforcement
tools. While such tools are effective in many situations, each contains limitations.
Administrative remedies – generally up to $1,000 per violation – are relatively quick and
easy to impose; however, due to the limitations in fine amounts and the limited judicial
process available to enforce such fines, they are less effective against entrenched
violators. Criminal prosecution can be a powerful remedy; however, the serious
congestion in the criminal courts system creates significant delays and, at times,
inadequate judicial attention to even serious cases. While permit suspensions and
revocations can have powerful consequences (e.g. a business operating without a
permit), such consequences still needs to be enforced by administrative, criminal or civil
means.
Civil remedies have not been a favored tool by enforcement staff because it can be a
much slower process, comparatively far more staff-time intensive, and, generally, a win
only results in a court enjoining the violation. Such an outcome does not provide
meaningful deterrence against serious and entrenched violators.
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Staff recommends that the Council consider meaningfully enhancing the City’s civil
remedies in the two following way. First, staff recommends that the Council consider
adoption of significant civil penalties. While administrative penalties are limited by state
law, and criminal penalties are limited by both state law and the City Charter, far less
limitations apply to the adoption of civil penalties. A significant civil penalty could
provide meaningful deterrence against violations, especially against violations largely
motivated by economic incentives.
Second, staff recommends that the Council direct staff to examine options for increasing
the availability and use of receivership and forfeiture processes as remedies for very
serious and entrenched violations. In situations involving, among other things, serious
health and safety violations (e.g. slum housing), state law authorizes local enforcement
agencies to request a court-appointed receiver to take over a property, remedy the
violations, and, if necessary, sell the property to pay for the remediation costs,
administrative costs and fines. See California Health & Safety Code §§ 17980 – 17992.
City Enforcement Staff has utilized this tool numerous times with great success. Staff
recommends that Council direct staff to explore ways to expand the availability and use
of this remedy to address serious violations of local law that harm the community’s
general welfare.
Next Steps
Once staff receives clear policy direction from Council, staff will conduct further
research and anticipates seeking input from the Planning Commission, Housing
Commission and Rent Control Board prior to bringing back an ordinance for adoption at
a future Council Meeting.
Financial Impacts and Budget Actions
There is no immediate financial impact or budget action necessary as a result of the
recommended action.
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Prepared By: Jing Yeo, Planning Manager
Approved
Forwarded to Council
Attachments:
A. Attachment A - City Council March 9, 2004 Staff Report
B. Attachment B - Item 12A Corporate Housing - Rent Control Board August 9,
2018 Staff Report
C. Attachment C - West Hollywood Corporate Housing Ordinance
D. Written Comments
E. PowerPoint
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Council Mtg: March 9, 2004
TO:Mayor and Councilmembers
FROM: City Staff
SUBJECT: Introduction And First Reading of an Ordinance Adding Santa Monica Municipal Code
Sections 9.04.02.030.778 And 9.04.14.140 And Amending Sections 9.04.08.15.040,
9.04.08.18.040, 9.04.08.20.040, 9.04.08.22.040, And 9.04.08.26.040 to Establish a
Definition of Short-Term Rental Housing, Conditionally Permissible Zones For Short-
Term Rental Housing, And Appropriate Design And Development Standards And
Conditions. Consideration of Appeal (04APP-002) of the Planning Commission’s
Technical Denial Of The Proposed Text Amendment. Applicant: City of Santa Monica;
Appellant: Planning Commissioner Jay P. Johnson.
INTRODUCTION
This report recommends that the City Council deny the appeal and introduce for first reading an
ordinance modifying the Zoning Ordinance to allow short-term rental housing as a conditionally
permitted use in the BSCD, C3, C3-C, C4, and C6 Districts subject to special conditions. The
proposed ordinance is contained in Attachment A.
BACKGROUND
On May 22, 2001, the City Council adopted an emergency interim ordinance, Ordinance Number 2011
(CCS), which established a moratorium on the development of short-term rental housing and the
conversion of existing multi-family developments to this form of housing. The moratorium was
established in order to stem the adverse impacts of short-term housing on the character of residential
neighborhoods and to prevent the introduction of a commercial use into residential zones. On June
19, 2001, the City Council adopted Ordinance Number 2012 (CCS) extending the interim ordinance
for a period of two years to provide staff with additional time to implement a permanent ordinance. On
March 11, 2003, the City Council extended the interim ordinance an additional year by adopting
Ordinance Number 2070 (CCS). The interim ordinance will expire on June 19, 2004.
On July 16, 2003, the Planning Commission adopted a Resolution of Intention authorizing staff to
prepare this ordinance amendment in accordance with the City Council’s direction. The Planning
Commission reviewed the proposed amendment on September 3, 2003, and continued the item due
Santa Monica, California
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to several concerns. Specifically, the Planning Commission requested input from the Rent Control
office regarding the proposed text amendment, sought further analysis on potential conversions of
existing rent controlled units to short-term rental housing units, requested information regarding the
number of existing short-term rental housing units, and clarification on the required lengths of stay for
short-term rental housing uses.
On January 21, 2004, the Planning Commission adopted a new Resolution of Intention authorizing
staff to prepare this ordinance amendment with modifications based on the Commission’s previous
concerns. The proposed amendment was reviewed on February 4, 2004. Unable to reach a
consensus for a recommendation to Council regarding the text amendment, the Planning
Commission’s official action was a technical denial. An appeal from one Commissioner was filed
shortly thereafter so that the City Council could deliberate on the text amendment. Since the appeal
was filed to address a procedural matter, the focus of this report will address the Planning
Commission’s substantive concerns as well as the staff proposed amendment as opposed to focusing
on the appeal itself.
ANALYSIS
Short-Term Rental Housing
Short-term rental housing is a housing alternative that provides temporary housing in fully furnished
apartment-like units for a minimum continuous stay of thirty days. Short-term rental housing is most
often used by corporate travelers; however, vacationers, future residents, and individuals remodeling
homes or facing other temporary circumstances also use short-term housing.
The emergency interim ordinance establishing a moratorium on the development of short-term rental
housing was a result of concerns regarding the use’s adverse impacts on the City and the character of
residential neighborhoods in particular due to the introduction of a commercial use into residential
zones. Short-term rental housing is unique in that it combines a commercial venture, similar to
commercial lodging, with a residential use. This hybrid use provides similarities to housing but also
incorporates commercial components such as maid service, health club and recreation facilities,
business centers, meeting rooms, and valet service that are not characteristic of a residential use.
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Further, occupants of short-term rental housing are less likely to participate in civic, neighborhood, and
community affairs and events and do not have the same level of involvement or ties to the community
in which they reside, as long-term residents and property owners.
Due to these issues, there is concern that short term housing in residential districts could lead to a
deterioration and destabilization of the neighborhood character and disrupt the quality of life for
residents nearby this type of development. The transitory nature of short-term rental housing also has
the potential to impact established residential neighborhoods in terms of increased noise and intensity
of use based upon the operation of short-term rental housing facilities.
The proposed ordinance would require approval of a Conditional Use Permit for a short-term rental
housing use, consistent with the requirement of a Conditional Use Permit approval for hotels in the
subject commercial zoning districts. However, short-term rental housing is differentiated from a hotel
use in that a minimum length of stay of thirty consecutive days is required, where as a hotel use is
limited to a maximum stay of twenty-nine days. Further, the use is differentiated from a multi-family
use by the amenities provided and other operational characteristics such as maid and linen service,
valet parking, and provision of meeting rooms. The requirement of a Conditional Use Permit
approval along with the proposed special conditions for short-term rental housing will ensure adequate
review of a proposed project and compatibility of the use with the surrounding neighborhood.
Planning Commission Action
The Planning Commission considered the proposed text amendment at two public hearings.
Commissioners who were opposed to the amendment expressed concerns regarding the conversion
of existing long-term housing stock to short-term rental housing, the lack of public participation in the
amendment process, a perceived lack of demand for short-term rental housing, and/or concerns
regarding enforcement. Some commissioners were also concerned that short-term rental housing
would increase property values and as such would drive out renters with the loss of existing long-term
housing to short-term rental housing. Further concerns regarding the impact to mixed-use housing in
the commercial districts and a desire to require Transient Occupancy Taxes or other special fees were
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discussed. Commissioners who supported the text amendment believed the staff proposed definition
and regulatory requirements were sufficient to address the stated concerns.
In fact, many of the arguments against the proposed ordinance are specifically addressed in the
proposed text amendment language or covered by existing regulations. For instance, the proposed
text amendment required approval by the Planning Commission of a Conditional Use Permit for all
new short-term rental housing projects. No new short-term rental project will be allowed without
Planning Commission review and approval. Newly initiated proactive enforcement of discretionary
entitlement approvals will ensure that short-term rental housing projects continually meet all special
conditions of approval. These special conditions also include prohibiting the conversion of any
existing residential units to short-term residential units. Mixed-use project opportunities in the subject
zones will continue to be possible with or without regulation on short-term housing. The concern that
a rent-controlled property would be removed from the rental market through Ellis Act procedures and a
new structure rebuilt as a short-term housing project is not a concern shared by Rent Control staff.
The principal reason is that any new residential opportunity such as short-term rental housing on the
site within five years of being Ellised would remain subject to existing rent control laws.
Another issue raised at the Planning Commission meeting involves the applicability of Transient
Occupancy Taxes (TOT). Since short-term housing requires lengths of stay thirty days or over, this
use is not considered a hotel. Hotel uses are defined by a length of stay under 30 days and are
subject to Transient Occupancy Taxes. While staff believes assessment of a Transient Occupancy
Tax is appropriate for this use since it would increase the parity between short-term rental housing and
hotels, such a tax could only be approved by a majority vote of Santa Monica residents. Should the
Council decide to place a measure on the ballot to increase the Transient Occupancy Tax, such a
measure could also include assessment of the tax to short term rental housing.
Proposed Ordinance
The proposed ordinance includes adding Section 9.04.02.030.778 of the Zoning Ordinance to create a
definition of short-term rental housing. Typically, short-term rental housing is designed for use by
individuals who will occupy a unit thirty or more days but who intend that their occupancy will be
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temporary and who maintain a permanent place of residence elsewhere. The typical amenities that
may be offered include maid service, health club and recreation facilities, business centers, meeting
rooms, fully furnished units, and valet service.
Short-term rental housing can be an appropriate land use within certain zoning districts subject to
special conditions to ensure compatibility with surrounding land uses. Due to the commercial nature
of short-term rental housing and its potential impacts to residential neighborhoods, staff believes that
the following commercial zones are appropriate areas for this type of use through approval of a
Conditional Use Permit: Bayside Commercial District (BSCD), Downtown Commercial District (C3),
Downtown Overlay District (C3-C), Highway Commercial District (C4), and Boulevard Commercial
District (C6). Short-term housing is similar to other conditionally permitted uses in these districts.
Specifically, hotel uses are conditionally permitted in all of these districts except C3. In addition, the
downtown districts and commercial corridors provide for the broadest mix of uses, allowing for
commercial activity that serves both the local community as well as the region. However, short-term
rental housing is differentiated from a hotel use in that a minimum length of stay of thirty-consecutive
days is required, where as a hotel use is limited to a maximum stay of twenty-nine days.
