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CITY OF SIMI VALLEY
MEMORANDUM
November 18, 2024
TO: City Council
FROM: Department of Environmental Services
SUBJECT: REQUEST FOR DIRECTION ON POSSIBLE AMENDMENTS TO THE
SIMI VALLEY MUNICIPAL CODE FOR THE REGULATION OF SHORT-
TERM RESIDENTIAL RENTALS
STAFF RECOMMENDATION
Staff recommends that the City Council provide direction regarding short-term residential rentals.
BACKGROUND AND OVERVIEW
On October 21, 2024, the City Council directed staff to provide options to the City Council for regulations on short-term rentals within the City of Simi Valley. Staff is providing this report and requesting direction on whether t he City should initiate Simi Valley Municipal Code Amendments and/or policy updates to establish specific standards for short-term rentals.
Short-term rentals ( also referred to as “STRs,” “vacation rentals,” “short -term vacation rentals,” or “transient rentals”) are private residences rented in whole or in part , for a period of less than 30 -days. Online sites, such as Airbnb, HomeToGo, and VRBO list entire homes or rooms for rent. The City’s research of online sites determined there are between 30 and 50 STR units listed within the city limits. STRs in Simi Valley range from $100 to $350 per night, depending on the listing site and type (Refer to Tables 2 and 3).
At this time, the City does not define a STR, nor regulate short-term rentals. Over the past 10 years, the City has only received a few complaints involving STRs. The most significant was from an STR being marketed as an event venue that made major property modifications without permits. The other STR complaints expressed not wanting the home to be rented short -term or otherwise and had no actionable items to address. Staff also receives a handful of inquiries each year regarding the City’s STR regulations , typically from prospective operators.
FINDINGS AND ALTERNATIVES
Staff surveyed seven (7) jurisdictions on their STR rules and regulations, as demonstrated in Table 1.
AGENDA ITEM NO.
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Table 1 – STR Regulations in Surrounding Jurisdictions
Jurisdiction Ordinance
in Place
Nature of
Ordinance
Notes
City of Agoura
Hills
Yes Allowed with a
permit
City of Camarillo Yes STRs Banned
City of Moorpark Yes STRs Banned
City of Ojai Yes STRs Banned
City of Oxnard Yes Allowed with a
permit
Limited permits offered in Coastal
Zone; and cannot be within 200
feet of any other STR property.
STR permit issued; enforcement
via third party vendor.
City of Ventura Yes Allowed with a
permit
The City is developing an
ordinance to regulate STRs,
including limiting the number of
units and density of allowed units.
Enforcement with 3 rd party
vendor.
County of
Ventura
Yes STR permits
required in
Coastal Zone
and Ojai Region
No outright ban on STRs
elsewhere.
Of those surveyed, four jurisdictions allow STRs with permits. These jurisdictions also work with third party vendors to regulate STRs, and/or have rules in place to limit where STRs can be located or the number of STRs allowed. Moorpark , Ojai and Camarillo do not permit STRs, arguing the need to preserve each individual city’s aesthetic and neighborhood characteristics. It should be noted that each of these cities still have available STRs listed on the various platforms that facilitate STRs.
Below is a breakdown of potential advantages and disadvantages of short-term rentals.
Advantages of Short-Term Rentals:
1. Tax Revenues for the City: If regulated, STRs have the potential to generate new permit fee revenue, Transient Occupancy Tax (TOT) and sales tax revenue, captured from tenant spending when visitors stay in Simi Valley instead of a neighboring jurisdiction.
2. Supplemental Income for Homeowners: Renting out a home or portion of a home (room rental) for business, leisure, or temporary housing can generate new revenue for homeowners, helping them recover from their investments, make a profit, or provide additional discretionary income.
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3. Increase in Simi Valley Visitors: STRs provide a lodging option to supplement the limited number of hotel rooms in the City and provide additional local lodging options.
