The world’s first recorded vacation home was the Palais de Versailles in France, built originally to serve as a hunting lodge for Louis XIII in 1624, according to Rentals United.
Nearly 400 years later, the international vacation-rental industry was worth an estimated $85 billion as of 2015, again according to Rentals United, a channel-managing service for rental-home owners around the world—and that number has surely risen in the years since.
Here in the Coachella Valley, vacation rentals are indeed big business—and, according to some neighbors of short-term rentals, a big hassle. As a result, short-term rentals—aka STRs—have become a focal point of debate and dispute between rental-property owners, neighboring residents and city governments.
At the heart of the conflict is the individual right of owners to rent out their desirable Coachella Valley homes as vacation getaways—appropriately regulated, of course—versus the rights of residents who, in some cases, have to deal with traffic, noise and other negative impacts on their quality of life as a result of nearby vacation rentals.
One of the more visible disputes is taking place in Palm Desert, where, on Dec. 10, 2020, the City Council voted to eliminate more than 60 STR properties from the city’s business rolls by no longer allowing short-term rental permits in planned residential neighborhoods that are not located in homeowners’ association communities. The action left the city with 709 STR properties still operating.
Predictably, the passage of the ordinance angered affected STR owners, who responded by filing a lawsuit against the city of Palm Desert on March 10, 2021.
Cody Carlson, a Palm Desert resident who was impacted by the new ordinance, is a co-founder of the Vacation Rental Owners and Neighbors of Palm Desert (VRON-PD); both he and VRON-PD are plaintiffs in the lawsuit. In a press release, Carlson claimed the city acted illegally, because the ordinance “is contrary to the city’s general plan, city policy, and the city goals of promoting tourism and accommodations.” He said short-term rentals bring the city more than $1 million in transient occupancy taxes each year.
At that Dec. 10, 2020, Palm Desert City Council meeting, the ordinance was adopted on a 3-1 vote. Kathleen Kelly, Jan Harnik and Sabby Jonathan voted in favor of the ordinance, while Karina Quintanilla voted against it; Gina Nestande recused herself due to a conflict of interest. Comments made by the three councilmembers who voted for the ordinance sum up many of the arguments often made against short-term rentals in the Coachella Valley.
“This pandemic has driven home, with great drama, just how critical it is that we diversify our economy,” Mayor Kathleen Kelly said. “I have participated in two economic summits, both of which have illustrated that Palm Desert, and the rest of the Coachella Valley, are suffering more greatly than some other communities because of our tourism dependence. … At one of those economic summits, Joe Wallace (CEO of Coachella Valley Economic Partnership) … was imploring the elected officials of Coachella Valley to be visionary, to set policy and to stick with it. This council has done that by heavily investing in a vision of making a dramatic step toward economic diversification. As that begins to happen, we’re going to be attracting additional workers to Palm Desert, and a paramount policy of this city has been to house more of the workers who are employed in Palm Desert within the city. That is probably the single most significant thing we could do to have a positive impact on the environment, because housing more of the people who work in Palm Desert within the city reduces, or eliminates, commutes. To accomplish that, we have to, as a matter of policy, guard against the commercialization of traditional neighborhoods, which would reduce, rather than increase, available housing for working people who are part of Palm Desert.”
In a recent interview with the Independent, Carlson disagreed with Kelly’s premise. He said that Palm Desert should be protecting tourism revenue for now, because there are no firm plans that he knows of for major companies to bring hundreds of jobs to Palm Desert, nor are there any concrete plans for a full four-year university to come to Palm Desert.
City Councilmember Jan Harnik referenced another common argument made against short-term rentals: the lack of affordable housing.
“For us to take more houses out of the housing market (to use as STRs) when we are hearing, time after time, that there’s a housing crisis, does not help that problem,” Harnik said at the Dec. 10 meeting. “I think one of the most valid thoughts I ever heard (came) from a gentleman who said, ‘You know, it’s not always the loud music that bothers me (about STRs), or the loud parties. … He said, ‘Jan, I don’t have any neighbors anymore.’ Well, that’s what a neighborhood is: It’s neighbors, and so what we’re doing when we instead offer a business to come into a neighborhood is diluting the neighborhood, and we’re turning it into something else.”
Sabby Jonathan expressed a similar stance at the meeting. “At the end of the day, it’s a matter of policy,” he said. “There are valid concerns all around, but I have to say, to be very honest, that I embrace a policy that places the welfare of our residents over the profits of the STR owners.”
Carlson responded that concerns regarding short-term rentals should be dealt with via proper regulation, not illegal bans.
“VRON-PD wants the Palm Desert and the general Coachella Valley communities to know that our goal here is to hold public entities accountable when they act illegally,” he said. “But it’s not so we can keep short-term rentals and wreak havoc on neighbors who are upset. We want to solve these problems with a commission. We want Palm Desert to build a STR commission so that we can create the blueprints for our future, and build the gold-standard for the STR community.”
The same basic arguments being made for and against short-term rentals in Palm Desert are being made in the valley’s other cities—and increasingly, the tide seems to be turning against STRs.