In order to ensure compatibility with surrounding land uses, special conditions for short-term rental
housing projects are required. These conditions are intended to ensure that short-term rental housing
operates in a harmonious manner with surrounding land uses and does not result in adverse impacts
upon the community. In addition, these conditions seek to reinforce a residential character to short-
term rental housing and to provide amenities typical of residential uses, including private open space,
parking, and other facilities. In order to protect the City’s existing housing stock, the special conditions
also preclude the conversion of existing residential units to short-term rental housing units. However,
new short-term housing projects would be allowed to convert to traditional long-term residential
developments, provided these projects comply with all the property development standards for the
district in which they are located. While the opportunity to sublet short-term rental housing units exist,
a condition requiring a minimum stay of at least thirty consecutive days for occupants will seek to
prevent a continuous turnover of occupants. The residential height and density bonuses normally
applicable to certain residential projects will also not apply to short-term rental housing units. In
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addition, the potential for new short-term rental housing units will not limit future mixed-use project
opportunities in the subject zones as short-term rental housing projects will also be permitted ground
floor commercial uses as currently allowed by the Municipal Code.
The requirement of a Conditional Use Permit approval along with the proposed special conditions for
short-term rental housing will ensure adequate review of a proposed project and will ensure
compatibility of the use with the surrounding neighborhood. Newly initiated proactive enforcement of
discretionary entitlement approvals will ensure that short-term rental housing projects continually meet
all special conditions of approval. Moreover, short-term rental housing facilities that have been
illegally established would be subject to City enforcement efforts and would be required to abate the
use or obtain a Conditional Use Permit as required by this amendment.
Conclusion
Currently, the Zoning Ordinance does not contain provisions to allow short-term rental housing.
Recent projects have shown that the impacts of short-term rental housing upon the City of Santa
Monica include potential adverse impacts on the character of residential neighborhoods due to the
introduction of a commercial use in residential zones. The proposed amendment would allow short-
term rental housing as a conditionally permitted use in the BSCD, C3, C3-C, C4, and C6 Districts and
would set forth special conditions for short-term rental housing to ensure the use operates in a
harmonious manner with surrounding land uses and does not result in adverse impacts upon the
community. The proposed amendments are consistent with the goals, objectives, policies and
programs specified in the General Plan.
CEQA STATUS
The project is categorically exempt from the provisions of the California Environmental Quality Act
(CEQA) pursuant to Section 15061(b)(3), of the State Implementation Guidelines in that CEQA applies
only to projects having the potential to cause a significant effect on the environment. The proposed
ordinance does not have this potential and merely seeks to define the short-term rental housing use,
designate the zoning districts where it is a permitted use, and provide development standards for the
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use. Applications made pursuant to the proposed ordinance are still individually subject to review for
CEQA compliance.
PUBLIC NOTIFICATION
Pursuant to Municipal Code Sections 9.04.20.22.050, notice of the public hearing was published in the
California section of the Los Angeles Times newspaper at least ten consecutive calendar days prior to
the hearing. Notice of the hearing was also sent to all neighborhood organizations, the Planning
Commission, and posted on the City’s web site. A copy of the notice is contained in Attachment B.
BUDGET/FINANCIAL IMPACT
The recommendation presented in this report has no budget or fiscal impacts.
RECOMMENDATION
It is recommended that the City Council reject the appeal (04APP-002) and introduce for first reading
the proposed ordinance included in Attachment A.
Prepared by: Suzanne Frick, Director
Amanda Schachter, Acting Planning Manager
Jonathan Lait, AICP, Senior Planner
Tony Kim, Associate Planner
City Planning Division
Planning and Community Development Department
ATTACHMENTS: A. Proposed Ordinance Text (see below)
B. Notice of Public Hearing
C. February 4, 2004 Planning Commission Meeting Staff Report
D. Appeal Statement
ATTACHMENT A
Proposed Ordinance
City Council Meeting 3-9-04 Santa Monica, California
ORDINANCE NUMBER ________ (CCS)
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(City Council Series)
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA
ADDING SANTA MONICA MUNICIPAL CODE SECTIONS 9.04.02.030.778 AND
9.04.14.140 AND AMENDING SANTA MONICA MUNICIPAL CODE SECTIONS
9.04.08.15.040, 9.04.08.18.040, 9.04.08.20.040, 9.04.08.22.040, AND
9.04.08.26.040 TO ESTABLISH A DEFINITION OF SHORT-TERM RENTAL
HOUSING, CONDITINALLY PERMISSIBLE ZONES FOR SHORT-TERM
RENTAL HOUSING, AND APPROPRIATE DESIGN AND DEVELOPMENT
STANDARDS AND CONDITIONS
WHEREAS, the proliferation of short-term rental housing can have a significant, detrimental
impact on the quality of life in the community; and
WHEREAS, short-term rental housing, also known as corporate housing, provides temporary
accommodations in fully furnished apartments complete with furniture, appliances, housewares, and
other furnishings; and
WHEREAS, short-term rental housing projects typically afford an array of conveniences and
services such as maid and linen service, laundry and dry cleaning service, on-site conference or
meeting rooms, business centers, and Internet access. Most short-term housing facilities also offer a
full health club, spa, large pool and tennis court. Projects that do not offer these facilities on-site, often
offer membership to area facilities; and
WHEREAS, the typical occupants of these facilities include: relocating executives requiring
temporary accommodations until a permanent residence is established, corporate recruits, attorneys
trying cases, and relocating families. This housing is also utilized by vacationers. The occupants of
these units do not intend to make these units their permanent place of residence, but view these
premises as interim abodes; and
WHEREAS, one of Santa Monica’s primary housing goals is to preserve the quality and
character of its existing single and multi-family residential neighborhoods. Santa Monica’s prosperity
has always been fueled by the area’s many attractive features including its cohesive and active
residential neighborhoods and the diverse population which resides therein. In order to continue to
flourish, the City must preserve its character and charm which result, in part, from cultural, ethnic, and
economic diversity of its resident population; and
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WHEREAS, the City must also preserve its unique sense of community which derives, in
large part, from residents’ active participation in civic affairs, including local government, cultural
events, and educational endeavors. Occupants of short-term rental housing do not and cannot have
the same involvement and ties to the community and to the neighborhoods in which they reside as
occupants who treat the City and their neighborhoods as their home. Short-term occupants are less
likely to become active in civic, neighborhood, and community affairs and events; and
WHEREAS, the City has adopted numerous regulatory measures intended to promote the
development of multi-family housing and ensures that this development is occupied by individuals as
their principle residence. The City never envisioned that these measures would facilitate the
development of short-term rental housing; and
WHEREAS, Section 9.04.02.030 does not presently define short-term rental housing; and
WHEREAS, the proliferation of short-term housing in the City is a relatively recent
phenomenon; and
WHEREAS, in light of these concerns, the City Council adopted Ordinance Number 2011
(CCS) on May 22, 2001 establishing a moratorium on the development of short-term rental housing
and the conversion of existing multi-family development to this form of housing to provide the City time
to adequately assess the full impacts of this form of housing and its appropriate scope and location
within the City; and
WHEREAS, the City Council extended Ordinance Number 2011 (CCS) on June 19, 2001 and
on March 25, 2003; and
WHEREAS, short-term rental housing can be an appropriate land use within BSCD, C3, C3-
C, C4 and C6 Districts subject to special conditions and development standards; and
WHEREAS, conditionally permitting short-term rental housing in the BSCD, C3, C3-C, C4 and
C6 Districts subject to certain special conditions and development standards will ensure compatibility
with surrounding land uses; and
WHEREAS, Sections 9.04.02.030.778 and 9.04.14.140 will be added to the Santa Monica
Municipal Code to establish a definition of short-term rental housing and to establish special
conditions; and
WHEREAS, the Planning Commission considered the proposed text amendment on February
4, 2004, but was unable to reach a consensus for a recommendation to the City Council regarding the
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text amendment, resulting in a technical denial of the proposed amendment; and
WHEREAS, this technical denial was appealed to the City Council; and
WHEREAS, the City Council held a public hearing on the proposed text amendment on March
9, 2004; and
WHEREAS, the proposed text amendment is consistent in principle with the goals, objectives,
policies, land uses, and programs specified in the adopted General Plan, specifically, Land Use
Element Objective 1.1 which states that the City’s land use policies should seek to “protect the quality
of life in all residential neighborhoods” in that the proposed amendment would allow short-term rental
housing as a conditionally permitted use in commercial districts only, thereby protecting the residential
character and quality of life in residential neighborhoods by prohibiting a commercial oriented use in
these areas; and
WHEREAS, for the reasons detailed above, the City Council finds and declares that the public
health, safety, and general welfare require the adoption of the proposed text amendment in that the
goals, objectives and policies of the City’s adopted General Plan are achieved as the amendment
would provide an alternative temporary housing option and would prohibit a commercial oriented land
use in residential zones, thereby maintaining the low intensity character of established residential
neighborhoods,
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA DOES
HEREBY ORDAIN AS FOLLOWS:
SECTION 1. Section 9.04.02.030.778 is hereby added to the Santa Monica Municipal
Code to read as follows:
9.04.02.030.778 Short-Term Rental Housing.
Rental housing which has the following attributes:
1. The property is designed for use by individuals who will reside on the
property for a minimum stay of at least 30 consecutive days, but who otherwise intend
their occupancy to be temporary.
2. The property is intended for use by persons who will maintain or obtain
a permanent place of residence elsewhere.
3. The property includes some or all of the following amenities:
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(a) Maid and linen service
(b) Health club, spa, pool, tennis courts, or memberships to area facilities
(c) Business service centers
(d) Meeting rooms
(e) Fully furnished units including a combination of some but not
necessarily all of the following: furniture, appliances, housewares, bed linens, towels,
artwork, television sets, stereos, VCRs, CD players, fax machines, and Internet access.
(f) Valet parking
SECTION 2. Section 9.04.14.140 is hereby added to the Santa Monica Municipal Code to
read as follows:
9.04.14.140 Short-term Rental Housing.
The purpose of this Section is to ensure that short-term rental housing
operates in a harmonious manner with surrounding land uses and does not result in
adverse impacts upon the community. The following special conditions shall apply to
short-term housing units:
(a) Applicability. Short-term rental housing may be permitted with the approval of a
Conditional Use Permit in the BSCD, C3, C3-C, C4 and C6 Districts so long as the use
is compliant with the property development standards of the underlying zoning district
and the standards established herein. The following conditions shall apply to all new
short-term rental housing uses and substantial remodels or the addition of units or the
expansion of existing short-term rental housing units.
(b) Private Open Space. Any project containing four or more short-term rental housing
units shall provide the following minimum open space: one hundred square feet per unit
for projects with four or five units, and fifty square feet per unit for projects of six units or
more.
(c) Parking. Parking for short-term rental housing units shall be provided in the amount as
required by Section 9.04.10.08.040, as specified for multi-family residential.
