Land Use, Sustainability,
and Resilience Committee
TO: LAND USE, SUSTAINABILITY, AND RESILIENCE DATE: AUGUST 14, 2023
COMMITTEE
WARDS: ALL
FROM: FINANCE DEPARTMENT
SUBJECT: SHORT-TERM RENTALS UPDATE
ISSUE:
Receive an update on “short-term rentals” in the City of Riverside.
RECOMMENDATION:
That the Land Use, Sustainability, and Resilience Committee receive and file a report on the status of short-term rentals operating in the City of Riverside.
BACKGROUND:
Chapter 19.910.200 of the Riverside Municipal Code (RMC) and as regulated in Title 5 , defines short-term rentals (STRs) as “The rental of a dwelling, or a portion thereof, by the owner to another person or group of persons for occupancy, dwelling, lodging, or sleeping purposes for a period of less than 30 consecutive calendar days. The rental of units within city-approved hotels, motels, and bed-and-breakfast inns shall not be considered to be a short-term rental.”
DISCUSSION:
On October 16, 2018, City Council approved a Voluntary Collection Agreement of Transient Occupancy Tax (VCA) whereby Airbnb collected Transient Occupancy Tax (TOT) from the renter via their online platform and remitted the revenue directly to the City on a monthly basis. In May of 2019, Airbnb issued the City a notice that they would be amending the VCA that was in place between the City and Airbnb. They changed their business reporting model and wanted to offer certain hosts the option of having more control over their taxes. By doing so, Airbnb put the obligation to collect and remit taxes owed on the Airbnb host, thus requiring the Cit y to ensure collection enforcement and proper receipt of revenue. The City would also be obligated to pursue the hosts directly for lack of payment which substantially changed the terms of the original agreement and placed more burden on City staff. As a r esult, in November of 2020, the City terminated the VCA and contracted with HdL to provide TOT Management and S TR services.
STR Update ● Page 2
During the transition period to HdL, the City collected TOT for the STRs. HdL began STR services beginning in July 2021.
AirDNA, a popular source of Airbnb rental data, provides a general o verview of STRs in the City by zip code. Table 1 below is AirDNA data that was previously presented to Council with additional 2023 data for comparison purposes.
Table 1: STRs by Zip Code 2019, 2021 and 2023
Zip Code
Area
Entire Home Private Room Shared Room Total
2019 2021 2023 2019 2021 2023 2019 2021 2023 2019 2021 2023 92501 27 27 63 13 5 13 0 1 0 40 33 76
92503 8 10 41 12 16 38 7 4 0 27 30 79
92504 8 7 31 11 15 10 0 0 0 19 22 41
92505 8 10 27 18 8 8 0 0 0 26 18 35
92506 13 13 52 31 22 22 2 2 0 46 37 74
92507 17 16 60 25 27 48 2 2 1 44 45 109
92508 2 10 26 19 12 14 0 0 0 21 22 40
Citywide 83 93 300 129 105 153 11 9 1 223 207 454
Per HdL, the data provided by AirDNA is not a true reflection of the STR landscape within the City of Riverside due to the following reasons:
AirDNA STR data is usually inflated as their website tracks listing information that may be advertised on multiple online platforms (Airbnb, VRBO, Expedia, etc.) versus the actual number of properties.
AirDNA does not filter out STRs over 30 days from their data , increasing the number of reportable listings.
AirDNA categories (entire home, private room, and shared room) can be misleading as renters may be advertising their entire home on one online platform or as a private/shared room on another. The self-reporting aspect is solely at the discretion of the renter. STR data is extremely fluid due to the actual rental dates and properties available on any given month.
HdL, through their third -party consultant Deckard Technologies, uses a comprehensive STR platform designed for local governments . This platform i dentifies, tracks, and reports STR registrations, booking activities, licenses, and TOT payments. HdL’s data analytics provides a more accurate and complete picture of the STR landscape in the City of Riverside by identifying properties rather than listings and filtering out rentals that exceed 30 days. Based on their data analysis and City TOT accounts, the following data provides an overview of the current (as of May 2023) STR landscape in the City of Riverside . A total of 251 individual properties have been identified as STRs since HdL began their STR and TOT management services.
STR Update ● Page 3
Table 2: HdL Data – STR’s by Account Status
Zip Code
Area Current Balance
Due Delinquent Pending Account
w/ Client Closed Inactive Total
92501 28 2 8 7 9 54
92503 15 1 4 1 4 7 32
92504 9 1 2 1 3 4 20
92505 6 1 1 5 6 19
92506 26 3 9 13 14 65
92507 19 1 4 1 6 11 42
92508 7 1 1 4 1 5 19
Citywide 110 2 9 32 3 39 56 251
A breakdown of each status above is defined as:
Current: Actively filing TOT.
Balance Due: Active filers who owe a balance.
Delinquent: Have not yet filed and past due.
Pending: Newly registered accounts that have not yet filed. Account w/ Client: City to determine additional steps. Closed: Registered and filed at least once and then closed. These accounts are very fluid and can change if rented again.
Inactive: Properties identified by HdL from the onset and are unregistered. These properties are not currently listed for rent, but that may change depending on the individual property owner.
Revenue Data and Fiscal Impact:
Revenue prior to Fiscal Year (FY) 2019-20 was collectively reported with all City TOT. Beginning in July 2019, TOT revenue was reported into two categories: Hotel/Motel TOT and STR TOT.
Below is a chart that demonstrates the City’s STR revenue by fiscal ye ar. The current FY 2022 - 23 year -to-date (YTD) revenue is projected to increase by 52% to nearly $320,000 total as compared to FY 2021-22 (pending May and June 2023 filings).
STR Update ● Page 4
STRATEGIC PLAN ALIGNMENT:
The topics included in the report support Strategic Priority 5 – High Performing Government and Goal 5.2 – Utilize technology, data, and process improvement strategies to increase efficiencies, guide decision making, and ensure services are accessible and distributed equitably throughout all geographic areas of the city.
This action aligns with each of the Cross-Cutting Threads as follows:
1. Community Trust – Create a level of confidence that the City of Riverside is effectively governing short -term rentals through regulations and polic ies that ensure the safety, security, and well-being of both the renters and community.
2. Equity – The City’s short-term rental and transient occupancy tax services are equally administered by the City’s 3 rd party consultant, H dL, with set filing periods , po licies, procedures, and enforcement.
3. Fiscal Responsibility – The Riverside Municipal Code provides governance and accountability for all business-related activities within the City and fair and equal application of the code. Revenue generated is directly integrated into the general fund and used for Citywide services.
4. Innovation – The City contracts with HdL which has access to additional data and third- party analytics to assist in the identifying of STR rental properties.
5. Sustainability & Resiliency – Through proper management of short-term rentals, the City of Riverside can create a more livable and resilient community for its residents by promoting long-term environmental and economic sustainability.
FISCAL IMPACT:
There is no fiscal impact related to this report.
Prepared by: Mitchell Mason, Treasury Manager
Certified as to
availability of funds: Kristie Thomas, Assistant Chief Financial Officer/Finance Director Approved by: Edward Enriquez, Assistant City Manager/Chief Financial Officer/City Treasurer
Approved as to form: Phaedra A. Norton, City Attorney