Business & Economy

Palm Springs passes wide-ranging restrictions on vacation rentals

File: The swimming pool at the Ingleside Inn in Palm Springs.
File: The swimming pool at the Ingleside Inn in Palm Springs.
Elina Shatkin/KPCC

Palm Springs vacation rentals are poised to face significant new restrictions, approved Wednesday night by the Palm Springs City Council. They'll be bolstered by an expansive new enforcement system, which Palm Springs City Councilman J.R. Roberts told KPCC will cost $1.7 million to set up and $1 million to $1.5 million per year.

"The city's now going to take that over, because when the industry was doing it, it wasn't getting done. And neighbors were going insane around them," Roberts said.

The most controversial new regulation, according to Roberts, is a rule limiting the number of vacation rentals people can own to just one.

"What we're trying to avoid is people buying up neighborhoods for freestanding hotel room investments. And that's where we were headed, and that's how we got into trouble, is it became very profitable for people to buy a house, or buy a number of houses, and simply use them as freestanding hotel rooms," Roberts said.

Other limitations include limiting the number of times someone can rent out their property per year to 32 times, increasing the cost of an annual rental permit from $200 to $900 and significantly increasing the fines when someone's caught violating the rules.

"This is going to be a very, very expensive program. Since the industry needs us to do their enforcement, it's going to be very expensive for them," Roberts said.

The growth in vacation rentals has led to not just noise issues, but what Roberts described as areas losing their sense of neighborhood and community. It meant that both full-time and part-time residents were dealing with hotel rooms nearby, not neighbors.

Another aim: Keeping housing affordable for first-time homeowners, as Roberts said it was becoming unaffordable for young people to buy in the city.

Roberts and his fellow councilman Geoff Kors have been working on the issue for months, Roberts said, with eight public hearings on the controversial issue. Industry representatives had argued that what was needed was enforcement, not increased restrictions.

"There's a lot of anger on both sides. We have a very divided community on the issue, and as you can imagine, that's pretty normal when you have a lot of money involved," Roberts said.

Palm Springs stands to lose income with the new regulations — it made $6 million in "transient occupancy tax" from vacation rentals.

"Cities get addicted to money like that. Because that's easy money, and we need that to run our city. So we're risking losing some money here by limiting the vacation rentals," Roberts said.

Roberts said they believe they're going to be OK — with some help from the new enforcement system making sure taxes are being paid.

Roberts said that there were lots of ideas for how to fix the problems the city was facing, but many of them either weren't enforceable or created their own problems. The Council wanted to allow people to buy a second home or a future retirement home and rent it out to offset the cost, which Roberts said was part of Palm Springs being a resort community.

Wednesday night's meeting included three hours of public comment and two hours of deliberation, according to Roberts. The Council itself was divided, with Councilwoman Ginny Foat choosing not to vote for the ordinance. Roberts said Foat felt the ordinance may be too restrictive and she didn't feel she had the information to feel comfortable with the choices made in the regulations.

Many other resort cities have completely banned vacation rentals, Roberts said, adding that he feels Palm Springs is an anomaly in that they're going to try to make vacation rentals work.