Balancing Housing with Vacation Rentals and Property Rights
The fires that descended on Sonoma County last October destroyed thousands of homes and increased pressure on an already tight housing market, leading the board of supervisors to take a closer look at the role Vacation Rentals play in exacerbating those problems.
In order to have time to get a more complete picture of the state of housing, and to reduce the opportunity for housing speculation as the county maneuvers its way through an unprecedented crisis, at the end of October the supervisors adopted an interim 45-day moratorium on the issuance of new vacation rental permits.
As the initial emergency ordinance was set to expire, on Dec. 5 the moratorium was extended an additional 60 days, to give county staff an opportunity to study Transient Occupancy Tax (TOT) receipts that come in January to determine the extent to which vacation rentals are affecting the availability of housing for residents displaced by the fires.
“That will be the first objective data we’ll have on what vacation rentals are being used for,” County Planning Director, Tennis Wick, said at the Dec. 5 meeting.
Wick added that he would meet with Airbnb executives with the expectation they will share data with the county to further enhance the report he hopes to bring back to the supervisors before the Feb. 5 deadline to either let the moratorium expire or extend it once again for a maximum total of one year.
Airbnb is a San Francisco-based online marketplace that connects travelers with vacation rentals from apartments to castles throughout the world, and claims it is “the easiest way for people to monetize their extra space and showcase it to an audience of millions.” In Jan. 2017, Airbnb began collecting TOT on any unit rented in Sonoma County, through a Voluntary Collection Agreement (VCA) with the county.
Vacation Rentals growing problem in some areas
Potential problems with vacation rentals has been on the board’s radar for several years, as former First District Supervisor Valerie Brown sounded the alarm toward the end of her tenure on the board, according to Susan Gorin, who was elected to replace Brown in 2012.
“Valerie Brown alerted the board and started that process,” Gorin said in a mid-December interview. “Sonoma Valley (vacation rentals) exploded during the recession when investors came in and bought up housing stock.”
Workforce housing took a hit, as real estate prices escalated once the market bounced back. The First District—encompassing Sonoma Valley and east Santa Rosa—is heavily affected by vacation rentals and workers struggle to find affordable housing.
But the economic collapse was nothing like the damage left behind by the Sonoma Complex Fires.
Prior to the fires, Sonoma County was already in the grip of a housing crisis that only picked up steam in the past five years.
According to the 2017 Sonoma County Profile Report developed by the Economic Development Board, rental vacancy rates fell from 5.8 percent in 2011 to 1.8 percent in 2015. During that same period, homeowner vacancy rates fell from 2.2 percent to 1 percent. According to the report, a healthy rental market needs vacancy rates of at least 5 percent.
A report titled “The Impact of Vacation Rentals on Affordable and Workforce Housing in Sonoma County,” prepared by Economic and Planning Systems for the Sonoma County Community Development Commission in 2015, found that “There is a measurable shift in housing supply, otherwise available to the County’s working families, to vacation rentals and other nonresident serving uses.”
The fires wiped out 5,100 homes in Sonoma County, 2.5 percent of the total housing stock. Santa Rosa alone lost 5 percent of its homes. Thousands of people have been displaced for the foreseeable future and there is a possibility of an economy-crippling depopulation that will decimate the workforce needed for rebuilding efforts.
Gorin’s district was particularly hard hit.
“The first district is a stopping point on the way to Napa and a big part of the economy of the Sonoma Valley is agro-tourism and the wine industry,” she said. “It’s the people with lower wage jobs having difficulty: vineyard workers, landscapers, and hospitality staff.”
Vacation Rental Exclusion Zones (VREZ)
This is not Gorin’s first attempt to limit vacation rentals in parts of the county most affected by them, as she picked up the mantel of a process that began in April, 2009 when a previous board considered the long-term effects of vacation rentals on communities.
The Second and Third districts, Petaluma and central Santa Rosa, for the most part, have very few vacation rentals—Third District Supervisor Shirlee Zane joked about having doubled to two at the Dec. 5 meeting and the Second has a mere handful—so the First, Fourth and Fifth were the main targets of subsequent studies.