Los Angeles gives hosts, neighbors mixed signals on short-term rentals

In Silver Lake, Jane Taguchi, who has complained that the house across the street is being rented out, worries about the changing feel of the neighborhood.

Feb. 7, 2015 10 AM PT

Airbnb and similar “home sharing” websites have exploded in popularity in L.A., overwhelming city regulators who are struggling to collect tourist taxes and enforce long-standing restrictions on rentals.

Renting out rooms or homes for a few days or weeks is illegal in many residential areas, city planning officials say. But the building department and other city agencies say they face practical obstacles to cracking down on such rentals, as individuals and investors have flooded the app-fueled L.A. marketplace.

MORE: Airbnb touts its economic benefits as L.A. leaders seek to clamp down

In tourist meccas such as Venice Beach, annoyed residents say entire homes are being rented out nonstop to revolving groups of guests. Some residents say they fear that the phenomenon is becoming overly commercialized, exacerbating an affordable-housing crunch as apartments and homes that housed tenants are converted to vacation rentals.

“It’s supposed to be a spare room — not corporate interests taking over our neighborhood and turning everything into a virtual hotel,” said Scott Plante, a Silver Lake resident.

When neighbors turn to the city to enforce the rules, Plante said, “it’s a very nebulous situation.”

Airbnb alone claims roughly 4,500 hosts in L.A. That’s more than four times the total number of lodging businesses, including hotels, bed and breakfasts and other rentals, that are registered to collect and forward city lodging taxes. The company recently estimated that its hosts earned $43 million in rent in a single year in the city — a number that suggests L.A. could be losing millions annually in tourist taxes used to help pay for police, tree trimming and other city services.

The city has been collecting revenue from some rental hosts who registered their businesses to pay taxes at City Hall. But in one sign of the uncertainty swirling around such rentals, The Times found what appeared to be hundreds of lodging businesses registered to pay taxes in neighborhoods where they are generally barred.

In at least one such case, a host later got a building department notice that his rental was illegal. Daniel Goodman said he’d paid taxes for months on a Venice canals home he marketed to visitors via Airbnb and VRBO for $400 to $700 a night. The income helped him support his mother, who had stopped working to care for her elderly father, Goodman said.

Then came the city order telling him to stop, saying he had improperly converted the home to a hotel.

“Wait a minute,” Goodman recalled thinking. “I’m paying taxes — but I’m getting fined. What’s going on?”

If someone wants to rent out a property for short stays, “the Department of Building and Safety will tell you that you can’t, and the finance department tells you to send your taxes,” said Paula Samuel, who rents out properties downtown. “It’s really a conundrum.”

Tax officials emphasize that tax registration is not a permit to operate. For their part, building department officials say it is extremely difficult to prove someone is illegally renting out a home.

“We go and knock on the door and ask, ‘Is this an Airbnb?’” said Luke Zamperini, spokesman for the building department. “They say no … How do we disprove that?”

Getting a lease agreement would help, but that typically means convincing a judge to approve a search warrant for “serious violations that threaten life, limb or property,” Zamperini said.

Many websites that broker short stays do not list addresses or host names. And building department officials said they have no way to track the number of violation notices issued to Airbnb-type rentals. Persistent violators can be taken to court, but a spokesman for City Atty. Mike Feuer said he knew of no such cases referred to his office by the building department.

A Los Angeles Times analysis of tax records found more than 300 businesses renting homes or rooms for less than 30 days in areas where such short stays are generally not allowed — including the Venice canals where Goodman operated his rental. However, it’s not clear how many of those are in fact illegal, due to the complexity of L.A.’s zoning laws.

For instance, such rentals might be lawful if permission to operate as bed-and-breakfasts in “designated historic homes” was secured, said Alan Bell, a recently retired deputy planning director. Planning officials said an extensive review of each location would be required to determine if short stays were allowed.

The bigger question for City Hall is how many such businesses aren’t registered to pay taxes at all. “So much of it is effectively underground,” said Westside City Councilman Mike Bonin, whose district includes popular Airbnb destinations such as Venice.

“We’re better off acknowledging that it’s here and regulating where it should or shouldn’t be and taxing it.”

Airbnb has worked out agreements in other cities, including San Francisco and Chicago, under which the firm agrees to collect and send lodging taxes to city governments. Company spokesman Nick Papas said Airbnb asks its hosts to follow local rules and has had “productive discussions with L.A. leaders about these rules and taxes.”

The Los Angeles Short Term Rental Alliance, which advocates for Angelenos renting out properties, says it would welcome new rules to legalize and regulate short-stay rentals in residential areas where they’re now banned. The regulations could ensure taxes are collected and the businesses aren’t creating a nuisance for neighbors, alliance co-founder Sebastian de Kleer said.

But as some residents push for much stricter regulations on the sharing economy, the city battle over rentals could be just beginning. In some neighborhoods, it’s already raging.

In Silver Lake, Jane Taguchi has snapped photos of guests loaded down with luggage and printed online listings she suspects are marketing the house across the street. The house with the blue tile roof, perched above the Silver Lake Reservoir, is in a zone where such rentals generally are barred.

Taguchi said she realized what was happening in May after a raucous fraternity event awoke her and her neighbors in the wee hours of the morning. Beyond such annoyances, her larger worry is that renting out homes like hotels could change the feel of the neighborhood.

“I don’t want a bunch of strangers around me,” Taguchi said. “If you let her do it, everyone will do it.”

Melody Shahbazian, who owns the home across from Taguchi, declined to comment for this story. Last year, she took Taguchi to court, alleging she was intimidating her and guests.

“Although we have rented our home, we have attempted to comply with all laws and regulations and believe that the use of our home is entirely legal,” Shahbazian wrote in a declaration. She said she and her husband initially planned to use the house as a second home and offset the cost by renting it out for short stays but mostly left it vacant because of harassment.

Taguchi denied she was engaged in harassment, and a judge rejected the request for a restraining order last year. The building department couldn’t substantiate complaints about improper use of the Silver Lake home but did issue a violation notice for illegal construction of a second kitchen that was ultimately removed, according to spokesman Zamperini.

Many neighborhood groups welcomed the recent city order against Goodman in the Venice canals, hoping for similar action in their areas. Zamperini said he couldn’t discuss details of evidence gathered to pursue the alleged violation because the matter remains under investigation.

Residents have been given inconsistent information from city officials about what proof is needed to trigger enforcement actions, said Judy Goldman, one of the co-founders of Keep Neighborhoods First, a group concerned about “commercialized” short-term rentals.

Some residents have been told that an online advertisement isn’t enough, she said. But when those same residents asked if it would help to obtain a copy of a rental contract, city officials told them that such investigative efforts should be left to the building department, Goldman said.

“It’s a lot of mixed messages,” Goldman said.

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Twitter: @LATimesEmily

Times staff writers Ben Poston and Tim Logan contributed to this report.