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(d) Facilities. Each short-term rental housing unit may provide one or more of the following
facilities:
(1) Kitchens
(2) Separate bedrooms
(3) Separate living rooms
(e) Conversion. The conversion of existing residential units to short-term rental housing
units shall be prohibited.
(f) Height and Density Bonuses. The residential height and density bonus provisions
permitted by Sections 9.04.08.15.060, 9.04.08.18.060, 9.04.08.20.060, 9.04.08.20.070,
9.04.08.22.060, 9.04.08.26.060, and Part 9.04.10.14 shall not apply to short-term rental
housing.
(g) Operation. The units shall not be operated as a hotel or in the same manner as a
hotel. The units shall not routinely have occupancies for periods of less than thirty
consecutive days.
(h) Lease. Each unit must be leased by an occupant for a period of at least thirty
consecutive days.
SECTION 3. Santa Monica Municipal Code Section 9.04.08.15.040 is hereby amended to read
as follows:
Section 9.04.08.15.040 Conditionally permitted uses.
(1) The following uses may be permitted in the BSC-1 portion of the BSC
District subject to the approval of a conditional use permit:
(a) Bars, subject to the limitations contained in Section 9.04.08.15.080;
(b) Billiard parlors;
(c) Bowling alleys;
(d) Cinemas;
(e) Clubs and lodges;
(f) Convention and conference facilities;
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(g) Fast-food food courts, subject to the limitations contained in Section
9.04.08.15.080;
(h) Homeless shelters with fifty-five beds or more;
(i) Hotels and motels;
(j) Nightclubs, subject to the limitations contained in Section 9.04.08.15.080;
(k) Open-air farmers markets;
(l) Short-term rental housing;
(l)(m) Skating rinks;
(m)(n) Theaters.
(2) The following uses may be permitted in the BSC-2, BSC-3 and BSC-4
portions of the BSC District, subject to the approval of a conditional use permit:
(a) Automobile parking lots and structures;
(b) Bars, subject to the limitations contained in Section 9.04.08.15.080;
(c) Billiard parlors;
(d) Bowling alleys;
(e) Cinemas;
(f) Clubs and lodges;
(g) Convention and conference facilities;
(h) General offices uses on the ground floor in that portion of a parcel
between twenty-five feet and seventy-five feet from the front parcel line;
(i) Homeless shelters with fifty-five beds or more;
(j) Hotels and motels;
(k) Nightclubs, subject to the limitations contained in Section 9.04.08.15.080;
(l) Open-air farmers markets;
(m) Short-term rental housing;
(m)(n) Skating rinks.
(3) In addition to those uses specified in subsection (2) of this Section, the
following uses may be permitted in the BSC-3 portion of the BSC District subject to the
approval of a conditional use permit:
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Expansion or intensification of automobile repair facilities existing as of July 8,
1997 provided such property is physically improved to comply with the Bayside District
special project design and development standards set forth in Section 9.04.08.15.070
and the special conditions for auto repair facilities set forth in Section 9.04.14.050.
SECTION 4. Santa Monica Municipal Code Section 9.04.08.18.040 is hereby amended to read
as follows:
Section 9.04.08.18.040 Conditionally permitted uses.
The following uses may be permitted in the C3 District subject to the approval of a
Conditional Use Permit:
(a) Automobile parking structures.
(b) Bed and breakfast facilities.
(c) Billiard parlors.
(d) Bowling alleys.
(e) Cinemas.
(f) Clubs and lodges.
(g) Convention and conference facilities.
(h) Expansion or intensification of automobile repair facilities existing as of
July 11, 1995.
(i) Funeral parlors and mortuaries.
(j) Homeless shelters with fifty-five beds or more.
(k) Liquor stores.
(l) Nightclubs.
(m) Open-air farmers markets.
(n) Replacement of fast-food restaurants in existence as of May 13, 2003.
(o) Service stations.
(p) Short-term rental housing.
(p)(q) Skating rinks.
(q)(r) Take-out restaurants.
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(r)(s) Rooftop parking.
SECTION 5. Santa Monica Municipal Code Section 9.04.08.20.040 is hereby amended
to read as follows:
Section 9.04.08.20.040 Conditionally permitted uses.
The following uses may be permitted in the C3-C District subject to the approval
of a conditional use permit:
(a) Auditoriums.
(b) Automobile parking lots and structures.
(c) Billiard parlors.
(d) Bowling alleys.
(e) Cinemas.
(f) Clubs and lodges.
(g) Convention and conference facilities.
(h) Expansion or intensification of automobile repair facilities existing as of
July 11, 1995.
(i) Homeless shelters with fifty-five beds or more.
(j) Hotels and motels.
(k) Liquor stores.
(l) Nightclubs.
(m) Offices at the ground floor street frontage.
(n) Open-air farmers markets.
(o) Restaurants where entertainment and dancing occurs.
(p) Service stations.
(q) Short-term rental housing.
(q)(r) Skating rinks.
(r)(s) Take-out and fast food restaurants.
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SECTION 6. Santa Monica Municipal Code Section 9.04.08.22.040 is hereby amended to
read as follows:
Section 9.04.08.22.040 Conditionally permitted uses.
The following uses maybe permitted in the C4 District subject to the approval of a
Conditional Use Permit:
(a) Auditorium.
(b) Automobile dealerships, or expansion of existing automobile dealerships
indoor or outdoor area by more than ten percent, or more than five thousand square
feet, whichever is less.
(c) Automobile parking lots and structures.
(d) Automobile repair facilities.
(e) Automobile washing facilities.
(f) Billiard parlors.
(g) Clubs and lodges.
(h) Drive-in, drive-through, take-out and fast-food restaurants.
(i) Exercise facilities.
(j) Homeless shelters with fifty-five beds or more.
(k) Hotels and motels.
(l) Liquor stores.
(m) Nightclubs.
(n) Open air farmers markets.
(o) Restaurants over fifty seats.
(p) Self service storage warehouses.
(q) Short-term rental housing.
SECTION 7. Santa Monica Municipal Code Section 9.04.08.26.040 is hereby amended to
read as follows:
Section 9.04.08.26.040 Conditionally permitted uses.
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The following uses may be permitted in the C6 District subject to the approval of
a Conditional Use Permit:
(a) Automobile dealerships in existence on October 1, 1996, provided that
such dealerships may not resume operations if converted to another use.
(b) Expansion of existing automobile dealerships indoor or outdoor area by
more than ten percent, or more than five thousand square feet, whichever is less.
(c) Auditoriums.
(d) Department stores over fifty thousand square feet.
(e) Homeless shelters with fifty-five beds or more.
(f) Hotels and motels.
(g) Nightclubs.
(h) Service stations.
(i) Short-term rental housing.
(i)(j)Take-out and fast-food restaurants.
(j)(k) Theaters.
SECTION 8. If any section, subsection sentence, clause or phrase of this ordinance is for any
reason held to be invalid or unconstitutional by a decision of any court of any competent jurisdiction,
such decision shall not affect the validity of the remaining portions of the ordinance. The City Council
hereby declares that it would have passed this ordinance, and each and every subsection, sentence,
clause, or phrase not declared invalid or unconstitutional without regard to whether any portion of the
ordinance would be subsequently declared invalid or unconstitutional.
SECTION 9. Any provision of the Santa Monica Municipal Code or appendices thereto
inconsistent with the provisions of this Ordinance, to the extent of such inconsistencies and no further,
is hereby repealed or modified to that extent necessary to effect the provisions of this Ordinance.
SECTION 10. The Mayor shall sign and the City Clerk shall attest to the passage of this
Ordinance. The City Clerk shall cause the same to be published once in the official newspaper within
15 days after its adoption. This Ordinance shall become effective 30 days from its adoption.
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APPROVED AS TO FORM:
________________________________________
MARSHA JONES MOUTRIE
City Attorney
ATTACHMENT B
Notice of Public Hearing
NOTICE OF A PUBLIC HEARING
BEFORE THE SANTA MONICA CITY COUNCIL
SUBJECT: Ordinance for Introduction and First Reading to Add Zoning Ordinance Sections
9.04.02.030.778 and 9.04.14.140 and amend Sections 9.04.08.15.040,
9.04.08.18.040, 9.04.08.20.040, 9.04.08.22.040, and 9.04.08.26.040 regarding short-
term rental housing. Consideration of Appeal (04APP-002) of the Planning
Commission’s technical denial of the proposed text amendment
APPLICANT: City of Santa Monica
A public hearing will be held by the City Council to consider the following request:
Introduction and first reading of an ordinance adding Santa Monica Municipal Code Sections
9.04.02.030.778 and 9.04.14.140 and amending Sections 9.04.08.15.040, 9.04.08.18.040,
9.04.08.20.040, 9.04.08.22.040, and 9.04.08.26.040 to establish a definition of short-term rental
housing, conditionally permissible zones for short-term rental housing, and appropriate design and
development standards and special conditions.
DATE/TIME: TUESDAY, MARCH 9, 2004, AT 6:45 p.m.
LOCATION: City Council Chambers, Second Floor, Santa Monica City Hall
1685 Main Street, Santa Monica, California
HOW TO COMMENT
The City of Santa Monica encourages public comment. You may comment at the City Council public
hearing, or by writing a letter. Written information will be given to the City Council at the meeting.
Address your letters to: City Clerk
Re: Short-Term Rental Housing
1685 Main Street, Room 102
Santa Monica, CA 90401
MORE INFORMATION
If you want more information about this project, please contact Tony Kim, Associate Planner, at (310)
458-8341, or by e-mail at tony-kim@santa-monica.org. The Zoning Ordinance is available at the
Planning Counter during business hours and on the City’s web site at www.santa-monica.org.
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The meeting facility is wheelchair accessible. For disability-related accommodations, please contact
(310) 458-8341 or (310) 458-8696 TTY at least 72 hours in advance. All written materials are available
in alternate format upon request. Santa Monica Big Blue Bus Lines numbered 1, 2, 3, 5, 7, 8, 9, and
10 serve City Hall.
Pursuant to California Government Code Section 65009(b), if this matter is subsequently challenged
in Court, the challenge may be limited to only those issues raised at the public hearing described in
this notice, or in written correspondence delivered to the City of Santa Monica at, or prior to, the public
hearing.
ESPAÑOL
Esto es una noticia de una audiencia pública para revisar applicaciónes proponiendo desarrollo en
Santa Monica. Si deseas más información, favor de llamar a Carmen Gutierrez en la División de
Planificación al número (310) 458-8341.
APPROVED AS TO FORM:
___________________________
AMANDA SCHACHTER
Acting Planning Manager
ATTACHMENT C
February 4, 2004 Planning Commission Meeting Staff Report
-BPCD:SF:JT:AS:JL:TK:f:\plan\share\pc\strpt\03\Shrttrm.020404.doc
Planning Commission Mtg: February 4, 2004 Santa Monica, California
TO: The Honorable Planning Commission
FROM: Planning Staff
SUBJECT: Short-Term Rental Housing Text Amendment 03TA-011
Address: BSCD, C3, C3-C, C4, and C6 Districts
Applicant: City of Santa Monica
INTRODUCTION
Action: Consideration of an ordinance which would define and authorize short-term rental housing by
adding Zoning Ordinance Sections 9.04.02.030.778 and 9.04.14.140 and amending Sections
9.04.08.15.040, 9.04.08.18.040, 9.04.08.20.040, 9.04.08.22.040, and 9.04.08.26.040 to establish a
definition of short-term rental housing, conditionally permissible zones for short-term rental housing,
and appropriate design and development standards and conditions.