In La Quinta, the City Council recently approved an indefinite stay on the issuance of any new permits, with a few exceptions—although existing permits may be renewed. The council is also increasing fees and penalties for STR properties that break the rules.
During the public comment portion of the April 6 meeting, the council was addressed by La Quinta resident Marlene Fradis, who said the city should rein in STRs.
“This argument that profits trump human rights and health is not a valid, humane position to take,” Fradis told council members. “In reality, property values diminish when you have short-term renters who destroy property, and when you have landlords who purchase these homes with the intent of making a profit out of it.”
The Independent could not locate any data on the impact that STRs have had on local property values. However, according to Inman—“the industry’s leading source of real estate information,” according to the company’s website—STRs may actually increase property values: “Home-renting service Airbnb has raised ire and eyebrows in recent years for totally transforming the way people can book travel accommodations. It also appears to be raising rents and home prices in major U.S. cities, at least according to a new working paper from academics at UCLA, the University of Southern California’s Marshall School of Business, and the National Bureau of Economic Research.”
Bruce Hoban, a co-founder of the Vacation Rental Owners and Neighbors of Palm Springs (VRON-PS), said STRs tend to have detractors anywhere they’re found.
“I would say that there’s a small group in every city who does not like vacation rentals, for whatever reasons,” Hoban said during a recent interview. “And they grossly over-exaggerate the size of the problem in each of these towns. It’s not about people’s personal financial interests. It’s about (the fact that) vacation rentals have been a source of lodging in the Coachella Valley since the ’50s. In this new culture we’re in for this last year, people just want to start cancelling everything out. There’s a trend.”
In 2018, VRON-PS successfully led an effort to overwhelmingly defeat Palm Springs Measure C, which would have phased out short-term rentals in the city. Since then, however, STR proponents in the Coachella Valley have suffered a string of defeats. Last year, the Rancho Mirage City Council voted to phase out STRs, except in some HOAs. During a March special election, Cathedral City voters resoundingly upheld an ordinance that will phase out most STRs by 2023.
Despite the decisive vote in Palm Springs just three years ago, some residents there are now calling for increased restrictions on existing STR operations.
“Palm Springs is now the outlier when it comes to STRs,” said Hank Plante, a well-known journalist who has recently spoken out in favor of more STR restrictions in Palm Springs, where he lives. “The other major cities in the valley have moved very definitively either to scale them back or get rid of them all together—and this is happening statewide. Tourist cities like ours (here in the valley), from Laguna to South Lake Tahoe, have moved to ban them.
“At some point, I do think that more and more people will become fed up with (STRs), because the city has done nothing to curb their growth, and has done nothing to stop entire neighborhoods from being taken over. I’ll give you an example: In Vista Las Palmas, on North Rose Avenue, the neighbors tell me that there are 19 vacation-rental homes in a four-block stretch. Now, that’s ridiculous. We have zoning laws for a reason. The city would never allow 19 cannabis dispensaries in a row, or 19 liquor stores in a row, or 19 massage parlors in a row. So, I think (the City Council members) need to address the issue of density. They have to impose a cap on STRs in neighborhoods that are overly saturated, and they need to rewrite the ordinance, now that we’ve had some experience with what is not working.”
Hoban said Palm Springs’ current STR ordinance is working just fine—despite a sudden spike in complaints during the pandemic-riddled summer of 2020.
“(STR complaints) had calmed down across the whole valley until we hit last summer,” he said. “And there are two parts to this tale. We (STR owners) were shut down for March, April and May, and then we were allowed to open up. We got this COVID-crazed crowd that came out to all the cities in Coachella Valley. They just didn’t want to follow the rules. So, complaints went up; calls (to code enforcement) went up; and citations and fines went up.
“But, then as mysteriously as they showed up, after Labor Day, everything went back to normal, even though the homes were still very crowded. So it’s that second part of the story that nobody’s telling: What happened after Labor Day? STR houses were rented way above normal in September, October and November, but a better crowd came back. That’s the part of the story that nobody wants to get into. They just want to talk about a 200 percent increase in calls in July 2020. Well, that’s true. But they didn’t finish the story. So … all these small groups start getting ahold of their City Council, and jumping up and down all over them, and everyone just wants to talk about bans.”
We asked Plante and Hoban whether there is room for compromise.
“Well, there has to be,” Plante said. “I would prefer a ban, but in the adult world, we have to work together. So, there has to be some co-existence. They (the Palm Springs City Council) were moving in this direction last fall, but they backed away from it.”
Hoban said: “We want collaborative decisions made for the betterment of vacation rental owners and neighbors. We realize that you have to balance what goes on in a vacation rental with what the neighbors around it experience. That’s what (VRON-PS) is working on, and that’s what we’re guiding the other (valley) VRONs towards. Sometimes some of these other VRONs say, ‘We’re not going to allow this in the ordinance. We can’t have this.’ And then I’ll sit there and say, ‘Well, how do you want to create a balance with the City Council, so that they feel like they’re regulating properties, and to appease the other side?’ It can’t be the Wild West, and we know that.”