4. Support Local Businesses: Requiring STRs to collect and pay TOT the same way hotels are required to do would level the playing field between the two types of lodging. The Fiscal Impacts section provides additional discussion this topic. In addition, when visitors stay in Simi Valley instead of neighboring jurisdictions, visitors are more likely to frequent nearby businesses , including retail stores and restaurants.
Disadvantages of Short-Term Rentals:
1. Potential Loss of Housing Stock for Residents and Workforce: Although not likely a concern in Simi Valley, units removed from the permanent housing market and used for short -term rentals may reduce long -term rental options . A reduced housing stock results in increased rental prices for permanent housing, and has the potential to affect the City’s workforce, who will then resort to residing outside of Simi Valley with longer commute times into the city.
2. Impacts to Existing Hotels : STRs may impact existing hotels by increasing competition and lowering hotel occupancy rates, hotel revenues , and transie nt occupancy and tourism taxes to the City. In addition, Simi Valley’s hotels currently contribute to the Visit Simi Valley Tourism Assessment, which is not collected for STRs. Hotels also create employment opportunities for City residents and generate related sales tax revenue.
3. Neighbor Complaints: Neighborhood deterioration and noise have the potential to lead to neighborhood complaints. Though the City has noise restrictions (SVMC 5-
33.03), STRs have the potential to cause public nuisance via loud parties and gatherings. This has the potential to create enforcement issues for the City. The Regulatory Challenges and Impacts to City Staff and Resources Section provides additional information on this topic.
4. Potential Deterioration of Residences/Neighborhoods : Without the oversight or presence of a property manager/owner on site, consistent turnovern of STR renters has the potential to depreciate homes’ conditions. Other concerns include:
increased traffic coming through neighborhoods; vandalism; noise; overcrowding; turnover of people; and leaving trash out on the street s. Simi Valley has not experienced STR concerns at a level at or above ordinary property maintenance complaints as a whole and the City has existing re gulations in the Simi Valley Municipal Code to address most of the concerns listed above.
Fiscal Impacts
The City of Simi Valley charges a 10%TOT rate on hotel and motel stays. TOT funds are used to offset increased public service costs that may be incurred from tourists, including public safety, road maintenance and repair. The City collects approximately $2 million 3 STRccmtg11-18-24(klk)
from TOT each year. 1 Upon further research of other California jurisdictions that permit and tax STRs (including the cities of Orange, Vista, Indio, Fullerton, Oxnard, Ventura and the County of Ventura), staff has prepared the following financial findings. Staff makes an optimistic assumption for the rent and number of nights per year of 40 listed homes and rooms in the City 2, based on available data online. Staff makes findings, assuming that all listed STRs would comply with an STR ordinance.
Table 2 – Simi Valley STR Estimates
Number
Available STRs
Average Daily
Rate
Estimated Number of
Days Rented per Year
Entire Home3 12 $322.50 96
Room Only 28 $130.05 144
Table 3 – Potential STR Revenues per Year
Fees for Homes Fees for Rooms
Permit4 $936 $936
Business Tax Certificate $115 $115
Gross Receipts Tax $50 $25
Transient Occupancy Tax $3,096 $1,561
Total Per Year Per Unit $4,197 $2,637
Total Per Year for Available Units $50,365.68 $73,828.72
Should the aforementioned occur, Staff projects approximately $125,000 of gross revenues per year from STRs.
Regulatory Challenges and Impacts to City Staff and Resources:
Necessary considerations of an STR program development are associated with code enforcement, public safety , and administration of a program. Some issues to consider include:
• Administration of a STR Program: Staff would need to determine required applications, permitting, taxation and business registration requirements for such a program, which would involve, the Planning Division, Administrative Services , and Code Enforcement, and a third-party vendor for searching, tracking and enforcing business tax registrations. The City currently uses HdL to administer all Business Tax Certificates.
• Adjustment of Staff Time and Personnel Management: Since most STR stays occur during the weekends , Code Enforcement staff would need to adopt permanent work schedules incorporating nights and weekends to respond to code enforcement related complaints arising from STR. If absorbed within existing
1 There are 6 hotels in the City of Simi Valley
2 Based on Airbnb and VRBO search on 10/23/2024 that brought up 43 searches in the City. 3 Includes homes, guesthouses, and apartments.