Recommendation: That the Planning Commission recommend approval of the text amendment to the
City Council to modify the City’s Zoning Code by allowing the conditionally permitted use of short-term
rental housing in the BSCD, C3, C3-C, C4, and C6 Districts.
SITE LOCATION AND DESCRIPTION
9-B
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This amendment would apply to all properties in the following zoning districts of the City:
Zoning Districts: BSCD (Bayside Commercial District)
C3 (Downtown Commercial District)
C3-C (Downtown Overlay District)
C4 (Highway Commercial District)
C6 (Boulevard Commercial District)
Land Use Districts: Downtown Core
General Commercial
General Commercial with Service/Specialty
General Commercial with Downtown Core
Institutional
Service and Specialty Commercial
PROJECT DESCRIPTION
Proposed is a Text Amendment to various sections of the Zoning Ordinance. Currently, the Zoning
Ordinance does not contain a definition for short-term rental housing, nor does it contain project
design and development standards for short-term rental housing. Prior to the moratorium, short-term
rental housing was not distinguished from multi-family housing. The use was, therefore, permitted in
all districts that allowed multi-family housing. In response to concerns regarding the deleterious
impacts associated with this type of use, the City Council adopted the existing interim ordinance to
temporarily prohibit and evaluate whether short-term rental housing should be allowed in specific
areas of the city.
The proposed amendment would add a Zoning Ordinance section to create a definition of short-term
rental housing and a section to set forth special conditions for short-term rental housing. In addition,
the BSCD, C3, C3-C, C4, and C6 sections of the Zoning Ordinance would be amended to allow short-
term rental housing as a conditionally permitted use. The text of the proposed amendment can be
found in Attachment A.
CEQA STATUS
The proposed ordinance is exempt from the provisions of the California Environmental Quality Act
(CEQA) pursuant to Section 15061(b)(3) of the State Implementation Guidelines in that CEQA applies
only to projects having the potential to cause a significant effect on the environment. This ordinance
does not have this potential as it provides for a use that is similar to other conditionally permitted uses
in the subject districts, and the amendment will not change the amount of development that can occur
in any of the districts.
PUBLIC NOTIFICATION
Pursuant to Government Code Section 65804, notice of the public hearing for the text amendment
was published in the “California” Section of the Los Angeles Times newspaper at least ten
consecutive calendar days prior to the hearing. Notice of the public hearing was also sent to all
neighborhood organizations, the Planning Commission, City of Los Angeles, and posted on the City’s
Web site. A copy of the notice is contained in Attachment B.
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BACKGROUND
On May 22, 2001, the City Council adopted an emergency interim ordinance, Ordinance Number 2011
(CCS), which established a moratorium on the development of short-term rental housing and the
conversion of existing multi-family developments to this form of housing in order to stem the adverse
impacts of short-term housing such as increased traffic, noise, and trash on the character and quality
of residential neighborhoods and the introduction of a commercial use into residential zones.
Occupants of short-term rental housing are also less likely to participate in civic, neighborhood, and
community affairs and events and do not have the same level of involvement or ties to the community
in which they reside, as long-term residents and property owners. On June 19, 2001, the City Council
adopted Ordinance Number 2012 (CCS) extending the interim ordinance for a period of two years to
provide staff with additional time to implement a permanent ordinance. On March 11, 2003, the City
Council extended the interim ordinance an additional year by adopting Ordinance Number 2070
(CCS). The interim ordinance will expire on June 19, 2004.
On July 16, 2003, the Planning Commission adopted a Resolution of Intent authorizing staff to prepare
this text amendment in accordance with the City Council’s direction. The Planning Commission
reviewed the proposed text amendment, which is contained in Attachment C, on August 20, 2003, and
continued the item due to several concerns. These concerns included the lack of input from the Rent
Control office regarding the proposed text amendment, the need for additional information regarding
potential conversions of existing residential units to short-term rental housing units, the lack of
information regarding the number of existing short-term rental housing units, and the need for
clarification on the required lengths of stay for short-term rental housing uses.
Based on the Planning Commission’s comments, staff proposed modifying other sections of the
Zoning Ordinance. These anticipated changes resulted in a new Resolution of Intention that was
presented to the Planning Commission on January 21, 2004. The adopted resolution is consistent
with the subject text amendment.
ANALYSIS
In response to the Planning Commission’s concerns, staff contacted the City’s Rent Control office to
review the proposed short-term rental housing text amendment. Rent Control staff expressed minimal
concern with the proposed text amendment as no major impacts to the existing stock of rent-controlled
housing units was anticipated. The number of rent-controlled units is not abundant within the
downtown area and along commercial corridors, which are the districts that would be affected by the
proposed text amendment. In addition, the proposed special conditions prohibit the conversion of
existing residential units to short-term rental housing units. Moreover, the concern that a rent-
controlled property would be removed from the rental market through Ellis Act procedures and a new
structure rebuilt as a short-term housing project is not shared by Rent Control. The principal reason is
that any new residential opportunity such as short-term rental housing on the site within five years of
being Ellised would remain subject to existing rent control laws.
As a short-term rental housing unit combines a commercial venture, similar to commercial lodging,
with a residential use, staff has revised the proposed text amendment to require approval of a
Conditional Use Permit for a short-term rental housing use, consistent with the requirement of a
Conditional Use Permit approval for hotels in the subject zoning districts. However, short-term rental
housing is differentiated from a hotel use in that a minimum length of stay of thirty consecutive days is
required, where as a hotel use is limited to a maximum stay of twenty-nine days. Further, the use is
differentiated from a multi-family use by the amenities provided and other operational characteristics
such as maid and linen service, valet parking, and provision of meeting rooms. The requirement of a
Conditional Use Permit approval along with the proposed special conditions for short-term rental
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housing will ensure adequate review of a proposed project and will ensure compatibility of the use with
the surrounding neighborhood. Newly initiated proactive enforcement of discretionary entitlement
approvals will ensure that short-term rental housing projects continually meet all special conditions of
approval. Moreover, short-term rental housing facilities that have been illegally established would be
subject to City enforcement efforts and would be required to abate the use or obtain a Conditional Use
Permit as required by this amendment.
The existing number of short-term rental housing projects is believed to be fairly limited but includes
some units in the Arboretum, Champagne Towers, Sea Castle, and Citrus Suites properties located at
1915 Ocean Way, 425 Broadway, and 1455 Fourth Street. Short-term housing, however, is not limited
to larger apartment buildings. It also includes smaller developments located throughout the City
including the Deco Palm, Casa Serena, and the Beach Suites. However, preparing an exhaustive list
of all existing short-term rental unit locations would be difficult to generate and is not necessary for the
purpose of regulating short-term housing. While the proposed text amendment would allow existing
short-term housing uses that were legally established prior to May 22, 2001 to remain, any new short-
term rental housing use must comply with the proposed text amendment. Specifically, the proposed
text amendment requires that any new short-term rental housing use may only be permitted with the
approval of a Conditional Use Permit. The conversion of existing residential units to short-term rental
housing units is prohibited. As no short-term rental housing uses have been allowed after May 22,
2001, any such use in question would need to demonstrate its existence prior to this date or have a
Conditional Use Permit. In addition, the percentage of existing short-term rental housing units
relative to overall housing units within the subject districts is very low.
Staff also believes that instituting a maximum length of stay requirement for short-term rental housing
units is unnecessary and contrary to the intent of the proposed text amendment to reinforce the
residential character of the use and to avoid frequent turnover to minimize the potential impacts to the
surrounding neighborhoods. The proposed text amendment seeks to encourage stable residential
uses with long-term occupants, providing active and cohesive residential neighborhoods and
maintaining the quality and character of the neighborhoods. In order to prevent short-term subletting
of these units, a special condition has been incorporated into the text amendment requiring a
minimum length of at least thirty consecutive days for the occupant of a short-term rental housing
unit. It is anticipated that this and lease restrictions, as proposed, would prevent a corporation from
subletting more frequently than every thirty days and prohibit operating in a manner similar to that of a
hotel use.
Regarding Proposition S, which prohibits the construction or conversion of new hotels west of Ocean
Avenue, staff specifically reviewed this citizen-initiated proposition to ensure short-term rental housing
would not conflict with the language or intent of that law. To that end, staff recommends that short-
term rental housing be conditionally allowed in commercial zones that are beyond the boundary
established by Proposition S.
Another issue involves the applicability of Transient Occupancy Taxes (TOT). Since short-term
housing requires lengths of stay thirty days or over, this use is not considered a hotel. Hotel uses are
defined by a length of stay under 30 days and are subject to Transient Occupancy Taxes. While
assessment of a Transient Occupancy Tax would increase the parity between short-term rental
housing and hotels, such a tax could only be approved by a majority vote of Santa Monica residents.
Short-term rental housing is a type of lodging use that provides flexibility to visitors and residents of
the community and provides a practical residential option for those that require this particular type of
lodging use. Therefore, allowing short-term rental housing in a regulated environment would be a
benefit to the community. Staff recommends the following text amendment to authorize short-term
rental housing in specific zoning districts.
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PROPOSED TEXT AMENDMENT
The proposed text amendment includes adding Section 9.04.02.030.778 of the Zoning Ordinance to
create a definition of short-term rental housing. Typically, short-term rental housing is designed for
use by individuals who will occupy a unit thirty or more days but who intend that their occupancy will
be temporary and who maintain a permanent place of residence elsewhere. The typical amenities
that may be offered include maid service, health club and recreation facilities, business centers,
meeting rooms, fully furnished units, and valet service.
Short-term rental housing can be an appropriate land use within certain zoning districts subject to
special conditions to ensure compatibility with surrounding land uses. Due to the commercial nature
of short-term rental housing and its potential impacts to residential neighborhoods, staff believes that
the following commercial zones are appropriate areas for this type of use through approval of a
Conditional Use Permit: Bayside Commercial District (BSCD), Downtown Commercial District (C3),
Downtown Overlay District (C3-C), Highway Commercial District (C4), and Boulevard Commercial
District (C6). Short-term housing is similar to other conditionally permitted uses in these districts.
Specifically, hotel uses are conditionally permitted in all of these districts except C3. In addition, the
downtown districts and commercial corridors provide for the broadest mix of uses, allowing for
commercial activity that serves both the local community as well as the region.
