Redwood City steps up regulation of short-term rentals

The Redwood City Council has adopted new regulations on short-term rentals in an effort to preserve housing stock as well as limit neighborhood disruption and commercial activities in residential areas, while still allowing residents to make some extra money from their property.

Provisions of the new rules include:

• Short-term rentals are only allowed in homes that are primary residences, meaning the residents live there full time.
• Rentals when the host is not present are limited to no more than 120 days per year.
• There is no limit on the number of rental days when the host is present.
• Residents are prohibited from renting out their properties for special events such as weddings or corporate retreats.
• Hosts must designate a local contact person who will respond to complaints while the host is absent.
• Hosts must provide on-site parking for guests.
• Short-term rental operators must register with the city, get a business license, and collect lodging tax from guests.

The council reviewed a second reading of the law on February 12, and it becomes effective in one year.

There are 380 active Airbnb hosts in Redwood City and 51 percent of Airbnb listings in the city are for an entire home. The average guest stay is six days.

The city estimates that the 12 percent lodging tax that will be charged on top of short-term rental costs could generate $400,000 a year for the city.

While Airbnb collects lodging taxes on behalf of its hosts in many California communities, it does not have an agreement with Redwood City to do so. If such an agreement is not in place by the time the new short-term rental regulations go into effect, short-term rental operators booking with Airbnb will be responsible for collecting lodging taxes from guests and passing those taxes to the city.

Since other short-term rental platforms, such as VRBO and HomeAway, generally do not collect taxes for their hosts, Redwood City operators using those platforms for their listings will also be responsible for managing lodging taxes themselves.

The council’s action is part of a trend in Northern California of increasing scrutiny of short-term rentals. Other communities where short-term rentals have been in the news include San Francisco, Pacific Grove, Carmel, Monterey, Sonoma County and South Lake Tahoe.