4 Amount was based on average fee assessed by the seven jurisdictions mentioned above. 4 STRccmtg11-18-24(klk)
resources, two Code Compliance Officers could be redirected to night and weekend schedules, which would divert resources from other quality of life issues by about 20% due to work that can only be conducted during daylight hours such as knock and talks with residents. Additionally, notifications to STR violators would be delayed due to the inability to mail notices during weekend shifts. An alternative would be to hire an additional Code Compliance Officer at a total cost of approximately $120,000 per year.
• Overall Enforcement of a Program : As there are dozens of online vacation rental sites, such as Airbnb, VRBO, HomeToGo, FlipKey, and Booking.com, finding and ensuring that all STRs in Simi Valley are registered and permitted with the City would be time-consuming and divert staff away from current priorities. It would require a minimum of 2.5 staff members from Code Enforcement and Administrative Services to properly administer the program and ensure compliance. Some third-party vendors have enforcement services, which could primarily monitor permit s or conditions of said permit , however, on-the-ground enforcement would likely be borne by Police or Code Enforcement staff . Further, third-party enforcement may only target locations advertised online through popular rental portals. Word of mouth rentals are harder to track and would be extremely difficult to enforce (similar to a traditional home rental).
Enforcement Rules are already in Place
As an alternative approach to establishing a new ordinance, the City’s existing mechanisms for enforcement of complaints related to single -family dwellings can be utilized for issues related to short -term rentals. The Municipal Code has existing definitions for Bed and Breakfast Inns, Lodging Houses, and Boarding Houses, all of which require a Conditional Use Permit (CUP). Existing operators may be able to apply for a Conditional Use Permit to operate through one of the categories. The Environmental Services Director may apply specialized conditions of approval to restrict certain operational aspects such as number of renters, length of stay and parking availability.
The enforcement of Conditional Use Permit violations tied to STR can be handled through existing procedures, while complaints related to late night noise violations or on -street parking violations are currently be referred to the Police Department. Other types of complaints could be referred to Code Enforcement. However, there would still be an added cost to modify the City’s existing contract with HdL to administer the issuance and monitoring of Business Tax Certificates.
An STR program would approximately cost $18,470 annually, plus a one-time $5,000 set up cost, to track and issue permits with a third-party vendor, such as HdL, which currently administers the City’s Business Tax Certificate program. The vendor would track short - term rentals in the City through online listings, and coordinate with City Staff and STR owners to obtain City permits and business tax certificates. Additionally, it would cost the City approximately $321,304 annually to administer and enforce the program. This cost includes salaries and benefits for new and/or reallocated staff , including two Code Compliance Officers and 50% of a Sr. Management Analyst. While the City would generate $125,000 from tax revenue, the City would be subsidizing an STR program at approximately $214,774 per year.
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The following alternatives are available to the City Council:
1. Direct staff to initiate Municipal Code Amendments to allow short-term rentals;
2. Direct staff to initiate a Municipal Code Amendment to prohibit short-term rentals;
3. Direct staff to provide more detailed research options for short-term rental zoning, enforcement and taxation rules and return with a report to the City Council within 6 months to allow for further direction on whether to proceed with an ordinance;
4. Do not initiate Municipal Code or policy amendments at this time; or,
5. Provide other direction.
SUGGESTED CITY COUNCIL MOTION
Staff has no suggested motion.
SUMMARY
On October 21, 2024, the City Council requested Staff to review STRs, including their feasibility, effectiveness, fiscal and staffing impacts. While benefits to STR regulations include tax revenue generation and supplemental income for City residents, there is a lack of STR complaints and a limited number of STRs within the City. Coupled with program expenses and enforcement, a STR Ordinance could outweigh the aforementioned benefits. Given the presented, Staff requests direction from the City Council regarding possible amendments to the Municipal Code.
____________________________________
Stratis Perros
Environmental Services Director
Prepared by: Zarui Chaparyan, Associate Planner
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