In order to ensure compatibility with surrounding land uses, special conditions for short-term rental
housing projects are required. These conditions are intended to ensure that short-term rental housing
operates in a harmonious manner with surrounding land uses and does not result in adverse impacts
upon the community. In addition, these conditions seek to reinforce a residential character to short-
term rental housing and to provide amenities typical of residential uses, including private open space,
parking, and other facilities. In order to protect the City’s existing housing stock, the special conditions
also preclude the conversion of existing residential units to short-term rental housing units. However,
new short-term housing projects would be allowed to convert to traditional long-term residential
developments, provided these projects comply with all the property development standards for the
district in which they are located. While the opportunity to sublet short-term rental housing units exist,
a condition requiring a minimum stay of at least thirty consecutive days will seek to prevent a
continuous turnover of occupants. In addition, the residential height and density bonuses normally
applicable to certain residential projects will not apply to short-term rental housing units.
In order to recommend the proposed text amendment to the City Council, the Planning Commission
must satisfy two findings. These findings relate to consistency with the City’s General Plan and
promotion of the public health, safety and general welfare.
The proposed amendment is consistent in principle with several of the goals, objectives and policies of
the General Plan. Specifically, the amendment is consistent with the following:
Land Use Element Objective 1.1 that states that the City’s land use policies should seek to
“protect to the quality of life in all residential neighborhoods.” The proposed amendment would
allow short-term rental housing through approval of a Conditional Use Permit in commercial
districts only, thereby protecting the residential character and quality of life in residential
neighborhoods by prohibiting a commercial oriented use in these areas.
Land Use Element Objective 1.2 that states that the City’s land use policies should seek to
“ensure compatibility of adjacent land uses with particular concern for protecting residential
neighborhoods.” The proposed amendment would allow short-term rental housing through
approval of a Conditional Use Permit in commercial districts only, and the proposed special
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conditions for short-term rental housing will ensure that short-term rental housing operates in a
harmonious manner with surrounding land uses and will not result in adverse impacts upon the
community.
Land Use Element Objective 1.6 that states that the City’s land use policies should seek to
“accommodate commercial uses which serve regional, community, and local needs while
respecting the adjacent residential neighborhoods.” The proposed amendment would allow a
commercial lodging use housing through approval of a Conditional Use Permit for a variety of
users in certain commercial districts while not impacting neighboring residential districts.
CONCLUSION
The Zoning Ordinance currently does not contain provisions to allow short-term rental housing.
Recent projects have shown that the impacts of short-term rental housing upon the City of Santa
Monica include potential adverse impacts on the character of residential neighborhoods due to the
introduction of a commercial use in residential zones. The proposed amendment would allow short-
term rental housing as a conditionally permitted use in the BSCD, C3, C3-C, C4, and C6 Districts and
would set forth special conditions for short-term rental housing to ensure the use operates in a
harmonious manner with surrounding land uses and does not result in adverse impacts upon the
community. Findings of fact in support of the request are still required. The proposed amendments
are consistent with the goals, objectives, policies and programs specified in the General Plan.
RECOMMENDATION
Staff recommends that the Planning Commission recommend adoption of the text amendment to the
City Council, as specified in Attachment A.
TEXT AMENDMENT FINDINGS
1. The proposed amendment is consistent in principle with the goals, objectives,
policies, land uses, and programs specified in the adopted General Plan, specifically,
Land Use Element Objective 1.1, which states that the City’s land use policies should
seek to “protect to the quality of life in all residential neighborhoods” in that the
proposed amendment would allow short-term rental housing through approval of a
Conditional Use Permit in commercial districts only, thereby protecting the
residential character and quality of life in residential neighborhoods by prohibiting a
commercial oriented use in these areas. It is also consistent with Land Use Element
Objective 1.2, which states that the City’s land use policies should seek to “ensure
compatibility of adjacent land uses with particular concern for protecting residential
neighborhoods” in that the proposed amendment would allow short-term rental
housing as a conditionally permitted use in commercial districts only. Further, the
proposed special conditions for short-term rental housing will ensure that short-term
rental housing operates in a harmonious manner with surrounding land uses and will
not result in adverse impacts upon the community. The proposed amendment is also
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consistent with Land Use Element Objective 1.6, which states that the City’s land use
policies should seek to “accommodate commercial uses which serve regional,
community, and local needs while respecting the adjacent residential
neighborhoods” in that the proposed amendment would allow a commercial lodging
use through approval of a Conditional Use Permit for a variety of users in certain
commercial districts while not impacting neighboring residential districts.
2. The public health, safety, and general welfare require the adoption of the proposed
amendment, in that the amendment would provide an alternative temporary housing option as
a conditionally permitted use and would prohibit a commercial oriented land use in residential
zones, thereby maintaining the low intensity character of established residential
neighborhoods.
Prepared by: Amanda Schachter, Acting Planning Manager
Jonathan Lait, AICP, Senior Planner
Tony Kim, Associate Planner
City Planning Division
Planning and Community Development Department
Attachments:
A. Recommended Ordinance Text
B. Notice of Public Hearing
C. August 20, 2003 Planning Commission Meeting Staff Report
F:\PLAN\SHARE\PC\STRPT\03\Shrttrm.020404.doc
Attachment A
AMENDMENTS TO THE COMPREHENSIVE LAND USE AND ZONING ORDINANCE OF THE CITY
OF SANTA MONICA
CREATION OF NEW DEFINITION TO BE INCLUDED IN SECTION 9.04.02.030
9.04.02.030.778 Short-Term Rental Housing.
Rental housing which has a combination of some but not necessarily all of the
following attributes:
1. The property is designed for use by individuals who will reside on the property for a
minimum stay of at least 30 consecutive days, but who otherwise intend their occupancy to be
temporary.
2. The property is intended for use by persons who will maintain or obtain a permanent place
of residence elsewhere.
3. The property includes some or all of the following amenities:
(a) maid and linen service
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(b) health club, spa, pool, tennis courts, or memberships to area facilities
(c) business service centers
(d) meeting rooms
(e) fully furnished units including a combination of some but not necessarily all of the following:
furniture, appliances, housewares, bed linens, towels, artwork, television sets, stereos, VCRs, CD
players, fax machines, and Internet access.
(f) valet parking
CREATION OF NEW SPECIAL CONDITIONS TO ENSURE THAT SHORT-TERM RENTAL
HOUSING IS HARMONIOUS WITH SURROUNDING LAND USES
9.04.14.140 Short-term Rental Housing.
The purpose of this Section is to ensure that short-term rental housing operates in a
harmonious manner with surrounding land uses and does not result in adverse impacts upon
the community. The following special conditions shall apply to short-term housing units:
(i) Applicability. Short-term rental housing may be permitted with the approval of a Conditional
Use Permit in the BSCD, C3, C3-C, C4 and C6 Districts so long as the use is compliant with
the property development standards of the underlying zoning district and the standards
established herein. The following conditions shall apply to all new short-term rental housing
uses and substantial remodels or the addition of units or the expansion of existing short-
term rental housing units.
(j) Private Open Space. Any project containing four or more short-term rental housing units shall
provide the following minimum open space: one hundred square feet per unit for projects
with four or five units, and fifty square feet per unit for projects of six units or more.
(k) Parking. Parking for short-term rental housing units shall be provided in the amount as
required by Section 9.04.10.08.040, as specified for multi-family residential.
(l) Facilities. Each short-term rental housing unit may provide one or more of the following
facilities:
(4) Kitchens
(5) Separate bedrooms
(6) Separate living rooms
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(m) Conversion. The conversion of existing residential units to short-term rental housing units
shall be prohibited.
(n) Height and Density Bonuses. The residential height and density bonus provisions permitted
by Sections 9.04.08.15.060, 9.04.08.18.060, 9.04.08.20.060, 9.04.08.20.070,
9.04.08.22.060, 9.04.08.26.060, and Part 9.04.10.14 shall not apply to short-term rental
housing.
(o) Operation. The units shall not be operated as a hotel or in the same manner as a hotel. The
units shall not routinely have occupancies for periods of less than thirty consecutive days.
(p) Lease. Each unit must be leased by an occupant for a period of at least thirty consecutive
days.
AMENDMENT OF THE BSCD, C3, C3-C, C4, AND C6 ZONING DISTRICTS TO ALLOW SHORT-
TERM RENTAL HOUSING AS A
CONDITIONALLY PERMITTED USE
Section 9.04.08.15.040 Conditionally permitted uses.
(1) The following uses may be permitted in the BSC-1 portion of the BSC District subject to the
approval of a conditional use permit:
(a) Bars, subject to the limitations contained in Section 9.04.08.15.080;
(b) Billiard parlors;
(c) Bowling alleys;
(d) Cinemas;
(e) Clubs and lodges;
(f) Convention and conference facilities;
(g) Fast-food food courts, subject to the limitations contained in Section 9.04.08.15.080;
(h) Homeless shelters with fifty-five beds or more;
(i) Hotels and motels;
(j) Nightclubs, subject to the limitations contained in Section 9.04.08.15.080;
(m) Open-air farmers markets;
(l) Short-term rental housing;
(l)(m) Skating rinks;
(m)(n) Theaters.
(2) The following uses may be permitted in the BSC-2, BSC-3 and BSC-4 portions of the BSC
District, subject to the approval of a conditional use permit:
(a) Automobile parking lots and structures;
(b) Bars, subject to the limitations contained in Section 9.04.08.15.080;
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(c) Billiard parlors;
(d) Bowling alleys;
(e) Cinemas;
(f) Clubs and lodges;
(g) Convention and conference facilities;
(h) General offices uses on the ground floor in that portion of a parcel between twenty-five feet
and seventy-five feet from the front parcel line;
(i) Homeless shelters with fifty-five beds or more;
(j) Hotels and motels;
(k) Nightclubs, subject to the limitations contained in Section 9.04.08.15.080;
(n) Open-air farmers markets;
(m) Short-term rental housing;
(m)(n) Skating rinks.
(3) In addition to those uses specified in subsection (2) of this Section, the following uses may
be permitted in the BSC-3 portion of the BSC District subject to the approval of a conditional use
permit:
Expansion or intensification of automobile repair facilities existing as of July 8, 1997 provided
such property is physically improved to comply with the Bayside District special project design and
development standards set forth in Section 9.04.08.15.070 and the special conditions for auto repair
facilities set forth in Section 9.04.14.050. (Added by Ord. No. 1841CCS § 3 (part), adopted 2/13/96;
amended by Ord. No. 1885CCS § 1, adopted 9/23/97; amended by Ord. No. 1937CCS § 1, adopted
2/23/99)
Section 9.04.08.18.040 Conditionally permitted uses.
The following uses may be permitted in the C3 District subject to the approval of a Conditional Use
Permit:
(a) Automobile parking structures.
(b) Bed and breakfast facilities.
(c) Billiard parlors.
(d) Bowling alleys.
(e) Cinemas.
(f) Clubs and lodges.
(g) Convention and conference facilities.
(h) Expansion or intensification of automobile repair facilities existing as of July 11, 1995.
(i) Funeral parlors and mortuaries.
(j) Homeless shelters with fifty-five beds or more.
(k) Liquor stores.
(l) Nightclubs.
(m) Open-air farmers markets.
(n) Replacement of fast-food restaurants in existence as of May 13, 2003.
(q) Service stations.
(p) Short-term rental housing.
(p)(q) Skating rinks.
(q)(r) Take-out restaurants.
