A little over two years ago, as Sacramento City Council put the finishing touches on one of the region’s first ordinances allowing short-term residential rentals via online platforms such as Airbnb, Councilman Eric Guerra offered some support.
“I think it’s very clear that many times, government falls behind in technology,” Guerra said during a hearing the council held on Jan. 19, 2016. “So the fact that we’re trying to catch up with this and get to it before … we have any significantly large problems in Sacramento, is a great and prudent move for us.”
All around the Capital Region, as the short-term home rental economy has multiplied in recent years, cities have grappled with how to catch up and establish sensible regulations. There hasn’t been a one-size-fits-all model for different jurisdictions — though if Sacramento’s experience is telling, there can be incentive to regulate a market that probably isn’t going away.
For other cities looking to Sacramento for guidance, one thing to know is that the process hasn’t been seamless since a representative for Airbnb first approached the City in November 2014, offering to assist in crafting an ordinance to legalize short-term rentals within city limits.
“We’re still evolving,” says Brad Wasson, financial services manager for the City of Sacramento. “It took a year to get the first ordinance in place and then when we did, there was some shortcomings.”
The ordinance that Sacramento’s council passed two years ago, by 7-0 vote, created a basic framework requiring permitting and neighbor notification for Airbnb-style units within the city. The council appeared to strike a balance. The original code let people earn extra money by renting out rooms they own, addressed noise and other concerns of neighbors, and limited properties from being rented out to no more than 120 nights in a calendar year.
“I think that this will become a model ordinance,” Councilman Jay Schenirer said that night. “I assume we will have to come back and tweak it at some point.”
Tweaks have been necessary. The City now lets residents rent their properties out at as many nights as they want each year, while property owners who live outside the area are allowed to rent their Sacramento houses out no more than 90 nights annually.
The City has struggled with getting Airbnb users to sign up. Capital Public Radio reported in December that there were just 90 permits among Sacramento’s 600 short-term rental units. Additionally, Wasson says he will be approaching the City’s Law and Legislation Committee on June 12 to address another problem: getting users to stop advertising services on Airbnb that the city code doesn’t allow, such as allowing more than six guests in a night.
This says nothing of possible deeper problems short-term rental units can create, such as depleting housing stock in California — a state already facing an affordable housing crisis.
But there have been some successes for Sacramento. For one thing, Wasson says a deal was struck with Airbnb so the tech company would collect Transient Occupancy Tax (a small fee that hotel guests typically pay) and remit it to the City. This money can quickly add up. Wasson estimates that from September 2017 through March 2018 alone, the City collected $312,000 from Airbnb.
Wasson adds that the City hasn’t had much luck with collecting from other short-term rental sites, but is looking at hiring a consultant to reach out to them.
Other cities in the region appear to be further back in the process. For example, the Roseville municipal code doesn’t allow houses to be rented for shorter than 30 days. Roseville Vice Mayor Bonnie Gore directed City staff in 2017 to consider updating the code after a resident was cited twice for renting out a house she owned and lost a hearing with the City’s Board of Appeals. The resident has since been cited a third time.
Roseville’s project lead, Development Analyst Wayne Wiley attributes the delay to his recent promotion to a position in the Economic Development Department, explaining that “some of the research and some of the projects I’ve been working on have been kind of put on the backburner in place of other priorities.”
Wiley says it’s also important that the City conduct public outreach before bringing an item on short-term housing to council, which he expects to happen in the next few months.
In Elk Grove, the municipal code neither allows or prohibits short-term rentals. “It’s come up based on some code complaints that have come in in the past,” says Elk Grove Planning Manager Antonio Ablog. “However, at this time, we’re not seeking to (modify) the code just to address short-term rentals.”
A Folsom spokeswoman confirmed that the city also doesn’t currently have anything in its code addressing short-term rentals.
Roseville, Elk Grove and Folsom might be moving cautiously because of a lesson Sacramento has learned about putting an ordinance into place, according to Cynthia Smith, of the City’s Business Permits Office.
“I don’t know that it would ever be disallowed, because I think it’s kind of hard to close the door on it now that it’s there,” Smith says.
All but 1 percent of the money Sacramento gets from the rentals is used to help fund the Sacramento Convention Center, according to Wasson. In time, the City might eventually use short-term rental units to do something larger-scale. Mayor Darrell Steinberg has openly discussed using them, Wasson says, to boost the number of available hotel rooms in the region and draw a major event, like the NBA All-Star Game.
In that respect, taking the plunge on regulating Airbnb and other sites has perhaps been for Sacramento, as Councilman Guerra said, “a great and prudent move.”