Cathedral City voters lean toward law that will phase out short-term rentals by 2023

Voters in Cathedral City, California, appear to have approved a referendum that will uphold the city’s short-term rental ordinance. As of 6:00 p.m. Tuesday, 5,000 votes in favor of Measure B had been cast, with 2,939 against and all 13 precincts reporting. 

The measure phases short-term rentals out of the city, with a few exceptions, by 2023. The City Council passed the law last fall.

According to Ordinance 842, short-term rentals must be licensed, with license fees of $1,950 for single-family homes and $525 for home sharing. Hosts must include permit numbers on any advertising.

The city will not issue any new short-term rental licenses that are valid beyond January 1, 2023. However, properties that offer home sharing or that belong to homeowners associations that allow short-term rentals will be allowed to operate beyond that date.

Under the law, vacation rental guests are required to book stays of a minimum of three nights, and hosts and guests must follow parking, trash, noise levels, occupancy, and health and safety rules. A designated agent must be available 24 hours a day, seven days a week to respond to complaints within 30 minutes.

The law includes stiff penalties for violations. Hosts who operate without a permit can be fined $5,000 for a first violation, $10,000 for a second, and $15,000 for a third. Other violations, including disobeying rules related to noise, occupancy, trash, and parking, can result in fines of up to $5,000. Individuals who make a false report to the city’s short-term rental complaint hotline may be fined up to $500.

Cathedral City received more than 1,800 complaints and calls for service related to short-term vacation rentals between October of 2019 and November of 2020. Out of those complaints, nine resulted in arrests and 52 citations.

Nearby in the Coachella Valley, the city of La Quinta has amended its short-term rental law to create three categories of vacation rentals that may operate in the city, along with raising the annual fees for short-term rental permits.

The three types of permits and their fees are:

• Primary residence, where the owner lives in the property most of the time but is not present during short-term rental guests’ stays. The fee is $750, or $1,250 for five or more bedrooms.
• General, where the owner does not live on the property most of the time and is not present during guests’ stays. The fee is $1,000, or $1,250 for five or more bedrooms.
• Home-share, where the property owner is on site during guests’ stays. The fee is $250, or $500 for five or more bedrooms per year.

Previously, all short-term rental fees were $200, but the city determined that those fees were not covering the costs of the program.

The new rules also require homes with five or more bedrooms to be inspected prior to getting a permit to make sure they meet requirements for noise monitors, parking, and other health and safety features.

Under the new amendments, short-term rental operators with two violations may have their license revoked for up to a year or be banned entirely from holding another short-term rental permit in the city.

Currently, the city will not issue any new short-term rental permits through April 6, although that moratorium may be extended.

The new requirements are the latest changes to the city’s short-term rental law, which the city council had updated late last year. At that time, the city introduced fines ranging from $1,000 to $5,000 for violations. The city also placed more responsibility on online platforms such as Airbnb and Vrbo, prohibiting platforms from booking stays for properties that don’t have valid city vacation-rental permits.

Short-term rental operators in La Quinta and Cathedral City are required to collect occupancy tax from guests and file monthly occupancy tax returns with their respective cities.

While Airbnb and Vrbo collect transient occupancy tax (TOT) in some Riverside County cities, it doesn’t do so in La Quinta or Cathedral City. Hosts whose platforms don’t collect on their behalf are solely responsible for TOT compliance.

MyLodgeTax can help automate and simplify tax compliance for California short-term rental hosts. For more on lodging taxes in California, see our state Vacation Rental Tax Guide. If you have tax questions related to vacation rental properties, drop us a line and we’ll get back to you with answers.