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(r)(s) Rooftop parking. (Prior code § 9018.4; amended by Ord. No. 1687CCS § 4 (part),
adopted 6/22/93; Ord. No. 1809CCS § 3, adopted 7/25/95; Ord. No. 1877CCS § 1, adopted 4/15/97;
Ord. No. 2077CCS § 1, adopted 5-20-03)
Section 9.04.08.20.040 Conditionally permitted uses.
The following uses may be permitted in the C3-C District subject to the approval of a conditional
use permit:
(a) Auditoriums.
(b) Automobile parking lots and structures.
(c) Billiard parlors.
(d) Bowling alleys.
(e) Cinemas.
(f) Clubs and lodges.
(g) Convention and conference facilities.
(h) Expansion or intensification of automobile repair facilities existing as of July 11, 1995.
(i) Homeless shelters with fifty-five beds or more.
(j) Hotels and motels.
(k) Liquor stores.
(l) Nightclubs.
(m) Offices at the ground floor street frontage.
(n) Open-air farmers markets.
(o) Restaurants where entertainment and dancing occurs.
(r) Service stations.
(q) Short-term rental housing.
(q)(r) Skating rinks.
(r)(s) Take-out and fast food restaurants. (Prior code § 9019.4; amended by Ord. No.
1687CCS § 5 (part), adopted 6/22/93; Ord. No. 1809CCS § 4, adopted 7/25/95)
Section 9.04.08.22.040 Conditionally permitted uses.
The following uses maybe permitted in the C4 District subject to the approval of a Conditional Use
Permit:
(a) Auditorium.
(b) Automobile dealerships, or expansion of existing automobile dealerships indoor or outdoor
area by more than ten percent, or more than five thousand square feet, whichever is less.
(c) Automobile parking lots and structures.
(d) Automobile repair facilities.
(e) Automobile washing facilities.
(f) Billiard parlors.
(g) Clubs and lodges.
(h) Drive-in, drive-through, take-out and fast-food restaurants.
(i) Exercise facilities.
(j) Homeless shelters with fifty-five beds or more.
(k) Hotels and motels.
(l) Liquor stores.
(m) Nightclubs.
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(n) Open air farmers markets.
(o) Restaurants over fifty seats.
(r) Self service storage warehouses. (Prior code § 9020.4; amended by Ord. No. 1687CCS § 6
(part), adopted 6/22/93; Ord. No. 1732CCS § 2, adopted 3/8/94; Ord. No. 1803CCS § 1, adopted
5/23/95; Ord. No. 1895 § 4, adopted 1/27/98)
(q) Short-term rental housing.
Section 9.04.08.26.040 Conditionally permitted uses.
The following uses may be permitted in the C6 District subject to the approval of a Conditional Use
Permit:
(a) Automobile dealerships in existence on October 1, 1996, provided that such dealerships may
not resume operations if converted to another use.
(b) Expansion of existing automobile dealerships indoor or outdoor area by more than ten
percent, or more than five thousand square feet, whichever is less.
(c) Auditoriums.
(d) Department stores over fifty thousand square feet.
(e) Homeless shelters with fifty-five beds or more.
(f) Hotels and motels.
(g) Nightclubs.
(i) Service stations.
(i) Short-term rental housing.
(i)(j) Take-out and fast-food restaurants.
(j)(k) Theaters. (Prior code § 9022.4; amended by Ord. No. 1687CCS § 8 (part), adopted
6/22/93; Ord. No. 1803CCS § 2 (part), adopted 5/23/95; Ord. No. 1896CCS § 1, adopted 1/27/98)
ATTACHMENT D
Appeal Statement
Electronic version of attachment is not available for review. Document is available for review at the
City Clerk’s Office and the Libraries.
F:\ATTY\MUNI\LAWS\BARRY\Shrttrm Hsing2d-1.doc
City Council Meeting 3-23-04 Santa Monica, California
ORDINANCE NUMBER 2120 CCS)
City Council Series)
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA
ADDING SANTA MONICA MUNICIPAL CODE SECTION 9.04.02.030.778 TO
ESTABLISH A DEFINITION OF SHORT-TERM RENTAL HOUSING AND
PROHIBITING THIS FORM OF HOUSING THROUGHOUT THE CITY
WHEREAS, the proliferation of short-term rental housing can have a significant,
detrimental impact on the quality of life in the community; and
WHEREAS, short-term rental housing, also known as corporate housing, provides
temporary accommodations in fully furnished apartments complete with furniture,
appliances, housewares, and other furnishings; and
WHEREAS, short-term rental housing projects typically afford an array of
conveniences and services such as maid and linen service, laundry and dry cleaning
service, on-site conference or meeting rooms, business centers, and Internet access.
Most short-term housing facilities also offer a full health club, spa, large pool and tennis
court. Projects that do not offer these facilities on-site, often offer membership to area
facilities; and
1
WHEREAS, the typical occupants of these facilities include: relocating executives
requiring temporary accommodations until a permanent residence is established,
corporate recruits, attorneys trying cases, and relocating families. This housing is also
utilized by vacationers. The occupants of these units do not intend to make these units
their permanent place of residence, but view these premises as interim abodes; and
WHEREAS, one of Santa Monica's primary housing goals is to preserve the quality
and character of its existing single and multi-family residential neighborhoods. Santa
Monica's prosperity has always been fueled by the area's many attractive features
including its cohesive and active residential neighborhoods and the diverse population
which resides therein. In order to continue to flourish, the City must preserve its character
and charm which result, in part, from cultural, ethnic, and economic diversity of its resident
population; and
WHEREAS, the City must also preserve its unique sense of community which
derives, in large part, from residents' active participation in civic affairs, including local
government, cultural events, and educational endeavors. Occupants of short-term rental
housing do not and cannot have the same involvement and ties to the community and to
the neighborhoods in which they reside as occupants who treat the City and their
neighborhoods as their home. Short-term occupants are less likely to become active in
civic, neighborhood, and community affairs and events; and
WHEREAS, the City has adopted numerous regulatory measures intended to
promote the development of multi-family housing and ensures that this development is
occupied by individuals as their principle residence. The City never envisioned that these
measures would facilitate the development of short-term rental housing; and
2
WHEREAS, Section 9.04.02.030 does not presently define short-term rental
housing; and
WHEREAS, the proliferation of short-term housing in the City is a relatively recent
phenomenon; and
WHEREAS, in light of these concerns, the City Council adopted Ordinance Number
2011 (CCS) on May 22,2001 establishing a moratorium on the development of short-term
rental housing and the conversion of existing multi-family development to this form of
housing to provide the City time to adequately assess the full impacts of this form of
housing and its appropriate scope and location within the City; and
WHEREAS, the City Council extended Ordinance Number 2011 (CCS) on June 19,
2001 and on March 25, 2003; and
WHEREAS, Sections 9.04.02.030.778 will be added to the Santa Monica Municipal
Code to establish a definition of short-term rental housing, but this form of housing will be
prohibited throughout the City; and
WHEREAS, the Planning Commission considered the proposed text amendment on
February 4, 2004, but was unable to reach a consensus for a recommendation to the City
Council regarding the text amendment, resulting in a technical denial of the proposed
amendment; and
WHEREAS, this technical denial was appealed to the City Council; and
WHEREAS, the City Council held a public hearing on the proposed text amendment
on March 9, 2004; and
WHEREAS, the proposed text amendment is consistent in principle with the goals,
objectives, policies, land uses, and programs specified in the adopted General Plan,
3
specifically, Land Use Element Objective 1.1 which states that the City's land use policies
should seek to "protect the quality of life in all residential neighborhoods" in that the
proposed amendment would prohibit short-term rental housing, thereby protecting the
residential character and quality of life in residential neighborhoods by prohibiting a
commercial oriented use; and
WHEREAS, for the reasons detailed above, the City Council finds and declares that
the public health, safety, and general welfare require the adoption of the proposed text
amendment in that the goals, objectives and policies of the City's adopted General Plan
are achieved as the amendment would prohibit this commercial oriented land use, thereby
maintaining the low intensity character of established residential neighborhoods,
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA
DOES HEREBY ORDAIN AS FOLLOWS:
SECTION 1. Section 9.04.02.030.778 is hereby added to the Santa
Monica Municipal Code to read as follows:
9.04.02.030.778 Short-Term Rental Housing.
Rental housinq which has the followinq attributes:
1. The housinq is desioned for use by individuals who will
reside on the property for a minimum stay of at least 30 consecutive days.
but who otherwise intend their occupancy to be temporarY.
2. The housinq is intended for use by persons who will
maintain or obtain a permanent place of residence elsewhere.
4
3. The housinq includes some or all of the followinq amenities:
a) Maid and linen service
b) Health club. spa. pool. tennis courts. or memberships to
area facilities
c) Business service centers
d) Meetinq rooms
e) Fully furnished units includinq a combination of some but
not necessarily all of the followinq: furniture. appliances. housewares. bed
linens. towels. artwork. television sets. stereos. VCRs. CD players. fax
machines. and Internet access.
f) Valet parkinq
SECTION 2. If any section, subsection sentence, clause or phrase of this
ordinance is for any reason held to be invalid or unconstitutional by a decision of
any court of any competent jurisdiction, such decision shall not affect the validity
of the remaining portions of the ordinance. The City Council hereby declares
that it would have passed this ordinance, and each and every subsection,
sentence, clause, or phrase not declared invalid or unconstitutional without
regard to whether any portion of the ordinance would be subsequently declared
invalid or unconstitutional.
SECTION 3. Any provision of the Santa Monica Municipal Code or appendices
thereto inconsistent with the provisions of this Ordinance, to the extent of such
5
inconsistencies and no further, is hereby repealed or modified to that extent necessary to
effect the provisions of this Ordinance.
SECTION 4. The Mayor shall sign and the City Clerk shall attest to the passage of
this Ordinance. The City Clerk shall cause the same to be published once in the
official newspaper within 15 days after its adoption. This Ordinance shall become effective
30 days from its adoption
APPROVED AS TO FORM:
6
Approved and adopted this 23rd day of March, 2004.
ard Bloom, Mayor
State of California
County of Los Angeles) ss.
City of Santa Monica )
I, Maria M. Stewart, City Clerk of the City of Santa Monica, do hereby certify that the
foregoing Ordinance No. 2120 (CCS) had its introduction on March 9,2004, and was
adopted at the Santa Monica City Council meeting held on March 23, 2004, by the
following vote:
Ayes: Council members: Mayor Bloom, Mayor Pro Tem McKeown, Feinstein,
O'Connor
Noes: Council members: None
Abstain: Council members: None
Absent: Council members: Holbrook, Katz, Genser
ATTEST:
7
1
SANTA MONICA RENT CONTROL BOARD MEMORANDUM
TO: Santa Monica Rent Control Board
FROM: J. Stephen Lewis, General Counsel
FOR MEETING OF: August 9, 2018
RE: Administrative item to consider adding a new regulation,
Regulation 2008, to Chapter 2 of Board Regulations
(Definitions), respecting the meaning of the word
“person” and the phrase “rental housing agreement” as
used in Charter Section 1801, subdivision (i).
