Frequently Asked Questions.

Aren't Airbnb hosts just people trying to make a little extra cash?
Some Airbnb hosts are just renting a spare room.  However, these are 19% of listings in Santa Cruz.  Most listings are whole houses where housing for locals is being converted for tourists. In fact, worldwide 89% of Airbnb's revenue comes from whole house rentals operated by real estate investors. Unfortunately, since the city has limited funds to enforce short term rental rules, opening the door for someone renting a room also opens the door for investors to convert scarce housing into rogue hotels.

Doesn't Airbnb help disabled people or those struggling with their mortgage stay in their homes?
The are a few folks who have come to depend on Airbnb for needed income and can't work at a full time job because of a disability.  If the city wants to help these people they can means test the permits for STR's.  The city does this for affordable housing assistance.  Limit the number of STR permits and only give them out to those who can document their disability or show true financial need.  Allowing anyone to start up a STR doesn't serve the people the city claims they want to serve.

Doesn't Santa Cruz need more hotel rooms for tourists?
No. The city's hotels are only 69% occupied. They are fully capable of handling the demand for short term accommodations in the city. In addition, there are 504 more hotel rooms under construction (as of April 2017) with even more rooms in the planning stages. Airbnb is not providing overflow lodging. It is taking business from local hotels. This is bad for the city since local hotels provide full time employment for medium and low wage workers.

Is it true that Airbnb rentals take housing off the market for long term tenants?
Yes. Every short term rental is different, however before the rise of Airbnb people with extra rooms or a whole house rented out long term to residents. if you need evidence check out this video.  It was produced in 2016 by a UCSC Anthropology student.  It's called Housing Static HD and it's on Vimeo.com.  One person interviewed for this piece is a local landlord who owns 36 units of housing.  You can skip to his comments at two points in the video at 3:40 and 6:02. See the video here.

Aren't the city's laws just out of date for the sharing economy?
Some say that the zoning laws should allow for changes in technology. City zoning was created to protect neighborhoods from commercial encroachment. This has been the backbone of long term city planning and has ensured our neighborhoods are great places to live. Do you love living in Santa Cruz?  If so, thank the zoning districts on the books for the last 50 years. They have created the city we all live in. Do we want to throw out our city's general plan just because a company builds a website? Don't think so.

Don't some tourists Like Airbnbs?
Sure, some travelers would rather stay in a home than a hotel. That's what customers are supposed to do, think short term and only of themselves. They don't think about the downstream effects of their actions. But we have to think long term as owners, not customers. Each of us is a fractional owner of this city and it's our job to create appropriate facilities for tourists with an eye toward protecting the neighborhoods that brought us here in the first place.

I heard short term rentals are only 1.2% of the housing stock in Santa Cruz.  Is that true?
No. That number uses only the Airbnb units that have registered with the city (303) and dividing it by all the houses in the city (23,635) that includes the owner occupied properties. In reality are only 12,057 houses for rent in the city. If we take the full number of registered and unregistered short term rentals (572) and divide by 12,057 (the number of houses that are rentals) we get 4.7%. That’s the real number.

How many Airbnbs and other short term rentals are there in the city?
A hand count of the five most popular short term rental platforms in April 2017 found 572 listings in the city of Santa Cruz.  Based on tracking these listings over time, short term rentals are growing in the city at a rate of 8-10 new listings per week.  This growth rate outstrips the rate at which new housing is being built.  According to the city Planning Department we are building 1.6 new housing units per week. 

I read that there are only 303 short term rentals in Santa Cruz. Why are the numbers reported here higher?
303 is the number of units that have voluntarily registered with the city Finance Department.  However, many short term rentals in the city never register.  The higher numbers we use come from a hand count of all the listings online, registered and unregistered. This the experience of other cities as well.  In San Francisco, two years after passage of a short term rental ordinance less than 20% of the 7,500 advertised units have registered. 

Don't Airbnbs bring in taxes?
They do, however, the city would get more tax revenue if visitors stayed in hotels.

In 2016 the city collected $3,964 per room in occupancy taxes from its 56 licensed hotels.  

In 2016 the city collected $1,780 per room from the 303 licensed short term rentals.This is 66% less tax revenue.

This highlights one of the problems with short term rentals.  They pull guests out of hotels and into less expensive short term rentals. The effect of this is to erode city occupancy tax revenues.  But don't short term rentals bring in new customers that wouldn't stay in a hotel?  Nope.  

In November 2016 Morgan Stanley Research surveyed 5,500 Airbnb users to determine how they were using the service. Only 2% of Airbnb users said they would not make the vacation stay if Airbnb was not available at their destination. That means that 98% of Airbnb stays would have been hotel stays. People vacation in Santa Cruz because of our weather, our beaches, our arts and culture, and our outdoor activities, not because of Airbnb.

What about promoting short term rentals and using the occupancy taxes to fund affordable housing?
The city can't make progress on housing, affordable or not, while encouraging long term housing to be converted to hotel rooms.  Each week the city loses housing units to short term rentals.  Even if we could (through taxes) double the amount of housing being built we would still be going backwards on housing by several units per week.  With Airbnb and other online platforms taking away long term housing so quickly we cannot build our way back to balance.

Isn't the shortage of rental housing from other causes like UCSC students?
The current shortage of rental housing is not the result of one thing. It is caused by our proximity to Silicon Valley, UCSC growth, historically low marriage rates, demographics, people buying second homes, and short term rentals. However, most of these causes are out of the city's control.  The item from this list that the city can actually act on is short term rentals.

Want to become an expert on this issue?
You can read our white paper for policy makers HERE.

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