Short-term rentals, including boats, vexing Newport

As Newport Beach city officials continue to grapple with regulating the short-term rentals popping up in residential neighborhoods, temporary lodging is also rising to the surface in the form of luxury vessels docked in Newport Harbor.

Short-term rentals aren’t a new phenomenon in Newport Beach. Since before the 1950s, weekly vacation rentals have thrived in the city, bringing in a variety of tourists — and revenue.

In the early days, vacationers often would look to rental companies and real estate agents to help them find a property. The city was able to more easily regulate the rentals and ensure that the property owners had an active business license, were in an area where rentals were permitted and were paying taxes to the city, according to city staff.

As short-term rentals available through websites such as Airbnb, TurnKey and Vacation Rentals by Owner continue to swell in popularity, Newport has become one of several beach communities in Orange County grappling with how to regulate an industry that critics say has disruptive effects on communities.

The changing market has enabled virtually any property to become a vacation rental, with or without city approval. The sites also have made it more difficult for cities like Newport to regulate the business and keep track of who should be paying taxes. The city imposes transient occupancy taxes on short-term rentals, charging 10% of the price of each rental, as it would for hotel guests.

For home and boat owners, the opportunity to rent out their property for a few nights means extra income that can be used to subsidize mortgage payments or make costly repairs to the property.

Brandon Grna of Costa Mesa has rented his 32-foot powerboat, which is docked in a marina in Newport Harbor, through Airbnb for the past two years. The powerboat is listed on the website for $135 per night.

“I don’t know how long it’s going to last,” he said. “But it’s a good situation for me as long as it does, because it subsidizes my boat.”

Community Development Director Kim Brandt said city code does not permit boat owners to use their vessels as short-term rentals in the harbor.

But on a recent day, roughly 18 vessels in Newport Harbor — some docked in marinas and others in residential slips — were listed for rent on Airbnb. The city is beginning to study these rentals and create a plan for enforcement, officials said.

“It’s part of our short-term-rental enforcement to get a handle on all of these,” Brandt said.

City staff has proposed making current regulations on short-term rentals of housing units more stringent by expanding the operational requirements for rentals in the city. The proposed amendments include limiting how many adult guests can stay in a home, requiring adequate parking and mandating that a notice with a local person’s contact information — someone within 10 miles of the home — be placed on the exterior along with the number of the house’s city-issued short-term-lodging permit.

Staff also has proposed a requirement that any rental agent, homeowner or online platform list a home’s lodging permit number on advertisements. That would make it easier for staff to identify and control homes that are operating without a permit, staff has said.

They’ve also considered adding to the municipal code the requirements that permits be reviewed annually, property owners submit verification from their homeowners associations that they are permitted to rent out their property — some don’t allow it — a guest stays a minimum number of nights to reduce the number of transient renters and homesharing be regulated. Home sharing involves the homeowner staying in the house along with the renter.

The City Council hosted a study session on the issue Tuesday and heard homeowners from both sides of the issue offer suggestions on the staff recommendations. Several speakers requested that the council not limit the number of days homeowners can rent out their property, since such a restriction would probably hurt their ability to attract renters in the slower winter months, they contended.

Councilman Ed Selich said he would not be inclined to support staff’s changes to the ordinance and instead suggested that staff focus on enforcing the current regulations. He spoke in favor contracting with a firm who would comb through the online rental websites and go after those people who aren’t paying the necessary tax to the city.

“I see us doing a lot of monkeying with the ordinance ... basically it boils down to enforcement anyway,” Selich said. “Why do we want to fix something that isn’t broken.”

In 1992, the city adopted short-term lodging regulations requiring property owners to have a city-issued permit before they could list a property to rent for 30 days or less.

Such lodgings previously were permitted throughout the city, but current law prohibits them in areas zoned only for single-family homes. However, 212 properties were allowed to keep their permits when the new regulations were passed in 2004.

Staff has proposed beginning to phase out the grandfathered short-term-lodging permits in single-family zones over a number of years.

Currently, there are 1,162 active short-term-lodging permits, the majority of them in Corona del Mar, the Balboa Peninsula and Balboa Island, according to city staff.

The city also is continuing to negotiate with online host platforms in an effort to push them to comply with city regulations, but discussions have let to “limited progress,” according to a city staff report.

Mayor Pro Tem Kevin Muldoon and Councilman Scott Peotter both indicated their support for negotiating with Airbnb to get the business to remit taxes to the city without Newport having to spend unnecessary funds trying to collect it.

The council is expected to consider possible changes to the ordinance in November.

While Grna said he’s aware of issues arising from people using their homes as short-term rentals in residential communities, he doesn’t see the same challenges on the water. He said often people who rent boats are individuals who would not otherwise have the chance to experience staying overnight on a vessel.

“There are all kinds of boats in Newport, and a lot of them are just sitting there empty,” he said. “This is a cool way to utilize it and get people on the water.”

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Hannah Fry, hannah.fry@latimes.com

Twitter: @HannahFryTCN