Subject Matter
The Santa Monica Rent Control Board will consider adding a new Regulation
2008 to Chapter 2 of Board Regulations (Definitions), respecting the meaning of
the word “person” and the phrase “rental housing agreement” as used in Charter
Section 1801, subdivision (i).
How this Item was Initiated
At the Board’s July meeting, Chair Foster, on behalf of herself and
Commissioner Phillis, asked the Board to discuss the diminution of the controlled
housing stock due to the use of controlled units for other than long-term
residential use. The Board by consensus placed on the current agenda further
consideration of the issue.
Discussion
In the late 1970s, Santa Monica landlords began taking rental units out of
circulation at a surprising rate. In a single 15-month period, in what became
known locally as “the demolition derby,” landlords razed more than 1,300 rental
units, with hundreds more converted to condominiums. Per capita, Santa Monica
lost ten times as many rental units as neighboring Los Angeles over the same
period, and, as the vacancy rate was pushed to between one and two percent,
the tight housing supply led, predictably, to a spike in rents. It was in response to
Item 12A
2
this that the people of Santa Monica amended their City Charter to institute a
system of rent control.
This history is reflected in the Rent Control Law’s statement of purpose,
codified in Section 1800 of the City Charter. After reciting predicate facts about
the “growing shortage of housing units resulting in a low vacancy rate and rapidly
rising rents exploiting this shortage,” the voters state unequivocally that they
enacted the Rent Control Law “to alleviate the hardship caused by this housing
shortage….” The statement of purpose goes on to say that the law achieves this
end not only by the straightforward regulation of rents, but also by regulating the
removal of rental units from the housing market.
The Courts, too, have recognized that Santa Monica’s rent control law exists,
in large part, to protect the existing housing supply. The Supreme Court, in Nash
v. Santa Monica1 (since superseded by the Ellis Act), recognized that limiting the
loss of controlled rental units is integral to the law’s purpose, as well as to its
effectiveness. In Bisno v. Santa Monica Rent Control Board,2 upholding the
Board’s tenant-not-in-occupancy regulations, the Court of Appeal noted that our
rent control law exists to alleviate the hardships caused by a housing shortage,
and to protect renters for whom Santa Monica is their home. As the court in that
case wrote, “The whole tenor of the RCL is the provision of housing, not ancillary
residential rental usage. Every aspect of the RCL addresses a housing crisis,”
and is intended to ensure the availability of housing for those who occupy rental
units as their principal residence.
Today, a new threat to the rental housing supply has emerged, as an
increasing number of landlords have begun to rent to corporate entities who use
rent-controlled units for other than the provision of long-term, permanent housing,
or themselves rent units to short-term visitors—a practice that, in another
context, the Court of Appeal recognized is not the provision of housing.3 Although
these practices effect less of a wholesale loss of units than does the demolition
of an entire apartment building, the loss is nonetheless real. In any event, City
Charter Section 1803(t) requires a landlord to obtain a permit from the Board to
remove even an individual controlled unit from the rental housing market.
1 Nash v. City of Santa Monica (1984) 37 Cal.3d 97.
2 Bisno v. Santa Monica Rent Control Board (2005) 130 Cal.App.4th 816.
3 San Remo Hotel LP v. City and County of San Francisco (2002) 27 Cal.4th 643.
3
As noted in last month’s meeting, it is the Planning Commission and the City
Council that are charged with regulating land use in Santa Monica. The Board
has no authority over that subject matter. The Board cannot, for example, make it
illegal to engage in short-term rentals or so-called corporate housing. But the
Board can, under Charter Section 1803(t), require that any person wishing to
engage in such a practice in what is now a controlled unit first obtain a permit to
remove that unit from the residential rental market. In order to obtain such a
permit, the landlord must demonstrate that he or she cannot make a fair return
on the unit by leaving it on the regular rental market, or that the unit is
irredeemably uninhabitable.4 The Board can also take legal action against a
landlord who, without having first obtained a removal permit, removes a unit from
the market by turning it to other than a permanent residential use.
Although the Board already has these powers, it seems likely that at least
some landlords have not fully understood that rent-controlled units are to be used
only for the provision of long-term permanent housing, and that using them for
any other purpose requires a Board-issued removal permit. This confusion is not
entirely reasonable in light of the Charter’s plain language and the above-
referenced appellate court opinions, coupled with the reasonable expectation that
those engaged in a regulated business are presumed to know the law that
regulates it. Nonetheless, a more explicit statement of existing law may help
landlords to comply with it.
One approach to such a clarification would be a regulation clarifying the
meaning of the terms “person” and “rental housing agreement” in Charter Section
1801(i). That Charter Section defines “tenant” as “… any … person entitled under
the terms of a rental housing agreement to the use or occupancy of a rental unit.”
The Board could enact a new regulation, Regulation 2008, clarifying that a
“person entitled … to the use or occupancy of a rental unit” as that term is used
in Charter Section 1801(i) is an individual (as opposed to a business entity)
entitled to use or occupy a rental unit on a long-term, permanent basis. This is
what such a regulation might look like:
4 The third basis on which to obtain a removal permit—development of new multifamily
housing that includes affordable units—is inapplicable in this context.
4
2008. Tenant
(a) Person
As used in Charter Section 1801(i), the term “person” means an individual
human being.
(b) Rental Housing Agreement
As used in Charter Section 1801(i), “rental housing agreement” means an
agreement permitting one or more individuals to use and occupy a
controlled rental unit as his, her or their permanent residence.
(c) Removal Permit Required for Rentals Other Than to Tenants
A landlord wishing to enter into an agreement to rent a controlled rental
unit other than to an individual, or individuals, for permanent, long-term
habitation must first obtain a removal permit under Charter Section 1803(t).
This definition is not intended to, and does not, supersede the provisions of
Regulation 3304, relating to tenants not in occupancy.
(d). Existing Law
This regulation is for public convenience only and is declarative of existing
law.
Of course, such a regulation would merely require a landlord to obtain a
removal permit in order to engage in corporate or short-term rentals (albeit a
permit that could be granted only under exceedingly limited circumstance); it
would not forbid the practice. And forbidding the practice is by far the most
straightforward remedy to the ill—the loss of controlled units—that the practice
leads to. As noted at last month’s meeting and in this report, because that
remedy is a land-use regulation, it is outside the Board’s purview. Staff is
informed that the Planning Commission will soon be studying how to strengthen
local law with respect to short-term corporate rentals. Staff will provide any
assistance that the Commission needs in that endeavor, and we will keep the
Board fully apprised of the Commission’s progress. Individual Board members
can also, of course, address the Planning Commission on the issue at public
comment during the meeting at which the Commission discusses the topic.
Recommendation
Staff recommends that the Board hear from the public and deliberate about
whether to adopt proposed new Regulation 2008.
1
Vernice Hankins
From:Council Mailbox
Sent:Tuesday, December 18, 2018 5:30 PM
To:Gleam Davis; Terry O’Day; Councilmember Kevin McKeown; Tony Vazquez; Ted
Winterer; Sue Himmelrich; Greg Morena
Cc:councilmtgitems
Subject:FW: Item 4A--Important Please Read
Council‐
Please see the below email regarding corporate housing.
Thanks,
Stephanie
From: Anastasia Foster [mailto:arfoster888@gmail.com]
Sent: Tuesday, December 18, 2018 3:03 PM
To: Council Mailbox <Council.Mailbox@SMGOV.NET>; Lane Dilg <Lane.Dilg@SMGOV.NET>; Rick Cole
<Rick.Cole@SMGOV.NET>
Subject: Item 4A‐‐Important Please Read
In the strongest terms, I support defining non-permanent uses of rent-controlled units and properties as a
commercial activity and use, I support stronger planning and permitting processes for rent-controlled properties,
I ask for stronger roles surrounding buyouts, and I ask that 12-month initial leases be required in rent-controlled
housing.
As Chair of the Rent Control Board, a Meals on Wheels driver and board member and a past SMRR hotline
volunteer, I have far too many firsthand accounts of the effect this commercial use is having on the 70% of our
citizens who are renters.
I've had correspondence, calls, testimony from and meetings with over 100 individual constituents that have
named this as a serious concern and threat to their tenancies. With the constituent multiplier effect, we all know
this likely means that thousands are experiencing the same or similar. That is a significant percentage of our
electorate and our families, seniors, schoolchildren, teachers, workers, city employees, small business owners
and more.
The benefits of rent control are meant for residents, not visitors who do not vote here, pay utilities here or intend
to make the unit their home. Rent Control counsel has already weighed in that under current law, this use could
constitute an illegal removal defined by the Charter. Therefore, it is not a leap to make changes to city code that
are in line with what our Charter already says regarding illegal removals. I believe City ordinances should be
amended to define this non-permanent use as commercial business activity.
Secondly, while some aspects of the ordinance in West Hollywood may be flawed in regards to newer
construction, the provision to place a 12-month initial minimum lease on existing rent-controlled housing is not
in question. Rent-controlled housing, in particular, is already here, already affordable and was permitted when
built to be permanent housing. Again, the benefits of rent control are meant for residents, not visitors who do
2
not vote here, pay utilities here or intend to make the unit their home. There could be an unintended
consequence of substituting temporary visitors for residents.....dwindling public school rolls.
Thirdly, please refine and strengthen the planning and permitting processes with added scrutiny and
enforcement to further protect our rent-controlled housing stock, and allow deeper review of rent-controlled
buildings that seek renovation to ensure that tenants who remain in place have their rights looked after, and that
units are not combined or altered to the point of an untenable state for all but transient visitors.
It is my observation that the people of Santa Monica have already put in their Charter a stated intent to preserve
Rent-Controlled housing as "housing" and not as a de facto hotel with furnishings and utilities
included. Allowing this use would seem to fly in the face of the long-held priorities of this great city. I hope
that by implementing these policies and ordinances, the harassment claims that make their way to the City
Attorney's offices will be greatly reduced and people can live in peace, not fear.
Again, I strongly urge the Council to adopt an ordinance, declaring non-permanent use to be defined as a
commercial use of a residential unit. I also urge Council to implement a 12-month initial minimum lease
in rent-controlled housing, as has successfully been done in West Hollywood. And I urge Council to adopt
stricter permitting processes for rent-controlled housing. These measures would significantly reduce
harm to our populace and the diversity of our city.
Lastly, please raise the fines and penalties for not filing buyouts timely with the City and in compliance
with the City's rules. The process starts with buyouts. The harassment starts with buyouts. Tenants are
confused about buyouts. Tenants are manipulated with buyouts. Explore an option to make any buyout
take place through the City. This important protection, data point and indicator is missing from our
City's ability to track the preservation of affordable homes for all Santa Monicans.
Respectfully,
Anastasia Foster
Chair, Santa Monica Rent Control Board
1
Vernice Hankins
From:Council Mailbox
Sent:Tuesday, December 18, 2018 5:30 PM
To:Gleam Davis; Terry O’Day; Councilmember Kevin McKeown; Tony Vazquez; Ted
Winterer; Sue Himmelrich; Greg Morena
Cc:councilmtgitems
Subject:FW: Item 4A--Important Please Read
Council‐
Please see the below email regarding corporate housing.
