Newport Beach has partnered with a company to help enforce short-term rental regulations by comparing addresses in the city’s database of permitted hosts with listings on popular online services such as Airbnb.
The city has contracted with San Francisco-based Host Compliance to comb 22 websites that could reveal who’s advertising their homes for vacation rental without proper clearance.
Kim Brandt, Newport Beach’s community development director, said such rentals have long been part of the local culture, with zoning, lodging permits and business licenses to regulate them. The city doesn’t keep track of how the properties are advertised — such as through online platforms or a traditional property management firm — but it does collect a 10% transient occupancy tax, or bed tax, as it would for a hotel room.
With the rapid growth of online vacation rental sites, some property owners may not be aware of all the city’s rules or may think their registration with the websites covers that responsibility, Brandt said.
“We want to make sure they’re paying what a hotel would charge in terms of transient occupancy tax so there’s parity with all of our overnight lodging accommodations in the city,” Brandt said.
Newport Beach has about 1,230 active short-term lodging permits, mostly along the Balboa Peninsula, Balboa Island and Corona del Mar.
Local short-term rentals — regarded as less than 30 days — generated about $2.6 million in taxes in 2016, a little more than 10% of the city’s $25.7 million in overall bed tax revenue, Brandt said.
Ulrik Binzer, founder and chief executive of Host Compliance, said Newport Beach is one of his company’s roughly 50 clients worldwide and one of 15 in California. Other Southern California clients include Buena Park, Hermosa Beach and Oceanside.
Without guidelines for short-term rentals, Binzer said, investors can buy up buildings in residential areas and essentially turn them into hotels, displacing residents and altering the character of neighborhoods. Without companies like his, it’s hard for cities to prevent that kind of behavior, he said.
Brandt said a series of community conversations last year about expanding short-term rental regulations ultimately led the City Council to direct staff to simply enforce existing rules, perhaps with outside help.
“It doesn’t matter at the end of the day how many regulations you have on the books unless you’re enforcing them,” she said.
The city is awaiting the results of its first report from Host Compliance, which Newport is paying $62,500 for a one-year commitment. Staff expects weekly updates.