These policy recommendations were written by Sustainable Economies Law Center Legal Intern, Jessica Arena; Executive Director and Staff Attorney, Janelle Orsi; and City Policies Program Director, Yassi Eskandari.

Introduction

“This policy brief recommends the adoption of city-level policies allowing residents a reasonable amount of latitude to host and be compensated by short-term guests. The Sustainable Economies Law Center (SELC) recommends that cities adopt such laws in order to increase the affordability of housing, diversify local tourism opportunities, and create new sources of local wealth and city revenue.”

Excerpts

“The following is a set of guidelines and rules that a city may want to consider when adopting rules that allow Short-Term Home Stays:

1. Registration: A city may want to require short-term home stay hosts to register their home as a “Short-Term Home Stay Host.” The application fee should be minimal (no more than $30) and could require that the registration be renewed periodically, such as every three years. Residents who operate Host Homes and No-Host Homes should not need to apply for a business license of the same type and nature that commercial hotels must obtain. Host Homes and No-Host Homes should be considered an accessory use of a residence or should be included in zoning laws as allowable home businesses.

2. Information and Amenities Provided to Guests: A city may want to require that the name and phone number of the host or a responsible local contact person and proof of registration be posted in a conspicuous place in the home. A city could also mandate that all bedrooms have a working smoke detector and that the hosts post an evacuation plan identifying all means of egress from the home. A city could adopt other rules and regulations, such as requiring that the host post information explaining how the city separates recycling, compost, and land-fill trash into separate bins.

3. Cap on Annual Income: Cities that are concerned about limiting the scale and scope of short-term home stays may want to cap the amount of money each host may earn annually from short-term guests. For example, a city can specify that a host’s gross income from short-term home stays shall not exceed 75 percent of the actual rent, in the case of a rental property, or of the area market rate rent for similar homes, in the case of properties where the host is the owner. This is to reflect the idea that short-term home stays serve the purpose of offsetting housing costs, not of earning the host a profit.

4. Tax: A city may wish to impose a special tax on the income received by Short-Term Home Stay Hosts. However, we recommend that the tax be much lower than that applied to commercial hotels, and that each category of home be taxed at a different rate. For example, in San Francisco, where a 14 percent tax applies to hotels, we might recommend a tax of 5 percent for Host Homes and 7 percent for No-Host Homes. To reduce administrative costs to the host and to the city, we also recommend that the tax be paid annually, not monthly.

5. Limited Duration of Stays: A city may wish to limit the duration of guest stays to 30 days to prevent hosts from using the Short-Term Home Stay law to circumvent landlord tenant laws.

6. Guests and Nights Per Year: A city may wish to limit the number of nights per year that a host may have short-term home stay guests. For example, a city may mandate that the sum of “Host Home” and “No-Host Home” overnight guest stays may not exceed 160 per year and that only 60 of these nights may be “No-Host Home” nights. To limit the frequency of guest turnover, a city may also wish to limit the total number of guests per year. A “guest,” in that case, may refer to an individual or to a group of individuals who travel together, such as a couple or family.

7. Recordkeeping: In order to ensure compliance with the rules and limitation a city adopts for short-term home stays, a city may wish to require that hosts keep records of guest names, guest contact information, dates of stay, and fees paid, and may want to require that hosts maintain the records for a number of years and require that records be made available for inspection by the city upon request.

Summary

The above recommendations are aimed at helping cities adopt regulations that balance the interests and concerns associated with short-term home stays. Cities may, in fact, vary widely in how they ultimately adopt such regulations, depending on the unique needs and concerns of the city. Our primary goals in offering the above recommendations are to encourage cities to open new doors to short-term home stays, to ensure that the barriers remain low, and to offer suggestions to help cities address common concerns that arise in connection with the growing practice of short-term home stays. We believe that the overall impact of allowing short-term home stays will be greater economic stability for city residents, greater variety of local tourism and travel options, and stronger local economies.”