Thanks,
Stephanie
From: Anastasia Foster [mailto:arfoster888@gmail.com]
Sent: Tuesday, December 18, 2018 3:03 PM
To: Council Mailbox <Council.Mailbox@SMGOV.NET>; Lane Dilg <Lane.Dilg@SMGOV.NET>; Rick Cole
<Rick.Cole@SMGOV.NET>
Subject: Item 4A‐‐Important Please Read
In the strongest terms, I support defining non-permanent uses of rent-controlled units and properties as a
commercial activity and use, I support stronger planning and permitting processes for rent-controlled properties,
I ask for stronger roles surrounding buyouts, and I ask that 12-month initial leases be required in rent-controlled
housing.
As Chair of the Rent Control Board, a Meals on Wheels driver and board member and a past SMRR hotline
volunteer, I have far too many firsthand accounts of the effect this commercial use is having on the 70% of our
citizens who are renters.
I've had correspondence, calls, testimony from and meetings with over 100 individual constituents that have
named this as a serious concern and threat to their tenancies. With the constituent multiplier effect, we all know
this likely means that thousands are experiencing the same or similar. That is a significant percentage of our
electorate and our families, seniors, schoolchildren, teachers, workers, city employees, small business owners
and more.
The benefits of rent control are meant for residents, not visitors who do not vote here, pay utilities here or intend
to make the unit their home. Rent Control counsel has already weighed in that under current law, this use could
constitute an illegal removal defined by the Charter. Therefore, it is not a leap to make changes to city code that
are in line with what our Charter already says regarding illegal removals. I believe City ordinances should be
amended to define this non-permanent use as commercial business activity.
Secondly, while some aspects of the ordinance in West Hollywood may be flawed in regards to newer
construction, the provision to place a 12-month initial minimum lease on existing rent-controlled housing is not
in question. Rent-controlled housing, in particular, is already here, already affordable and was permitted when
built to be permanent housing. Again, the benefits of rent control are meant for residents, not visitors who do
2
not vote here, pay utilities here or intend to make the unit their home. There could be an unintended
consequence of substituting temporary visitors for residents.....dwindling public school rolls.
Thirdly, please refine and strengthen the planning and permitting processes with added scrutiny and
enforcement to further protect our rent-controlled housing stock, and allow deeper review of rent-controlled
buildings that seek renovation to ensure that tenants who remain in place have their rights looked after, and that
units are not combined or altered to the point of an untenable state for all but transient visitors.
It is my observation that the people of Santa Monica have already put in their Charter a stated intent to preserve
Rent-Controlled housing as "housing" and not as a de facto hotel with furnishings and utilities
included. Allowing this use would seem to fly in the face of the long-held priorities of this great city. I hope
that by implementing these policies and ordinances, the harassment claims that make their way to the City
Attorney's offices will be greatly reduced and people can live in peace, not fear.
Again, I strongly urge the Council to adopt an ordinance, declaring non-permanent use to be defined as a
commercial use of a residential unit. I also urge Council to implement a 12-month initial minimum lease
in rent-controlled housing, as has successfully been done in West Hollywood. And I urge Council to adopt
stricter permitting processes for rent-controlled housing. These measures would significantly reduce
harm to our populace and the diversity of our city.
Lastly, please raise the fines and penalties for not filing buyouts timely with the City and in compliance
with the City's rules. The process starts with buyouts. The harassment starts with buyouts. Tenants are
confused about buyouts. Tenants are manipulated with buyouts. Explore an option to make any buyout
take place through the City. This important protection, data point and indicator is missing from our
City's ability to track the preservation of affordable homes for all Santa Monicans.
Respectfully,
Anastasia Foster
Chair, Santa Monica Rent Control Board
Corporate Housing Study Session
City Council
December 18, 2018
Purpose of Meeting
1.Follow-up on Council Direction August 2014
Examine renter protections in light of market pressures on local rents
Study definition of “corporate housing” and “short-term rentals”
2.Clarify terminology -not discussing changes to short-term rentals
3.Address recent practices in the housing market –going beyond definition of corporate housing
Rent -controlled units
Proposed divisions of existing units
Rented for several months at a time (e.g. students, temporary work assignments)
New Construction
Stated intent to operate non-permanent housing
Corporations/business entities leasing units
4.Consider impact of any changes on diversity of housing needs/options and tenants who rely on housing options of less than 1 year
Corporate Housing Study Session | City Council | December 18, 2018 2
Key Questions
How do we protect existing rent-controlled housing?
How do we define “short-term” compared to “medium-term” housing?
What is length of time to be medium-term?
Can we distinguish between “temporary” and “permanent resident”?
Should some activity be defined as a commercial use?
How to reduce unintended consequences on month-to-month or less than 12-
month rentals?
Should we accommodate different and evolving housing models?
Are we a city of only permanent housing stock without any interest in
accommodating “medium-term” housing?
Corporate Housing Study Session | City Council | December 18, 2018 3
Existing Terminology
Introduced in 2004 as “Short-Term Rental Housing”
Response to concern about adverse impacts of short-
term housing on character of residential
neighborhoods
2015 Zoning Ordinance updated to “Corporate
Housing”
Reduce confusion with “short-term vacation rental”
terminology in Home-Share Ordinance (Chapter 6.20)
3 qualities: Stays of 30 days and more; Intent for
temporary occupancy; Amenities
2015 “Short-Term Vacation Rental” (Home-Share
Ordinance)
Stays of 30 days or less for exclusive transient use
Corporate Housing Study Session | City Council | December 18, 2018 4
Prohibited
Rent Control Law
•Confirms that
rent-control
housing is for
long-term
permanent
housing
•Clarifies that
corporation
cannot occupy a
unit
•Does not
regulate land
use
What is Corporate Housing Generally?
Originally intended to serve business
travelers on short-term assignments
Has expanded to include:
Education
Healthcare
Temporary displacement
Not direct competitor with hotels due to
differences in clientele, length of stay,
amenities provided
Better terminology?
“Medium-term” or “Temporary” Housing
Corporate Housing Study Session | City Council | December 18, 2018 5
New Trends in
“Co-Living”
Driven by lack of housing affordability
Hybrid models –neither hotel nor permanent housing
Membership-based subscriptions
Shared common area kitchens and bathrooms
Several tenants sharing a unit
Stays typically for several weeks to months
Most closely resembles “group residential” use classification in Zoning Ordinance
Requires Minor Use Permit
Corporate Housing Study Session | City Council | December 18, 2018 6
Understanding Scale of the Issue
How we heard about it?
Complaints
Overwhelming majority for rentals slightly longer than
30 days –noise & neighborhood disruption
Very few complaints for rentals of 3-6 months
Where?
Ellised units particularly vulnerable to abuse –
insufficient resources to monitor units
New construction
Stated intent to be “temporary” housing
Corporate Housing Study Session | City Council | December 18, 2018 7
51,000
total
units
28,000
rent-
controlled
164
active vac.
rentals
4
active corp.
housing
1,300
units owner
occupied
1,100
units use
exemptions
Complaints
Ellis
Existing Enforcement Challenges
Existing Definition of “Corporate Housing” is problematic
Specific list of amenities
Very difficult to prove “intent”
No explicit prohibition on advertising
No regulations to prevent proposed physical modification of housing units that
could allow multiple tenants to lease one unit
Leads to possible “group residential” use classification which requires separate
leases and Minor Use Permit
Could also lead to illegal increase in number of units
Corporate Housing Study Session | City Council | December 18, 2018 8
Peer Cities’ Approach
Most regulate short-term stays of 30 days or less (like Home-share Ordinance)
West Hollywood example for defining corporate housing
2-part test
Unit must be leased by business entity
AND Person occupying the unit does not intend use as principal residence
OR Person has not entered into a lease of at least one year
Corporate Housing Study Session | City Council | December 18, 2018 9
Planning Commission Summary
Goals
Reduce impact on existing rent-controlled housing
Stop high-turnover units with no intent for long-term permanent housing
Recommendations
Potential for quick changes to address enforcement challenges
Revise definition to address enforcement challenges
Consider changing use classification to commercial –easier to prohibit
Study “carve-out” for temporary housing for healthcare, educational purposes
Accommodate new housing models
Review impact of Rent Control Board’s recent actions
Review data to determine whether Santa Monica has sufficient units for city of size and character
Explore available legal tools to prevent division of larger units intended for families
Corporate Housing Study Session | City Council | December 18, 2018 10
Framework for New Policy
Define thresholds for “medium-term” housing
Protect permanent housing stock (i.e. prioritize rent-controlled
units)
Continue to encourage new housing production
Understanding diversity of housing demand in Santa Monica
Permanent residents
Strong economic base supported by mobile workforce
Two major hospitals
Institutions of higher learning (e.g. SMC, UCLA)
Continues to be demand for housing in city for stays of more than
30 days but less than 12 months
Corporate Housing Study Session | City Council | December 18, 2018 11
Policy Concepts for Consideration
Minimum tenancy terms (e.g. 1 year) & Limiting furnished units
Concern if done in isolation
Explore how to address stays slightly longer than 30 days (akin to short-term
vacation rentals)
Restrict leasing of units by business entities
Consistent with Rent Control Board actions
Prohibit advertising by booking platforms
Corporate Housing Study Session | City Council | December 18, 2018 12
Regulatory Options
Enforcement-Heavy Approach
Establish clear boundaries of illegal activity
Multi-pronged Approach RECOMMENDED
Amend problematic definitions and create new ones to address gaps
Enact stricter regulations to protect rent-controlled units
Examples: Tenancy terms, furnished units, prohibit business entities from leasing
Possible consequence: leads to more Ellis if regulations too onerous?
Flexibility for market-rate units in certain zones where temporary housing or other kinds of housing models could be allowed
Perhaps commercial zones only
Considerations: percentage of units, increased affordability, minimum lease terms
Possible consequence: potentially increase speculation at the cost of permanent housing opportunities and 100% affordable housing
Corporate Housing Study Session | City Council | December 18, 2018 13
Further Remedies
Ensure that violations are enforceable
Stronger civil remedies
Examine options for increasing availability and use of receivership and
forfeiture processes as remedies for very serious violations
Corporate Housing Study Session | City Council | December 18, 2018 14
QUESTIONS?
Corporate Housing Study Session | City Council | December 18, 2018 15
Corporate Housing Definition
Housing designed for use by individuals who will reside on the property for a
minimum stay of at 30 consecutive days, but who otherwise intend their
occupancy to be temporary
Housing intended for use by persons who will maintain or obtain a permanent
place of residence elsewhere
Housing includes 2 or more of amenities:
Maid and linen service
Health club, spa, pool, tennis courts, or memberships to area facilities
Business service centers
Meeting rooms
Fully furnished units
Valet parking
Corporate Housing Study Session | City Council | December 18, 2018 16
Short-Term Rental Definition
Rentals of 30 days or less for exclusive transient use
“exclusive transient use” = none of dwelling unit’s primary residents live on-
site during any visitor’s stay
Corporate Housing Study Session | City Council | December 18, 2018 17